Page 25 - An Indispensible Resource for Being a Credible Activist

Factors used in most corporate governance indices include ratings of risk in various areas
including accounting, regulatory, legal, reputation, environmental and social, compliance, port-
folio, credit, and market. Investors seeking to hold shares in a company for the long term will
typically be concerned about the quality of their company’s corporate governance, as research
has shown that a high quality of corporate governance typically leads to enhanced shareholder
returns. Prudent investors look to these measures to determine whether to invest in various
companies. Investment research has come to include many OD principles in the evaluation of
a company’s competitiveness and predicted profitability. Even if a company is not publicly
traded, leadership and HR/OD will want to ensure that what I call “competitive corporate gov-
ernance” is in place to both boost profits and prevent unnecessary risk. The chapters that fol-
low will explore how an HR/OD professional or any corporate leader with influence, authority,
and determination can do this from an OD perspective, which unsurprisingly mirrors those
areas that are now scrutinized by the most prudent institutional and individual investors.
Many of us have seen or heard interviews with Warren Buffett and have learned how he
personally visits and researches companies before investing in them, as well as maintains both
a balance of personal relationship and trusting autonomy with business leaders in whom he
chooses to invest. He is only able to trust them because he has researched his own sense of
competitive corporate governance, and he knows what he requires in a business in order for it
to be worth his financial backing.
Although HR/OD professionals still often struggle for the respect their colleagues with MBAs
and law degrees get in the C-suite, the most crucial linchpins of competitive corporate governance
are rooted in OD knowledge and will determine whether a company survives and thrives, or fails.
Even HR/OD professionals who don’t have the influence, authority, or experience they wish they
did will be able to find many ways to apply what we have learned in the OD field about why
these linchpins have proven to contribute to corporate success and increased profitability. See the
HR Tool entitled “Competitive Corporate Governance Implementation,” on pages 11–12.

❱❱ WHAT IS A “CREDIBLE ACTIVIST” AND WHY IS IT IMPORTANT?

Being a credible activist is the most challenging of the six critical skills any HR/OD profes-
sional must have, according to SHRM. Many helpful articles and white papers are available
on www.SHRM.org regarding the importance of being a credible activist. A credible activist
is someone who backs up his or her positions and recommendations with credible research,
who takes a strong stand on certain points, who is respected, and who accomplishes orga-
nizational improvement in doing these things. Credible activism has also been called “HR
with guts” or “HR with sharp elbows.”
The HR/OD field has evolved significantly from the “personnel departments” from decades
ago and from out-of-touch HR professionals who give HR/OD a bad name. One man in Annabel
Gurwitch’s film FIRED! describes how, as a former HR professional, he would betray the confi-
dences of employees to their managers while claiming that was his job and referring to HR as
5
“the dark arts.” This is unethical and not at all consistent with the new HR/OD professional
of today. While it has historically been true that HR has been mistrusted by employees and
inaccurately regarded as valueless fluff by executive management, HR has emerged as a promi-
nent and valuable aspect of OD that directly connects profitability to governance.

8 The H R Toolkit