Most boards focus on annual budgets and financial outcomes, often limiting their involvement in talent management to recruiting and hiring a CEO and managing his or her performance. Successful organizations know that's not enough. Talent is typically the largest single line item in an annual financial plan and the chief factor in achieving strategic objectives. Managing your talent is another critical aspect of asset management and merits the full attention of your board.

Eight talent management questions effective boards can answer

Because today's directors are held to a higher degree of responsibility than in the past, they must delve deeper into business strategy. And that means including talent management on their agenda. Marketplace conditions will continue to shift, and successful CEOs will increasingly need to leverage the input and support of their boards in tackling talent management issues. Directors can start by modeling themselves after the most effective boards, who make sure they have answers to talent management questions like these:

1. Is our culture in line with our organizational values and business goals?
2. What is the process for evaluating senior executives and how well does it assess executives' strengths and weaknesses?
3. Is there a succession plan in place that covers all contingencies for executives and other key employees?
4. Is there a pipeline of strong candidates in place and do we have a plan for developing leaders?
5. Do we have an active plan to retain our top talent?
6. Do our HR policies support the changing demands of the workplace?
7. Is executive compensation linked to business strategy and performance goals, and does it match the competition's?
8. How does the board show that we value and support our people strategy?
The answers serve as a platform for adding board value to talent management initiatives.

The board's role in talent management

Talent management involves a forward look to identify the competencies needed to achieve business goals and create a plan to attract and retain the right people to execute on them. The board's primary role in this process is to give strategic support to the CEO. This should include guiding, monitoring and evaluating-only.

The board's role is not to develop talent management strategy, nor to get down in the weeds and meddle in day-to-day execution. That is the domain of executive management. The board should focus on ensuring that effective strategic processes and plans exist; reviewing the plans and seeing that they are given the necessary resources to succeed; and evaluating outcomes. Directors add value by asking the "what if" and "why not" questions.

Directors need information to perform their role effectively, not every detail about processes and plans, but enough data to ask the right questions. In some of the best-performing companies the chief talent officer reports directly to board, serving as the liaison between the board and the organization's leaders.

Talent management overlaps with performance management, which is a look back to measure expectations compared to job performance. The best CEOs want substantive feedback, not a pat on the back from their boards. They want to know how they stand with their board, what they do well and what needs improvement. The most effective boards provide detailed performance reviews to their CEOs and ensure that the review process filters through the entire organization. A meaningful performance review process helps attract and retain key talent, including the CEO. And it helps directors fulfill another of their central responsibilities, developing and sustaining effective leaders who model the organization's core values and culture.

The most important thing is people. Talent is mission critical for every organization in today's increasingly demanding environment. Talent management requires a strong commitment from the board and should be treated with equal importance to financial and risk management. The most successful organizations know this and their boards pay attention.