Investors want to know about workforce outcomes, cultural integrity and psychosocial risk – and boards expect HR leaders to have the answers. Ahead of AGM season, an expert shares five questions HR should be prepared to answer.

Today, as people and culture professionals contend with external scrutiny, more HR leaders are being pulled into governance territory. This increasingly includes preparation for annual general meetings (AGMs).

“The CPO role is going through the same transition as the CFO role went through in the 1990s: from a functional expert to an enterprise risk owner with a public profile,” says Dr Philip Gibbs MAHRI, co-founder of Agile HR Analytics. 

In part, this is because investors have grown savvier about workforce issues, says Gibbs. 

“They now have data at their fingertips” – such as mandatory WGEA reporting – “and fluency in the language of human resources.”

Meanwhile, a string of high-profile cultural failures at Australian companies has shown that people risk has direct consequences for shareholder value. 

“Shareholders now view an organisation’s workforce as a financial risk factor,” says Gibbs. That, in turn, is prompting some to reassess their investments.

Gibbs believes the evolution the CPO role is undergoing is likely to be structural, rather than cyclical.

“HR is being asked to own people risk, publicly and permanently. It is a genie that will not go back into the bottle.”

How forward-thinking CPOs are preparing for AGM season

Performing well in a high-pressure environment such as an AGM requires groundwork, not just presentation skills, says Gibbs.     

He highlights three ways the CPOs he deals with are equipping themselves for AGM season:

1. They have named owners for key metrics and processes.
   
   “When a shareholder asks how psychosocial risk is measured and tracked, the CPO needs to be able to answer that question with precision,” Gibbs says. The best way to do so, he says, is to have a single accountable owner within your team who is responsible for the accuracy and governance of each material workforce figure.
   
   “That clarity of ownership provides on-the-floor support when tough questions are thrown.”
2. They have built a coherent people narrative that can withstand scrutiny.
   
   “The organisations that are getting into trouble at AGMs are those whose public narratives and internal data have diverged,” says Gibbs.That divergence is rarely deliberate, says Gibbs – rather, it’s often the product of workforce data that was never governed to the standard now being applied to it.
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   “Nevertheless, with data increasingly available to investors, it’s never been more important for the story you’re telling in the annual report to be consistent with what’s actually happening inside your organisation.”

Resource: Read Dr Gibb’s article ‘What happens when HR’s workforce data can’t be trusted?’ for advice on how to manage this divergence effectively.

3. They are proactively engaging with investor relations.
   
   The most effective CPOs are working with the investor relations team to stress-test potentially tricky disclosures before they are raised publicly, says Gibbs     .
   
   “This is probably the single most consequential change you can make. The CPO who is workshopping talking points and likely investor questions before the AGM is in a much better position than the one who is handed questions on the day. Fundamentally, it’s moving from being reactive to being strategic.”Understanding what makes a piece of information AGM-ready is also critical, he says.

   “The information you are delivering needs to be defensible, auditable and comparable year-on-year. If it’s not, delivering it can be a liability.”

5 questions to workshop before your AGM

While the unpredictable nature of AGMs means it’s impossible for HR to foresee every question they might be asked, Gibbs says investors are generally focusing on a few topics – including psychosocial risk and gender equality – when they take the mic. 

He offers five questions that he says all CPOs should prepare for:

1. How are you measuring and managing psychosocial risk?Under Health and Safety legislation, organisations must demonstrate proactive management of psychosocial risk.“That means a vague answer here is a red flag. It’s also insufficient to talk about passive measures such as collecting data from employee engagement surveys. Investors expect more.”
2. What is your gender pay gap, and what’s causing it?The WGEA disclosure rules make answering this question accurately and comprehensively particularly important, says Gibbs.

   “The CPO needs to be able to explain the gap, distinguish between like-for-like pay equity and the structural gap, and describe what the organisation is doing about it.”

3. What is the state of your leadership pipeline, and how are you managing succession risk?Questions about organisational continuity are just as likely to be posed by the board pre-AGM as they are by investors, says Gibbs.

   “Boards and shareholders alike care about whether the organisation can sustain its performance through leadership transitions, what the strength of the bench is and whether succession planning is in place. HR should be prepared to speak to this at any time.”

4. What’s your current voluntary attrition rate, and how does it compare to last year?“That sounds like a simple question, but it becomes complicated when finance and HR have different numbers because they define voluntary attrition differently,” says Gibbs.

   Aligning the figures internally beforehand is important, and there should be agreement about who will speak to the issue to avoid confusion on the floor.”When the CFO cites one attrition figure and the CPO cites another in the same room, the credibility damage follows the CPO, not the CFO,” says Gibbs. “That’s the risk of an unresolved definition.”

5. How confident are you in the accuracy of the workforce data that you’re presenting?“I think this is the hardest question, because most CPOs have never been asked it directly,” says Gibbs. “The short, honest answer is probably: ‘Not fully confident’, but the prepared answer is a governance story.”He encourages CPOs to prepare a response that touches on how the data is produced, how it is validated and who owns it internally.

   Gibbs believes the new demands being placed on CPOs present a strategic opportunity for professionals who are serious about operating at peak level.

   “AGM season is no longer a communications exercise,” he says. “For the prepared CPO, it’s a demonstration of enterprise leadership.”

🧰 HR’s career resource toolkit

• Learning:  People analytics course (foundations level) – this introductory course demystifies data-driven decision-making in HR, catering especially to those who may feel they are “not data people.”
• Learning: People analytics course (advanced level) – elevate your workforce data management and analytical skills in a business context. This course offers a hands-on approach to leveraging and analysing HR, financial and business data.
• Reading: What happens when HR’s workforce data can’t be trusted?
• Podcast: Navigating boardroom dynamics with Dr Juliet Bourke