Help Wanted: The need for employees is the next corporate crisis.

• Author: Hall, April
• Position: ENDNOTE

The biggest current issue in the boardroom is human capital, and not just because the SEC mandated human capital disclosures for the first time in the last proxy filings. Many companies are having trouble filling jobs left open by the pandemic.

I discussed this recently with Charles Elson, our executive editor-at-large, and Bob Rock, our publisher. Both serve on boards and know firsthand what's at the top of the board agenda. They both believe that human capital risk oversight is now a critical function of the board. Beyond 10-K disclosure requirements, that's because these labor shortages affect corporate America at every level.

When I'm out these days, I see the "help wanted" signs in windows, mostly for service industries like restaurants, convenience stores and hotels. Often, they are next to signs that announce new hours of operations because there isn't enough staff to return to pre-pandemic hours.

Many supply chains, too, are short on workers (in addition to various supplies and computer chips). At California ports, ships carrying both products and raw materials are backed up outside of harbors because there aren't enough people to unload them. And of course, the delay in delivery on one end of the shipment causes a return-trip delay, and the problem magnifies.

This holds true for domestic products as well. When demand for gasoline plummeted, for instance, fuel companies reduced deliveries, which led to a cutback on drivers. Now that gasoline consumption has rebounded, getting those drivers to return to work has been challenging --even with offers of significantly higher salaries.

While boards have traditionally focused on hiring and firing the CEO, and the comp committee has focused on CEO and senior executive compensation, many boards and comp committees have broadened their purview--and their charters--to include oversight of human capital throughout the organization.

Boards are looking deeply into the reasons people aren't applying for jobs lower in the organization. What issues are there? Can the company afford raises at all levels? Can it be flexible with hours or work location? What about mental health and child care coverage? Blow can the company protect employees in high-contact positions? And perhaps, is there a way for management to measure the long-term costs to the organization and supply chain as a result of supposedly cost-saving layoffs?

The CHRO has now become a key boardroom guest, and directors want to know what...