Three recent observations from advising in the boardroom:
**Disagree without Being Disagreeable**
Churchill commented that; “If we are together, nothing is impossible. If we are divided, all will fail.”
To govern effectively now, requires an Independent Board Chair who insures inclusion assuring focus without being perceived as manipulative. The most effective Boards are led by Chairs who “know” their fellow Directors and the value of how each contributes.
Given Directors differing points of view (many strongly held), The Chair’s role of encouraging a candid inclusive dialogue and “navigating” to conclusions on critical decision is increasingly important as Directors grapple with uncertainty at an accelerating pace.
Effective Chairs recognize the dimensions of varying opinions/judgments and work diligently to engage and focus their fellow Directors on the most salient challenges. The most successful eschew Board political squabbles and thereby avoid “entrenched camps,” leading to continuous discord. They seek resolution.
Here’s a seminal example of the complexity of Chair Leadership.
Many Boards are grappling with strategic deployment/allocation of capital resources. Decisions on repositioning/strengthening via M&A, divestments or considerations of short term actions, such as returning cash to the shareholders via increasing dividends and/or improved returns by share repurchases, are under continual review. These decisions set a course that is not easily reversed. Realizing its implications and the import of inclusive debate, Boards must act with one strong voice, which requires a skilled and respected Chair to achieve such resolution.
The bottom line is don’t underestimate the importance of emotional intelligence in Chair leadership in and among Directors.
**Activism from the Inside **
Ben Franklin commented that; “Life’s tragedy is that we get too old soon and wise too late.”
Many Boards wise up too late in recognizing that their CEO isn’t the right leader to realize “go to value.” Simply, they fail to address their CEO’s “shortcomings” or take the necessary corrective action. When Directors procrastinate, we find it is usually due to “board politic” or lack of courage. Rarely, are they unaware. Yet, “kicking the can” creates unnecessary peril and delays the inevitable.
Lately, we have observed heightened “activism” on evaluating CEO leadership from inside the boardroom.
Boards, who are impatient with their CEOs who aren’t meeting the challenges of asymmetrical or “black swans” and winning out. They demand performance.
While caution and a steady hand has its value, Boards lose confidence in their CEOs when shortfall explanations wear thin. Today, this translates to quarters, not years.
To underscore this trend, recent research suggests that CEO tenure is shortening and turnover is increasing.
Boards are becoming more acutely diligent in seeking and/or retaining CEOs who possess the rare ability to attract deep and diverse talent, which adapts and pivots readily as conditions and opportunities unfold. Progressive Boards prize CEOs who assess and move quickly i.e., not recklessly…operationally and financially.
We have observed that if a CEO is deemed as failing, Directors are less inclined to wait for a midcourse correction and, accordingly, if warranted, balancing all aspects of the risk and possible reward, are moving with courage and confidence to change leaders.
**A Committee for Info Security?**
Boards recognize that information and its security are the backbone of commerce and will be even more so in the future. There is no doubt, given recent breaches, that many companies, however vigilant, remain vulnerable.
Now, with more frequency, Boards are examining whether a separate Board Committee should be established to assure a comprehensive approach to governing this burgeoning challenge. Perhaps, this is a reaction to the situations at Target, at various financial institutions and most recently, the breach at The UPS Store. Recently, an SEC Commissioner has commented in general support of this concept.
Yet, many Boards remain skeptical, believing that risk assessments are effectively governed within the existing Committee structure.
We believe that Boards will begin to adopt such a Committee, seeking new Directors with the technology experience and insight to provide governance guidance on this increasingly important matter.
The Koblentz Group is an executive search firm specializing in recruiting “C” level leaders and corporate directors for companies in the multi-unit consumer and business service sectors. Over the past 30 years, its partners have successfully conducted hundreds of “sensitive matter” recruitments for public, investor owned and emerging companies. The Firm serves its clients worldwide.