GET THE MOST OUT OF YOUR BOARD

While internal boardroom politics are the bane of many an executive’s existence, getting your board members working in the same direction can be a vital step towards a successful CEO tenure.

Corporate governance has brought with it greater scrutiny of the board, its role, its composition and its effectiveness, and we are ever more aware of the importance of independence and ethical guidelines. And when one looks at the composition of several boards, there are general rules of thumb that are followed. But looking across a number of organisations, it can be seen that although some companies’ boards have the “right” mix in terms of backgrounds and skills of the individual directors, some have more of an impact than others.

So, if it is not structure, what is it that makes a good board? Research documented in the Harvard Business Review stresses that the key ingredient is the social element as opposed to the structure per se.

Just as the chemistry in a well-functioning, successful team cannot be quantified, it nonetheless is a key, determining component that is present in effective boards.

There are five key elements that can help a CEO foster the optimum environment in which the board, and each member within it, performs at their best: creating a climate of trust and candour; fostering a culture of open dissent; harnessing the mix of different roles; ensuring individual accountability and performance evaluation.

Climate of trust

Creating a climate of trust and candour is a virtuous cycle whereby board members develop mutual respect, therefore developing trust, and hence enabling the sharing of difficult information. The CEO needs to be transparent and open in information sharing, providing documents with ample time for them to be read and digested. This will enable all members to have the same level of information and so allow for more balanced discussion and a better- informed decision process.

The CEO should also give board members free access to people who can answer their questions, such as creating opportunities to meet key company personnel and inspecting company sites. Encouraging different board members to engage in this kind of activity and spending time together creates more unity and minimises the exposure or risk of factions. Providing free access to information and key personnel also eliminates the need and/or desire of individual members to create “back access” to information leading to them breaking away from the team and creating possible factions.

Open culture

In an environment of trust and mutual respect, healthy debate is encouraged where assumptions are challenged. This ensures issues are thoroughly discussed and each member has the opportunity to voice his viewpoint.

The CEO should not punish or discourage rebels or nonconformists, but instead use the opportunity to learn. It is through these interactions that people’s perspectives are challenged and horizons expanded. The CEO should leverage the knowledge and wisdom of the members of the board. Having a thorough understanding of members’ positions and their justifications opens opportunities to new conclusions and stronger decisions.

Research conducted by Eisenhardt and Bourgeois, found that the highest-performing companies have extremely contentious boards and regard dissent as an obligation, treating no subject as a taboo topic.

Roleplay

CEOs, along with other board members, should encourage members to play a variety of roles thereby giving them a wider perspective of the business. Viewing a scenario from a different perspective and developing alternative scenarios to evaluate strategic decisions not only broadens the number of possibilities and opportunities but also inhibits members developing a rigid point of view. Hence, members should be encouraged to play devil’s advocate, at other times delve into the details of the business and also be given the opportunity to act as the project manager. A case that demonstrates the impact this can have on a business was at Pepsico in 1997 when the board decided to sell the various components of its well-run restaurant group.

CEO Roger Enrico had previously turned around the unit which had been the brainchild of two of Enrico’s predecessors and must have had great pride in the division. Yet, he eventually convinced all that the restaurant unit should be sold and so that it could flourish freely beyond the controls of the parent company. It proved to be a brilliant idea.

Accountability

Ensuring accountability is probably one of the toughest challenges a CEO faces. In a survey conducted by the Yale School of Management and the Gallup Organisation, 25% of CEOs claimed that their board members did not appreciate the complexity of the businesses they oversaw. In recent history we have seen cases of individuals blaming others, proclaiming ignorance, Enron being a case in point.

Directors should take their duties seriously and encourage others to do the same, setting the tone for acceptable behaviour and performance.

Behaviour breeds behaviour and although the CEO and chairman of the board can assign tasks to get individuals fully engaged, peer pressure will play a major influencing factor in further enforcing positive behaviour.

Tasks can take on various formats and could involve collecting external data, meeting with customers, anonymously visiting plants and stores in the field and cultivating links to outside parties critical to the company. The exercise will then require members to impart knowledge and findings to the rest of the board and allows them to become better versed in strategic and operational issues the company faces.

GE’s board members for instance, dine with the company’s largest suppliers and distributors the night before the annual meeting while Home Depot’s board members are expected to visit at least eight stores outside their home state between board meetings.

Evaluate performance

Not giving feedback to a team is self-destructive as there can be no learning without feedback. Findings from a combination of research and surveys show that directors rate their board’s effectiveness significantly more positively at companies where individual members are evaluated. Although, when individuals are in an interdependent group such as on a board, it is better to conduct a formal evaluation on the performance of the overall group rather than its individual members.

