Board human resources committees are encouraged to transition to a broader “human capital” remit, in order to assure proper focus on new AI-prompted issues impacting the workforce. These include, but are not limited to, workforce restructuring; employee retraining and professional transition; workforce skills augmentation; and more complex considerations that address employment as a vehicle of social justice.
These issues do not replace the traditional agenda of human resources and human capital committees, e.g., oversight of workplace conduct and compensation-related issues and policies, primarily relating to the company’s non-executive employees. Rather, they reflect the increasing overlap of technology implementation, its implications for the workforce, and the board’s responsibility to maintain a positive workforce culture as an asset of the company.
Including them within the scope of the committee’s charter will acknowledge the growing importance of human capital as a major focus of corporate governance. It may also prompt a second look at committee practice and composition, and its relationship to the full board. Specific AI-related workforce issues worthy of board committee attention might include the following:
- Company hiring processes: Whether, and if so how, corporate governance should monitor the extent to which AI is involved in corporate hiring decisions. This would include the increasing practice to use technology to screen (usually by the presence of key words) job applications at various levels before they are sent to a human hiring executive. The governance concern is that such practices may limit the company’s access to qualified employees simply on the basis of the applicable AI programming, rather than on the basis of the judgment of trained HR personnel.
- Workforce restructuring: The role of the board, likely as advised by the human capital committee, in exercising oversight (and perhaps approval) of proposed major workforce restructurings. This oversight would be grounded in thought leadership from organizations such as the National Association of Corporate Directors that encourage board monitoring of the rationale for, and workforce impact of, technology-driven employee displacement.
- Skills retraining: The extent to which the company is legitimately committed to significant investments in worker education, retraining, and economic transition that proactively address increasing organizational deployment of AI. These initiatives may also include possibly extending severance benefits to technology-prompted displacement. A related concern is whether AI deployment is truly being used to augment the ability of employees to perform their jobs, as opposed to simply eliminating those jobs.
- Worker retention and loyalty: The value of governance in monitoring the impact of AI deployment on the company’s workforce culture. This would include whether the scope and speed of that deployment detracts from employee loyalty and lessens the ability of the company to recruit and retain qualified employees at all levels.
- Communications: Approval of, or some other level of input to, proposed internal and external communications regarding the impact of AI deployment on the company’s workforce. While the most obvious communications of concern are those that arise regarding worker restructuring, communications from other AI workplace issues carry the potential for cultural dissonance if not properly implemented.
- The dignity of work: The willingness of governance to address the social justice issues associated with AI deployment raised by global religious leaders such as Pope Leo XIV and the Archbishop of Canterbury. These include the potential for AI deployment to degrade the quality of work and the satisfaction that employees derive from such work. It also includes concerns as to whether such deployment unfairly targets the oldest and youngest in the workforce, or has a disproportionate gender impact.
A related issue is the extent to which the structure of the human capital (or other similar) committee should be revised to accommodate an AI-driven expansion of its responsibilities. Such revisions may include critical matters such as an expanded committee charter; more frequent meetings and updated information flow; affirming the most effective reporting system to the full board; and reconsidering both the committee’s composition and the executive team leaders who support the committee.
Governing boards and their committees are encouraged to revisit the scope of their human capital responsibilities, given the fast-moving and often disruptive impact that AI has on the company’s workforce. This is not intended to push the board into conflict with the recognized responsibilities of the management team. It is, however, intended to assure that the board is properly applying its workforce culture oversight responsibilities to a new generation of human resources issues and concerns.
Mr. Peregrine is a retired corporate governance attorney. He is a Fellow of both the American College of Governance Counsel and the American Health Law Association.
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