It is a core component of Corporate Governance which is quite similar to Financial or Risk Governance. HR Governance incorporates the oversight and leadership of the HR strategy, related policies and program results.
The framework of HR Governance often includes (but not limited to) the process and practice introduced in determining the roles, responsibilities, authority, decision making, and accountability of everyone within the company for the benefit of the stakeholders.
HR Governance is the act leading the HR function and managing related investments to:
- Optimize the performance of employees;
- Fulfilling the fiduciary and financial responsibilities;
- Aligning the priorities with that of the business;
- Mitigating operational HR Risk;
- Aligning the functions priorities with those of the business
- Enabling HR authoritative decision making.
Governance is not a strategic objective but rather a systematic approach to management that enables the function to achieve tactical and operational success.
This governance consists of formal and internal governance:
- Formal HR Governance includes Risk Management, Policy and Program Governance.
- Internal HR Governance includes the oversight and management of a companies’ HR strategy, programs and outcomes; using clearly defined roles, responsibilities and accountabilities throughout the company.
Areas of priority include:
- Developing formal HR Governance practices and structures;
- Performance measurement metrics
- Clarity of accountability throughout the company.
Optimizing labour and human performance is a necessity in any business. Knowledge focused companies need to implement more formal corporate governance and strengthen internal governance. Companies in this era must be employee- centric in order to stay relevant and push boundaries of the industry. One-size-fits-all approaches are over generalized and usually outdated as it does not suit the specific needs of each business.