One reason for this may be that, as it currently stands, board members are typically replaced for performance reasons only in extreme circumstances (e.g., criminal misconduct, conflict of interest, active disruption, very poor attendance/participation record) – and if they are replaced, they are rarely given an early warning and a chance to improve. In most cases, boards wait for under-performing directors to retire, a more reactive than proactive approach. Since the Board is in effect a high-level team, no matter how good it is, it is bound to get better if  there is an evaluation process in place.

A good first step in director evaluation is to have directors assess only themselves. After two or three years, a peer assessment can be introduced, with directors evaluating one another. A simple pass/fail along several dimensions will ensure that the process is not too time consuming. The evaluations can be handed over to a trusted board advisor, such as outside legal counsel, who summarises the findings and provides individuals with their results. A next step is for the assessments to be turned over to the committee charged with director nominations, so that under-performing directors can be identified and action taken. Overall, this is good way of identifying who is truly adding value to the organisation, as well as making performance expectations clear. In evaluating directors, ask yourself the following questions:

• Do they understand the company’s strategy and business?

• Do they keep up to date with issues and trends affecting the business?

• Are they willing to challenge management when necessary?

• Do they have special expertise that is important to the company?

• Do they have an appropriate level of involvement in CEO succession and assessment?

• Do they attend boardroom meetings and discussions?

• Are they readily available for committee meetings?

• Do they contribute to board and committee agendas?

• Are they well prepared for meetings and discussions?

• Do they actively participate and contribution to the committee and boardroom deliberations?

• Are they available outside meetings to advise management?

• Do they effectively inquire about major performance deficiencies?

Although there are guidelines in how to formulate a board, the attitude a CEO takes towards the board is key in the tone that is going to be set. If a board is to truly fulfill its purpose of monitoring performance, advising the CEO, and providing connections with a broader world, it must become a robust team. Its members need to be actively engaged in seeking the truth and challenge each other to broaden their perspectives and viewpoints. The CEO should work in collaboration with the Board and all its members as opposed to viewing it as an obstacle that needs to be managed. Adopting an approach of transparency, honesty and respect will go a long way to building and nurturing a strong team, and a robust and effective board.

VALUES AND GUIDING PRINCIPLES

We have all seen a myriad of company websites touting a list of values they stand for:

  • Respect, Integrity, Communication and Excellence;
  • Integrity and honesty in everything we do;
  • High performance and great behaviours driving exceptional rewards;
  • Respect, trust and integrity; the list goes on.

And yet, it is no good saying what you stand for if the actions of the people and the company operations are not in alignment with what the values presumably set the bar to be.  Values are not mere marketing, nice to have fuzzy words, but rather guiding principles that are supposed to be the bedrock and governance practice of every individual within the organisation. The values listed above are those of notable organisations.  Companies that until the recent past were held in high regard until they were linked or associated with fraud, corruption and the manipulation of the truth.  One would hope that by now, we would be wiser, smarter and behave more responsibly.  But alas, this is not the case.

Countless people are talking about values but how many people in any organisation are aware of what values the company supposedly stands for?  And if they don’t know what they are, how can they be behaving in alignment with those values?  Do we brandish certain values to the outside world, whilst we create compensation and rewards structures that promote behaviours that are contradictory? Values are not drawn up by a single individual or, more worryingly, by a marketing company who then presents some nice fluffy document or prospectus.  Values are determined by the people building and driving the organisation – by individuals who are committed to a vision and have the courage to develop a set of principles they are committed to living by in order to meet that vision.  Everyone in the organisation is responsible for acting in alignment with the values.  But let’s take a closer look… The following is an extract of some values of a financial services organisation.  This is for example purposes only and is not meant to single them out per se, but rather to show the potential complexity in adhering to values and knowing what truly will be ‘rewarded’.

  • Our clients’ interests always come first.
  • Our goal is to provide superior returns to our shareholders (…significant employee stock ownership aligns the interests of our employees and our shareholders.)
  • We stress creativity and imagination in everything we do. (…We pride ourselves on having pioneered many of the practices and techniques that have become standard in the industry.)
  • Integrity and honesty are at the heart of our business.

One could argue that it is these same values that drove this organisation and its people to develop and market complex financial instruments that were a factor in the lead up to the financial crisis, with the exception of course of the last principle – integrity and honesty.  But when a reward system is based on short-term gains and organisations are under pressure to post quarterly results, people choose to hear what they want to hear, making them feel that they are acting honestly. Back in 1990, in an article by Amar Bhide and Howard H. Stevenson entitled Why Be Honest If Honesty Doesn’t Pay, published in the Harvard Business Review, they had highlighted that unfortunately, treachery can pay, and that without values, without a basic preference for right over wrong, trust based on such self-delusion would crumble in the face of temptation.

