New certification tackles role of HR and compensation committees

Directors College program applies latest governance principles

Though many advances have been made in improving the decision-making and corporate governance practices of boards of directors, there is still a large need to better understand and convey the proper role of their HR and compensation committees.

That’s according to Chris Bart, principal and lead professor at the Directors College, a joint venture of the Conference Board of Canada and the DeGroote School of Business at Hamilton’s McMaster University.

Bart says the work of boards has been dispersed among committees, such as audit or governance committees, but there has been “a woeful lack of attention” paid to the governance requirements for HR and compensation committees (whose duties can include a review of company strategies for attracting, developing, retaining and motivating management and employees, a review of the succession of leadership talent or a review of the executive compensation policy).

“The whole issue of a board’s responsibilities with respect to executive compensation and policies has been underserved, understudied, undefined and under-represented. The human resources of an organization are its greatest assets and for the board to leave it as a black box or completely outside its purview brings you into the realm of negligence,” says Bart.

To fill this gap, the Directors College, in co-operation with the Human Resources Professionals Association of Ontario (HRPAO), has launched a Human Resources and Compensation Committee (HRCC) certification program. Tailored to directors and senior corporate officers, the program shows how to apply the latest governance principles, practices and insights to HR and compensation committee procedures.

It consists of two two-day modules delivered one month apart. Areas of focus include:

• conducting CEO performance evaluations;

• managing succession, appointment, performance and compensation of the CEO and other senior executives;

• reviewing, approving and supervising the organization’s overall management succession and performance management system;

• measuring and shaping organizational culture;

• ensuring an appropriate “tone at the top;” and

• ensuring effective human resource risk management.

Robb MacPherson, a labour lawyer with McCarthy Tetrault in Toronto, participated in the HRCC pilot program earlier this year. He says the small group included people with a wide range of experience, including past and present boards of directors.

“There’s a greater interest at corporations in having their directors properly trained as opposed to simply putting people on the board, some of whom don’t have the background and experience needed to deal with all the issues they’re having to confront,” says MacPherson.

“Certainly human resource and compensation committees have become increasingly important and while they exist in a lot of organizations, there are probably a lot of organizations that don’t have committees or don’t have committees that operate the way they should. And they play an extremely important role in the company, particularly dealing with executive compensation issues.”

There is no other program like the HRCC in Canada, says Tom Bursey, a managing partner with the Tom Bursey Consulting Group in Ottawa and chair of the audit and finance committee at the HRPAO.

North America has seen a significant trend towards the professional education of corporate directors and part of that training has included an increasing standard when it comes to their responsibilities, accountabilities and behaviours, he says.

“There’s been a significant amount of corporate effort put into increasing the effectiveness of audit committees so the next thing on the agenda, in terms of improving corporate governance overall, is the role of the HR and compensation committee,” says Bursey.

Secondary to that has been a higher standard for the role of chair on those committees, senior vice-presidents of HR who serve those committees and external consultants to the HRCC.

Considering a key element of such committees has to do with executive compensation, which has to do with the attraction and retention of executives, the timing of this program is impeccable, says Bursey.

“This program is geared to bring the issues associated with human resources and compensation oversight, and its integration with strategy, into one complete package.”

Sarah Dobson is editor of Canadian Compensation & Benefits Reporter, a sister publication to Canadian HR Reporter. For more information visit

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