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Board
development
Question # 1
How large is the board?
Companies with small boards perform better
http://online.wsj.com/articles/smaller-boards-get-bigger-returns-1409078628
Research on group dynamics suggests that
groups of 6 or 7 are the most effective
at decision making.
http://hbr.org/2010/1...
Question # 2
How different are
board members?
Board diversificaton is an increasingly
important topic inside boardrooms.
http://www.heidrick.com/~/media/Publications%20...
Aspects of diversity
 Diversity in thinking.
 Skill diversity.
 Experience diversity.
 Age diversity.
 Nationality di...
Research from multiple sources has shown
that competive advantage, innovation, and
increased shareholder value, among othe...
Being around people who are different from
us makes us more creative, more
diligent and harder-working.
http://www.scienti...
Non-national directors on boards - Europe
http://www.heidrick.com/~/media/Publications%20and%20Reports/HS_EuropeanCorpGovR...
Boards that look more like their
target market have a better
understanding of their target market.
http://blogs.hbr.org/20...
Companies targeting significant growth in
emerging markets benefit from having
board members from those countries.
http://...
17% of S&P 500 directors are
women, up from 12% in 2002.
http://hbr.org/2014/03/the-boardrooms-quiet-revolution/ar/3
http://www.heidrick.com/~/media/Publications%20and%20Reports/HS_EuropeanCorpGovRpt2011.pdf
Proportion of
women on the
board
http://www.economist.com/blogs/economist-explains/2014/03/economist-explains-14
Over time, advocates of quotas hope that a...
Further inspiration
http://www.slideshare.net/frankcalberg/gender-diversity-9869793
http://www.slideshare.net/frankcalberg...
Question # 3
What values do board
members have?
Board members need to understand and trust each
other. Only when they can have candid conversations
will they ultimately r...
All parties, but especially CEOs, should acknowledge
different points of view and work to minimize the
conflicts that inev...
Further inspiration
http://www.slideshare.net/frankcalberg/questions-to-discover-your-values
Question # 4
How much time do board
members invest in their work?
http://www.mckinsey.com/Insights/Strategy/Improving_board_governance_McKinsey_Global_Survey_results
Time that board member...
Number of days a year
board spends
http://www.mckinsey.com/insights/strategy/High-performing_boards_whats_on_their_agenda
...
Boardmeetings
peryear
http://www.heidrick.com/~/media/Publications%20and%20Reports/HS_EuropeanCorpGovRpt2011.pdf
Private equity directors spend, on average, 54 days on their roles.
Directors at public companies spend on average 19 days...
We need not another layer of legal procedures
but a new culture of governance, one in which
professional directors view th...
If a potential director can’t put in 300 to
350 hours a year, she shouldn’t take
the job.
http://www.mckinsey.com/insights...
On boards where I am
chairman, I speak to
the CEO a couple of
times a week.
http://www.mckinsey.com/insights/Strategy/The_...
Only 43% of the nonexecutive directors of public
companies believe they significantly influence strategy.
For this to chan...
http://www.mckinsey.com/insights/leading_in_the_21st_century/governance_since_the_economic_crisis_mckinsey_global_survey_r...
How can companies achieve the right degree of
commitment?
What does actually help is a board environment
that encourages p...
Board members
educate
themselves more
http://www.pwc.com/us/en/corporate-governance/annual-corporate-directors-survey/asse...
Question # 5
What tasks do board members
invest their time on?
Traditional board agenda
http://www.mckinsey.com/Insights/Strategy/Building_a_forward-looking_board
http://www.mckinsey.com/insights/strategy/tapping_the_strategic_potential_of_boards
Board members understand the respectiv...
Additional forward looking
board activities
http://www.mckinsey.com/Insights/Strategy/Building_a_forward-looking_board
http://www.pwc.com/us/en/corporate-governance/annual-corporate-directors-survey/assets/pdf/pwc-annual-corporate-directors-...
http://www.mckinsey.com/insights/leading_in_the_21st_century/governance_since_the_economic_crisis_mckinsey_global_survey_r...
