CHRO Quick Talks Episode 3: Tracy Ting, Chief Human Resources Officer

Thanks, Belen. I'm happy to be here, and hello to all the listeners.

Yeah, as far as the engagement with the board is concerned, I would say the conversations have really opened up much more in the past two to three years. At the beginning, I remember discussing with the board things like employee safety, getting people to effectively and productively work from home, or setting up new work protocols to meet customer needs or business needs. Then social justice, which our whole country faced, brought diversity, equity, and inclusion to the forefront of many personal and professional conversations for the first time. Then employee wellness, mental wellness, especially being a very real challenge affecting employee productivity and engagement, finally getting the attention it deserves. More recently, many versions of conversations around the Great Resignation, which is the term we're all very familiar with. I remember a Gartner study last year on employee sentiments where the top two scores went to these questions: 'The pandemic has made me rethink the place that work should have in my life' and 'The pandemic has made me long for a bigger change in my life.' I think many of these were new things that companies and boards were forced to face into, never mind all of them colliding together at once. Another data point I want to highlight is one of the key findings in the 2021 PwC Annual Corporate Director Survey was about talent management. It topped the list of areas that boards believed needed more attention and more time in the boardroom, and for the first time, talent management beat out strategy oversight. So as a CHRO at my current company, I engage heavily with the board, as well as the Compensation Committee and the Nominating and Governance Committee of the board. In the Compensation Committee at my company, we've had a number of metrics in our bonus plan that we've built over the years, and it changes each year. Our bonus plan is set up like a balanced scorecard, which allows us to incorporate a variety of important strategic metrics. In the human capital space, we've incorporated metrics around inclusion, employee net promoter score, employee engagement score, diversity in leadership, and more recently, employee turnover. In that same bonus plan, we've also worked with the Comp Committee and the Nom/Gov Committee to think through bonus plan metrics through an ESG lens. ESG, as you all know, stands for environmental, social, and governance, which is another newer area that came into the spotlight more recently, really putting pressure on companies to take accountability around it. At many companies, ESG falls under the oversight of the Nom/Gov Committee of the board, and my company too. So not only are investors asking for more metrics and disclosures, the SEC is also leaning in that direction, and some clients and regulators are asking too. And don't forget, employees and prospective employees also want to know if the company they work at or are looking to work for is a strong corporate steward. So what I have found is human capital shows up not only at the board level, but it also shows up in virtually all board committees in some shape or form. In the Comp Committee, I talked about compensation plan metrics; in the Nom/Gov Committee, it would show up in succession planning conversations or ESG; in Audit and Risk Committee discussions, around different types of people risk or ESG risk. So when you put all this together, this is really exciting for a CHRO. What that brings to light is that a strong partnership with your CEO, with your board, and the committee chairs on human capital topics is so important to support the transparent conversations that should be taking place at the board level, and they're happening more and more. I think these increased and deeper levels of board discussion not only are we doing them more, but I've found them to go deeper, which is really great. These types of discussions at the board level further validate that human capital is truly seen as a strategic driver of the business.

Yeah, that's a great question, Belen, thank you. I think there are many studies out there that point to the correlation of increasing diversity to a higher performing organization. In that same 2021 PwC Annual Corporate Director Survey I mentioned earlier, there was another data point that I thought was interesting. I think it was 33% of directors in 2021 believe that diversity will simply happen naturally. That's a 30-some-odd percent drop from the 2020 survey of the same question, where the number was much higher, like 70 or 71. So for me, that data point supports that the shift around diversity has to be intentional because it's not going to happen naturally. By intentional, we're seeing more and more in different ways. Search criteria for new board members now typically cover three areas, in no particular order: one is industry experience, two is some sort of operational or key functional expertise, and more recently a third criteria which is around diversity, racial or ethnic diversity. My board is proud of being 50% diverse and will continue our board diversity journey. Just because we hit that mark doesn't mean we're done; we'll continue to really embrace the notion of diversity being important. I mentioned board searches are typically handled by the Nom/Gov Committee of the board. As far as intentionality of diversity, I think as a CHRO you can play a really strong partnership role with the Nom/Gov Committee and with the board in two ways. One, as a partner when we're looking for a new board member. This doesn't just include the search itself, but to the extent that you're selecting a search firm that you're working with, you want that firm to also align to the DNI principles of your company and your board. I think that's really important. Another area of board work that a CHRO does is when the board undertakes board effectiveness work. This is an area where the board looks to enhance their own effectiveness and performance as a fiduciary body and also as an advisory body to management. This is an area where I think DNI principles can play a role in how the board interacts with each other and with management. And the last part, maybe, Belen, was about how this has permeated the broader diversity initiatives at Encore. I think it has in a number of ways. To speak to one example, we have talent dialogue with the board regularly. Executive succession planning at my company sits with the Nom/Gov Committee, and every year we dedicate a good amount of time to have a robust dialogue with the Nom/Gov Committee about talent review and development. That area is about growth and building capabilities, and succession planning is about mitigating risk. Here we specifically highlight diversity, especially gender diversity, in our leadership incumbent group as well as our future pipeline, our successor pipeline group. We include this as part of what I call our talent SWOT analysis that we talk with the board about and share with the board. What is even more positive is this talent review succession planning presentation that I lead with the Nom/Gov Committee each year, for the past couple of years we've also grown that into a second discussion with the full board, so that the full board is also hearing and dialoguing, not just hearing but they're really participating and joining in the discussion and helping us think through this. This is how much our board is interested in this important topic, and I'm really thrilled with that.