The recent events have proven this.  Suffice to say, no one person is exempt from knowing, honouring and living the values, regardless of rank, position or title.  People in an organisation and serving an organisation have a fiduciary responsibility to balance results against the backdrop of ethics and purpose.  The real challenge is for each and every one of us to have the courage to do what is right, to think, speak and act with the highest intention, and to have the courage to say no, to break away from the crowd and not be lulled by what the proverbial Joneses are doing.  Failure to do so will inadvertently lead to a more disturbing economic climate than we are experiencing currently. So how is this done?  The key word here is alignment.  Imagine a compass setting for a moment.  If the heading is North, everyone first needs to know the heading is North.  We then need to determine what behaviours are in alignment with the North heading.  And then they need to be tested, creating scenarios that will test their applicability – the what if scenarios.  Just as any sailor knows, the seas change, the winds shift direction, but the heading is there and the skills and tenacity to navigate the course are what determine the true leaders.

THE DISCONNECT BETWEEN PEOPLE AND COMPANIES

If you speak to a young person about their job search, many will say they have applied to a number of companies through their online web portal but have never heard anything. And those that get rejected are disheartened because they never got to speak to a human being. They don’t know why they got a ‘no’ so they can’t even learn along the way. I think most of us hate to see anyone lose their confidence and enthusiasm in their search for a meaningful role, let alone those just embarking on their professional lives. What should businesses that care do to prevent this?

Purpose, Vision and Values

Many companies have their purpose, vision and/or values listed on their site, but are they compelling? Is it a purpose and mission that truly reflects what the company aspires to and not just spin? Purpose, vision and values are important, but more critical is the true culture of the organisation.

Given that cultural fit is a key component in determining the suitability and longevity of a person within an organisation, it would be beneficial both for the company and the applicant to have a good understanding of the character traits they look for in determining cultural fit. These should be clearly communicated on the website and you should even give tips to young people as to how these could be demonstrated. You could have candid biographies of your current star talent at different levels of the organisation, podcasts, even call ins for applicants who want to ask questions. Fostering a human touch will improve not only the caliber and breadth of applicants but also your standing as an organisation in the community.

More than a CV

Do you think a CV is a true reflection of who you are and your capabilities? Some exaggerate their capabilities whilst others play them down, but for some reason we still use this piece of paper as a major screening tool. How does a CV highlight an individual’s attitude, personality and character? Whilst aptitude, capabilities and skills are important, there have been countless studies showing that it is much easier to teach a skill than it is to transform an attitude.

We need to encourage applicants to show more of who they are – as human beings. It is often personal experiences that demonstrate resilience, character and determination – the golden nuggets for employers. Companies need to create the environment where people feel safe to be themselves.

Get the Business Lines Involved

If we were looking for widgets to fit into a machine, I would understand the current systems. But if today’s applicants don’t become our employees, they are tomorrow’s potential clients, investors and partners. Anything we do to help foster goodwill is a good investment, for today and the future. Let’s all take it upon ourselves to do our little bit in helping guide the next generation and not leave it to a web portal or HR. If nothing else, update your LinkedIn profile saying you are willing to take a call or an email. This in turn will say a lot about your character and who knows what doors could open for you in return?

Deborah is an advocate for business as a force for good, building companies that create value, in both financial and social terms.

Did this resonate and you’d like to know more? Please get in touch for your confidential one-to-one.

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3 SECRETS OF TOP TALENT

In any organisation these days, we come across a myriad of titles. But when one breaks it down, what are titles really all about? Do they help us in being better? It seems to me that sometimes, a title is a mask and stands in the way of us being our best.

For simplicity’s sake, imagine two people in an organisation, each responsible for their own area but ultimately responsible for the wellbeing of the organisation. And now imagine one of them is missing the ball on something.

I recently observed this and was fascinated by two hugely different outcomes when adopting two opposing outlooks. In the first instance, one of the colleagues was willing to allow the other to trip up. And yet, when she adopted the perspective of a fellow human as opposed to a colleague with a title, she took on an entirely different stance, one of collaboration, empathy and all hands on deck.

Somewhere along the line, we have created a belief system within organisations and ourselves that, in order to make it to the top, we have to be guarded, tough and use sharp elbows – for what end really I have no clue, since getting to the top in that manner would be very lonely indeed.

So, adopting this vein of thinking, one would like to believe that the people at the top are mean, ruthless and generally not very nice.

The good news is that this is not the case. In profiling some of the best talent from around the world, there were three elements that were consistently present amongst those who companies wanted to have as part of their team:

1. They are great human beings – possessing strength of character, commitment and integrity, they have a desire and ability to grow and guide people, working with and through others.

2. They love what they do – doing something which resonates with a deep part of who they are, something they are interested in, engaged with and committed to.

