Eileen Schloss is a strategic and transformational human capital expert, who currently serves on the boards of directors for Alteryx, Sprinklr, Sharethrough and CCC Intelligent Solutions. Ms. Schloss has worked successfully and directly with CEOs and boards as a global Chief Human Resources Officer and for companies ranging from major global brands in the Fortune 500/1000 to pre-IPO businesses needing to scale. Ms. Schloss received her MS in technology management from Pepperdine University and BS in organizational behavior from the University of San Francisco.
As part of Equilar’s recently launched CHRO Navigator program, a strategic set of resources geared to assist the modern HR leader, the company also kicked off the CHRO Quick Talks series. During episode one of CHRO Quick Talks, we sat down with Eileen Schloss, former CHRO of Medidata Solutions and board member.
Ms. Schloss shared her perspective as a former CHRO and current board member on the value HR leaders bring to the boardroom. She discussed a wide range of topics including compensation knowledge, efforts around DEI, board succession planning and more. This segment features highlights from the discussion.
Eileen Schloss: I retired just about five years ago, and during my last year it was actually my CEO who said to me, “You should be serving on boards.” I said, “I would love to,” but five years ago, nobody was really thinking about HR leaders as primary board members. It was always CFOs or recently seated and retired CEOs. His response was, “It makes no sense because half of the work I do with the board is all the work that you do with me.” Equity management, board recruitment and nom/gov committee succession planning are all of those things that HR leaders do—all year long on a regular basis—and they have that interaction with board members, particularly comp committee members. I have to give much credit to my ally and sponsor, my previous CEO, who introduced me to a couple of previous investors of the company who were ready to add independent board members to some of their companies that were going public.
I had the pleasure of meeting Dean Stoecker. He was the CEO of Alteryx at the time. It had just gone public, and he said, “Not only do I want independent board members, I want women on my board.” By the way, this was before the California legislation came through, and he said, “More importantly, I need somebody on my board who really understands human capital, culture and all the other things that I deal with on the board that are not all the financial metrics.” That was almost five years ago.
I joined Alteryx, and since then—through my consulting work with Advent International, a private equity firm—they exposed me to one of their portfolio companies that was also going public. Again, the work we do as HR leaders, nom/gov work, working with comp committees and equity management—all those things were top of mind when this company, CCC Intelligent Solutions, was getting ready to go public.
The HR leader has to be deeply involved and understand what’s happening in real time in the compensation market and be able to put a compelling case together for the comp committee.
Schloss: Absolutely. As a matter of fact, I would say more so in the last two years than ever before. I talked to a lot of candidates, mostly women who are really interested in joining a board. My first question is: Why do you want to join a board? Do you really know what board work is all about? Across most businesses, the board work really is done in the committees, and there are three primary committees: the audit committee, the compensation committee and the nom/gov committee. Now the audit committee, they’re definitely looking for financial expertise, people that are considered certified financial individuals. However, for the comp committee and the nom/gov committee, if you think about the work that the senior HR leader does—interacting with the chair of the comp committee, driving the agenda, working with the CEO and the general counsel on whatever the proposals are for that quarter or that year around executive compensation, around equity management, all of the things that are going on around new and different incentives—we have to go above and beyond to do some of the recruiting activities to get some of these folks across the line that may be out of guidelines.
The HR leader has to be deeply involved and understand what’s happening in real time in the compensation market and be able to put a compelling case together for the comp committee—certainly working with the chair in advance and then presenting to the comp committee, and obviously with the partnership and guidance from the CEO, sitting there and talking about why we are making this proposal. What impact does it have on the business?
If you think about most companies, the largest cost of running a company is the cost of labor. If you get that wrong, by a point too high or too low, you are significantly impacting the cost of running that business. I strongly encourage all HR leaders, if you’re not deeply involved already in either managing your comp committee or having a great relationship with the chair of your comp committee, it’s very important to get involved.
Obviously, we always use outside consultants, such as Radford and Compensia. Many times, the outside consultants like to take the lead with the comp committee chair. I think it’s equally important for the head of HR to build that very strong relationship with the outside comp consultant, since they are the ones that are generating all the survey data that goes to the outside consultant.
You want to be managing that process very carefully, not just submitting the data and then having it go to the comp committee chair. I would encourage all HR leaders to really think about who their outside committee is using for their comp consultants and to build that relationship, if possible. If it works between the general counsel and the CEO that you can manage the comp committee, meaning putting together the agenda and understanding each of the proposals that go out on an annual basis, that’s going to pay dividends when you are looking for a board seat.
The other area that is really important as I screen folks for board positions is the nom/gov committee. Typically, and historically, succession planning has been the key factor for the nom/gov committee and adding new board members. In the last couple of years, ESG has become a mainstay of looking at companies, both public and private. What are the nonfinancial metrics that companies need to be reporting on these days? That has typically been falling in the nom/gov committee.
ESG, I’m sure most know what that stands for: the ‘E’ is the environment, the ‘G’ is the governance of the board and the ‘S’ is social—really a lot of the work that HR leaders are doing. The ‘S’ wants us to report on things like pay equity, distribution of wealth among the company, training and development of your employees, diversity metrics, health and safety, all of the things that we do on a day-to-day basis as HR leaders.
The good news is these are becoming standard requirements for nonfinancial metrics for all public companies, and many private companies are following suit. The nom/gov committee is typically the place where the ESG responsibility is moving. Sometimes it sits in the audit committee, periodically it’ll sit in the comp committee because there are a lot of compensation elements about the ‘S’ part of ESG, but, by and large, the nom/gov committee is a place where the ESG responsibility is housed.
In the last couple of years, ESG has become a mainstay of looking at companies, both public and private.
Schloss: If you look back two years ago when COVID hit and who was front and center in looking at how we were going to manage the workforce through COVID, some companies became essential overnight and other companies were considered distressed. The HR person, in either case, was dealing with all of the compensation impacts.
When there’s an external crisis, how are you managing it? How are you delivering creative solutions to the board? After that settled down, I call it settling down at this point, but when the worst got behind us, then all of a sudden social justice came into the forefront.
From that, the good news is the emphasis and attention on diversity, equity and inclusion [DEI] just expanded exponentially. As HR leaders, we’ve been involved in DEI from the very beginning of our careers, and whatever companies we worked at, we were always promoting diversity, equity and inclusion, but it never got named in such a way as it did last summer.
Understand what your company’s philosophy is, how you are being perceived both internally and externally. Make sure that you, as the HR leader, are constantly assessing your organization and how effective you are along the journey of DEI. Those are the kinds of things that are expected to be presented at the board meetings as well. At each one of my companies, they deliver to us their current overview of their DEI program at the beginning of the year.
Many of them, as a result, have put in leaders to run the diversity, equity and inclusion program. Some of them are called corporate social responsibility, which has a broader remit around ESG, in addition to DEI. I think it’s very important to be front and center: What’s going on in your organization, how are you managing it, measuring it and reporting on it?