Ensuring that a company has a great strategy
is among a board’s most important functions.
http://www.mckinsey.com/insights...
Engaging in strategy and resource allocation
is really where boards can help the most to
create value.
http://www.mckinsey...
To better prepare for succession, boards
should have multiple discussions each year
to identify the company’s next generat...
Question # 6
How are board meetings done?
Further inspiration
http://www.slideshare.net/frankcalberg/dialogue-vs-discussion
http://www.slideshare.net/frankcalberg/f...
Question # 7
How is communication
done between meetings?
Under a new model, professional directors
working in audit committees as well as in
compensation committees would also spe...
http://m.theglobeandmail.com/report-on-business/industry-news/marketing/social-media-still-a-mystery-for-canadian-company-...
Missing skill among
many board members:
Knowledge about
technology.
http://blogs.hbr.org/cs/2013/07/joining_a_board_who_yo...
Digital megatrends such as big data analytics, cloud
computing, mobile commerce, smartphone penetration and
social media a...
Bank of Montreal encourages shareholders to
directly contact its independent directors,
in particular about such topics as...
One of the benefits the board and I had was an active,
capable lead director with whom I could work closely.
He did a supe...
Question # 8
How is the annual general
meeting done?
Further inspiration
http://www.slideshare.net/frankcalberg/annual-general-meeting-innovation
Question # 9
How is the relation between
CEO and Chairman?
Boards should be independent
of management.
http://knowledge.wharton.upenn.edu/article/is-one-global-model-of-corporate-go...
http://www.mckinseyquarterly.com/Governance/Leadership/Chairman_and_CEOone_job_or_two_1413
Percent of listed companies wit...
North American CEOs strongly prefer the dual mandate
of being board chair and CEO, as it puts them squarely in
charge and ...
http://www.pwc.com/us/en/corporate-governance/annual-corporate-directors-
survey/assets/pdf/pwc-annual-corporate-directors...
A board may contribute directly to company
performance by co-creating the strategy
of the company.
By pursuing a co-creati...
Question # 10
To what extent and how are
external people involved?
http://www.pwc.com/us/en/corporate-governance/annual-corporate-directors-survey/assets/pdf/pwc-annual-corporate-directors-...
A growing tendency to engage outside experts
has improved the quality of board decision
making in recent years.
Good board...
Invite outsiders to critique the company’s
strategy in the boards’ strategy sessions.
http://hbr.org/2013/11/you-cant-be-a...
Shareholder engagement activities
will likely continue to increase among
organizations and boards.
http://www.corpgov.delo...
To test whether a board is doing its job well
or not, observe the growth and involvement
of activist investors.
If the boa...
Further inspiration
http://blogs.hbr.org/2014/08/so-you-want-to-join-a-board
http://www.ssireview.org/blog/entry/boosting_...
Board development
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Board development

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Question # 1: How large is the board?
Question # 2: How different are board members?
Question # 3: What values do board members have?
Question # 4: How much time do board members invest in their work?
Question # 5: What tasks do board members invest their time on?
Question # 6: How are board meetings done?
Question # 7: How is communication done between meetings?
Question # 8: How is the annual general meeting done?
Question # 9: How is the relation between the CEO and the Chairman?
Question # 10: To what extent and how are external people involved?

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  1. 1. Board development
  2. 2. Question # 1 How large is the board?
  3. 3. Companies with small boards perform better http://online.wsj.com/articles/smaller-boards-get-bigger-returns-1409078628
  4. 4. Research on group dynamics suggests that groups of 6 or 7 are the most effective at decision making. http://hbr.org/2010/12/the-big-idea-the-case-for-professional-boards/ar/1
  5. 5. Question # 2 How different are board members?