3. They all had a mentor in some way shape or form at some point in their life and/or career that imparted wisdom and guidance.

There are some positive shifts taking place, with a call to basic and traditional values of honour, integrity, respect, etc. A time when people want to treat others and be treated as human beings as opposed to numbers. Where, to bring out the best in others and ourselves, we must be true to who we are as human beings as opposed to hiding behind some title.

We are in a time when we can create positive changes in our ‘corporate’ experiences. An opportunity to instil a strong value set within our companies that resonate with and embody members of the organisation, enabling them to tap into who they truly are instead of resorting to titles for position and power. A time when companies live human values as opposed to a string of words and niceties that beef up a website or other corporate collateral. An opportunity to shape our organisations to create real value with every interaction and along the value chain.

It will be interesting to see the progress of our students, our future leaders, who are currently watching the debacle we are going through.  They are a key element since they will be demanding more from the companies they will be choosing to work for.  And if they don’t find the right value set, I hope they will have the courage, determination and network to create their own new cultures which will resonate far more deeply with the customers they will have set up to serve.

Headhunter turned talent spotter, Deborah creates the connect between people of character and companies with principles. The Founder of AMANI™, she is an advocate for business being a force for good, vested in the impact business has in both economic and social terms across various strata of society.

Did this resonate and you’d like to know more? Please get in touch for your confidential one-to-one.

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HOW TO ATTRACT THE BEST PEOPLE

Searching for talent is about fixing a problem – that of finding the right person to tackle a business opportunity or challenge. Contrary to popular view, the toughest challenge is not finding the right talent. It is finding great companies to find talent for. This is because the objective is not merely to find talent but to retain it and get the best out of it.

In Executive Search, potential candidates are typically happy and successful in their current roles. In my experience, more than 80% of cases involve international relocation. This brings with it an extra layer of complexity – that of moving house and in the case of children, school.

So what are the markers that ensure the new environment would be such that the person, and their family, would settle in and stay?

Purpose

Companies need to present a compelling proposition that candidates can relate to and connect with. A company whose sole objective is to make profit with no sense of meaningful purpose or differentiator, have a tougher time attracting the right people. It doesn’t have to be complicated but something that is real and the company is committed to pursuing.

Principles in Practice

Mission statements are great but what happens in reality is what matters. People joining and working in an organisation want to ensure their own personal values will not be compromised. There is no point in brandishing a set of values if the modus operandi and decision-making does not reflect this in reality. The spin and facade might bring them into the organisation, but it will not bring out the best in them and it will not keep them.

People

The leadership and team already in place impact the quality and calibre of talent a company will be able to attract. High calibre talent looks for environments in which they can grow, excel, contribute and thrive. Leaders needs to have the ability and foresight to bring out the best in people, providing them with the tools and resources to succeed. The team needs to foster collaboration, trust and mutual respect, a cohort of colleagues with different yet complementary capabilities one can resonate with.

Performance

High ideals are great but for a company to be successful it needs to deliver. Failure to do so will result in poor financial results and the inability to support its employees. This takes appetite, commitment and follow through. For instance, if the problem to be fixed is the financial well-being of the company where a turnaround is required, the company needs to ensure they have the willingness and ability to bring about the change. There is no point in hiring people if they are hindered from doing what is necessary to deliver.

 

Packages

Fair compensation is key. That said, I would ward off anyone hiring a person whose sole motivation is the financial package. This is for the simple reason that unless the individual is aligned and committed to the mission, there is always the next biggest bidder willing to dangle a bigger carrot. It is important for people to feel they are fairly rewarded for their efforts. Compensation packages need to be fair and look at the person in terms of return on investment and effort. Companies also need to ensure the metrics they are measuring and rewarding are in alignment with the business’s objectives and principles. Avoid conflict that arises from mismatched incentive programmes – this is a sure way to demotivate people and create an atmosphere of resentment.

Process

The process through which you take a potential candidate can make or break your hire. From interviewing to induction, getting bogged down in HR processes is a sure way to turn off top talent.Talented individuals want to get a handle on the business environment, the vision and the task at hand. They are looking for data that will enable them to determine if this is the type of company they are best suited for and if they are fit for the mission at hand. If the role requires a relocation, a broader set of decision criteria will be at play. My counsel would be to identify who else is affected by the move and include them in the process.

Ultimately, companies need to ensure they have the ability to understand a candidate’s capabilities, character, concerns and level of commitment. Only in this way will you ensure you have people on board with the right fit – and cultural fit is essential for people to thrive in and add value to your business.

Deborah drives business as a force for good, building companies that create value, in both financial and social terms.

Did this resonate and you’d like to know more? Please get in touch for your confidential one-to-one.

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