Yeah, great question. I think the pandemic has really transformed how every organization looked at its people, its capabilities, its business, its operations. And you add on to that the test of how every company will have to continue to navigate the VUCA world. VUCA stands for volatile, uncertain, complex, and ambiguous. I remember hearing that term over 10 years ago and using that term, and then it kind of went away for a little while, and then it came back in full force very recently. If you think about the VUCA world, how do you handle it? You have to handle it with nimbleness, agility, and openness. On top of that, I think no one can assume we can go back to the way of how we worked before 2020. We're all trying to figure out what the future has lined up for us and face into this post-pandemic next normal. As I was preparing for your question, and this is a look-forward question, I think there are four areas I would highlight that I think HR leaders are dealing with. The first one is really virtually every company is thinking about the future of work and writing their new playbooks: what the future of work will look like, what new capabilities they need to build, what existing capabilities they don't need to grow, and how to do things smarter, better, faster. The second point I think is many companies are looking at their culture and redefining it; if they're not redefining it, they're clarifying it in some shape or form. The culture we had before and during the pandemic has definitely evolved because our worker mindset has shifted. I think culture has to be more intentional now and going forward more than ever. I would encourage, if you're not measuring culture in a systematic way, I would encourage companies to start. I think that's really important to really get that level of data, especially how fast the world is moving. The third point, with the world today, I think there is a rise in the voices, a rise in acknowledgment of the voices of the employees. I think work can no longer be seen primarily through the eyes of the employers. With that, I think what's important is we have to make human capital more human. I don't know if that makes sense, but I'm a huge believer in the voices of the people and co-creating human capital programs and approaches with our people. I think of the concept of making human capital more human, especially acknowledging that the voices of the employees are so critical to every organization's success now. I think that notion of making human capital more human is a necessity for a sustainable competitive advantage, for getting top talent, as well as for a company to really build a strong employee value proposition. The last point I would make here is around ESG. I mentioned ESG earlier; I'm going to say this again. I think ESG will continue to play a larger role in our board and leadership conversations. I think the notion of sustainability will become more embedded into companies' strategic planning and thinking if they aren't already. I think for HR, a lot of this will show up through the 'S' lens of ESG. HR leaders can really play a critical role to address that broader external appetite for more disclosures. Here you'll see it playing out in disclosures of more and more people metrics, whether that be around employee engagement, turnover, people development, DNI, compensation, as well as community and social impact. So I think those four points are probably top of mind for many CHROs, certainly including me.

Yeah, so I would say especially now, it's so critical as the CHRO to not only have a great, strong relationship with your CEO and management team, but to really build a strong relationship with your board and key committee chairs and board members that you interact with. Really leverage these board members as management advisors. Dialogue with them as frequently as you're able, and bring topics to them for discussion. Don't feel like you're limited to a fixed agenda of some sort or that you're simply there as a management leader to answer questions. It's really up to us to bring these topics to light for dialoguing. I think the best relationship that I've seen between management and boards that I've experienced is one when you're transparent and vulnerable. If things aren't going well, say so. Then it's our job to find a solution, build a plan, and execute the plan. I think it's really that simple, easier said than done, but a clear and straightforward framework.