  6. 6. Board diversificaton is an increasingly important topic inside boardrooms. http://www.heidrick.com/~/media/Publications%20and%20Reports/Boards-and-the-permanent-revolution-in-governance.pdf
  7. 7. Aspects of diversity  Diversity in thinking.  Skill diversity.  Experience diversity.  Age diversity.  Nationality diversity.  Gender diversity. http://www.heidrick.com/~/media/Publications%20and%20Reports/HS_EuropeanCorpGovRpt2011.pdf
  8. 8. Research from multiple sources has shown that competive advantage, innovation, and increased shareholder value, among other benefits, are linked to a diverse board of directors. http://www.heidrick.com/~/media/Publications%20and%20Reports/Boards-and-the-permanent-revolution-in-governance.pdf
  9. 9. Being around people who are different from us makes us more creative, more diligent and harder-working. http://www.scientificamerican.com/article/how-diversity-makes-us-smarter/
  10. 10. Non-national directors on boards - Europe http://www.heidrick.com/~/media/Publications%20and%20Reports/HS_EuropeanCorpGovRpt2011.pdf
  11. 11. Boards that look more like their target market have a better understanding of their target market. http://blogs.hbr.org/2012/04/geting-the-most-out-of-your-bo/
  12. 12. Companies targeting significant growth in emerging markets benefit from having board members from those countries. http://blogs.hbr.org/2011/11/board-diversity-and-global-age/
  13. 13. 17% of S&P 500 directors are women, up from 12% in 2002. http://hbr.org/2014/03/the-boardrooms-quiet-revolution/ar/3
  14. 14. http://www.heidrick.com/~/media/Publications%20and%20Reports/HS_EuropeanCorpGovRpt2011.pdf Proportion of women on the board
  15. 15. http://www.economist.com/blogs/economist-explains/2014/03/economist-explains-14 Over time, advocates of quotas hope that a sudden large increase in the number of women in leadership will change attitudes. They point to the results of a law passed in 1993 in India that reserved positions for women in randomly selected village councils. A decade later women were more likely to stand for, and win, elected positions in those villages that had by chance reserved positions for women in the previous two elections.
  16. 16. Further inspiration http://www.slideshare.net/frankcalberg/gender-diversity-9869793 http://www.slideshare.net/frankcalberg/differences-between-women-and-men
  17. 17. Question # 3 What values do board members have?
  18. 18. Board members need to understand and trust each other. Only when they can have candid conversations will they ultimately reach a consensus that has positive and far-reaching implications for the company. Trust becomes even more important when meetings are conducted by telephone, which is often the case in crises. http://www.billgeorge.org/page/board-governance-depends-on-where-you-sit http://www.mckinsey.com/insights/leading_in_the_21st_century/board_governance_depends_on_where_you_sit
  19. 19. All parties, but especially CEOs, should acknowledge different points of view and work to minimize the conflicts that inevitably arise from them. This requires high-level listening skills, the ability to see situations from the other person’s perspective, and the wisdom to understand the basis for the different points of view. http://www.billgeorge.org/page/board-governance-depends-on-where-you-sit http://www.mckinsey.com/insights/leading_in_the_21st_century/board_governance_depends_on_where_you_sit
  20. 20. Further inspiration http://www.slideshare.net/frankcalberg/questions-to-discover-your-values
  21. 21. Question # 4 How much time do board members invest in their work?
  22. 22. http://www.mckinsey.com/Insights/Strategy/Improving_board_governance_McKinsey_Global_Survey_results Time that board members invest per year working on company matters Region Days invested Board members of North American companies. 22 days. Board members of European companies. 29 days. Board members of Asian companies. 34 days.
  23. 23. Number of days a year board spends http://www.mckinsey.com/insights/strategy/High-performing_boards_whats_on_their_agenda http://www.mckinsey.com/Insights/Strategy/Improving_board_governance_McKinsey_Global_Survey_results
  24. 24. Boardmeetings peryear http://www.heidrick.com/~/media/Publications%20and%20Reports/HS_EuropeanCorpGovRpt2011.pdf
  25. 25. Private equity directors spend, on average, 54 days on their roles. Directors at public companies spend on average 19 days on their roles. Even in the bigger FTSE 100 companies, the average commitment is only 25 days a year. In both models of ownership, directors spend 15-20 days a year on formal meetings. Private equity non-executives devote an additional 35-40 days to hands-on, informal interactions, for example field visits, ad hoc meetings with executives, phone calls, internet communication, while nonexecutive directors at public companies only spend 3-5 days a year on hands-on, informal interactions. http://www.mckinseyquarterly.com/Corporate_Finance/Capital_Management/The_voice_of_experience_Public_versus_private_equity_2245
  26. 26. We need not another layer of legal procedures but a new culture of governance, one in which professional directors view their role as their primary occupation. http://hbr.org/2010/12/the-big-idea-the-case-for-professional-boards/ar/6
  27. 27. If a potential director can’t put in 300 to 350 hours a year, she shouldn’t take the job. http://www.mckinsey.com/insights/corporate_finance/Are_you_getting_all_you_can_from_your_board_of_directors David Beatty
  28. 28. On boards where I am chairman, I speak to the CEO a couple of times a week. http://www.mckinsey.com/insights/Strategy/The_power_of_enduring_companies Markus Wallenberg
  29. 29. Only 43% of the nonexecutive directors of public companies believe they significantly influence strategy. For this to change, board members must devote much more time to their roles. 4-5 days a month obviously give a board member much greater understanding and impact than the 3 days a quarter (of which two may be spent in transit) devoted by the typical board member of a public company. http://hbr.org/2011/03/capitalism-for-the-long-term/ar/4
  30. 30. http://www.mckinsey.com/insights/leading_in_the_21st_century/governance_since_the_economic_crisis_mckinsey_global_survey_results Most effective factors for improving overall board performance
  31. 31. How can companies achieve the right degree of commitment? What does actually help is a board environment that encourages participation and allows board members to derive meaning, inspiration, and satisfaction from their work. http://www.mckinsey.com/Insights/Strategy/Building_a_forward-looking_board
  32. 32. Board members educate themselves more http://www.pwc.com/us/en/corporate-governance/annual-corporate-directors-survey/assets/pdf/pwc-annual-corporate-directors-survey-full-report.pdf
  33. 33. Question # 5 What tasks do board members invest their time on?
  34. 34. Traditional board agenda
  35. 35. http://www.mckinsey.com/Insights/Strategy/Building_a_forward-looking_board
  36. 36. http://www.mckinsey.com/insights/strategy/tapping_the_strategic_potential_of_boards Board members understand the respective company’s financial position better than its strategy
  37. 37. Additional forward looking board activities
  38. 38. http://www.mckinsey.com/Insights/Strategy/Building_a_forward-looking_board
  39. 39. http://www.pwc.com/us/en/corporate-governance/annual-corporate-directors-survey/assets/pdf/pwc-annual-corporate-directors-survey-full-report.pdf Many board members want to invest much more time on strategy
  40. 40. http://www.mckinsey.com/insights/leading_in_the_21st_century/governance_since_the_economic_crisis_mckinsey_global_survey_results Percent of time that board currently spends on issue
  41. 41. Ensuring that a company has a great strategy is among a board’s most important functions. http://www.mckinsey.com/insights/strategy/tapping_the_strategic_potential_of_boards
  42. 42. Engaging in strategy and resource allocation is really where boards can help the most to create value. http://www.mckinsey.com/insights/strategy/rethinking_where_to_compete_an_interview_with_the_ceo_of_pentair
  43. 43. To better prepare for succession, boards should have multiple discussions each year to identify the company’s next generation of leaders. http://www.billgeorge.org/page/board-governance-depends-on-where-you-sit
  44. 44. Question # 6 How are board meetings done?
  45. 45. Further inspiration http://www.slideshare.net/frankcalberg/dialogue-vs-discussion http://www.slideshare.net/frankcalberg/facilitationmoderation-of-meetings http://www.slideshare.net/frankcalberg/brainstorming-the-scamper-method http://www.slideshare.net/frankcalberg/six-thinking-hats-9989762 http://www.slideshare.net/frankcalberg/listening-tips
  46. 46. Question # 7 How is communication done between meetings?
  47. 47. Under a new model, professional directors working in audit committees as well as in compensation committees would also spend a significant amount of time gathering information throughout the year engaging with company staff and others between board meetings. http://hbr.org/2010/12/the-big-idea-the-case-for-professional-boards/ar/5
  48. 48. http://m.theglobeandmail.com/report-on-business/industry-news/marketing/social-media-still-a-mystery-for-canadian-company-directors/article15369773/?service=mobile Survey of 171 Canadian directors shows that 21% say social media is significant for their boards today, but 74% say it will be significant within 3-5 years. 10% of the directors say they are active users of social media.
  49. 49. Missing skill among many board members: Knowledge about technology. http://blogs.hbr.org/cs/2013/07/joining_a_board_who_you_know_m.html
  50. 50. Digital megatrends such as big data analytics, cloud computing, mobile commerce, smartphone penetration and social media are now embedded in the core of business. More importantly, these trends are critical to competitive advantage. As with any fundamental change of this kind, boards must play a central role in ensuring that companies are accurately evaluating risks and opportunities. http://www.kornferryinstitute.com/briefings-magazine/spring-2013/corporate-governance-20-boardroom-collides-digital-age
  51. 51. Bank of Montreal encourages shareholders to directly contact its independent directors, in particular about such topics as succession planning, corporate governance practices, and disclosure. https://hbr.org/2015/01/where-boards-fall-short
  52. 52. One of the benefits the board and I had was an active, capable lead director with whom I could work closely. He did a superb job in guiding the issues of the independent directors and in keeping me fully informed of any concerns and issues the board might have. When it came time to select my successor, he developed a sound process that we both agreed upon and led the board through it. http://www.billgeorge.org/page/board-governance-depends-on-where-you-sit http://www.mckinsey.com/insights/leading_in_the_21st_century/board_governance_depends_on_where_you_sit
  53. 53. Question # 8 How is the annual general meeting done?
  54. 54. Further inspiration http://www.slideshare.net/frankcalberg/annual-general-meeting-innovation
  55. 55. Question # 9 How is the relation between CEO and Chairman?
  56. 56. Boards should be independent of management. http://knowledge.wharton.upenn.edu/article/is-one-global-model-of-corporate-governance-likely-or-even-desirable/
  57. 57. http://www.mckinseyquarterly.com/Governance/Leadership/Chairman_and_CEOone_job_or_two_1413 Percent of listed companies with split Chairman-CEO roles
  58. 58. North American CEOs strongly prefer the dual mandate of being board chair and CEO, as it puts them squarely in charge and avoids the likelihood of conflicts or power struggles within the boardroom. The downside of this model is that in the past it often encouraged complacency by boards and discouraged them from getting deeply involved in issues until it was too late. http://www.billgeorge.org/page/board-governance-depends-on-where-you-sit
  59. 59. http://www.pwc.com/us/en/corporate-governance/annual-corporate-directors- survey/assets/pdf/pwc-annual-corporate-directors-survey-full-report.pdf If you currently have a combined chair/CEO, has your board discussed splitting the role during your next CEO succession?
  60. 60. A board may contribute directly to company performance by co-creating the strategy of the company. By pursuing a co-creative role, boards can help open the minds of executives and steer the strategy debate beyond any cultural blind spots. http://sloanreview.mit.edu/article/how-strategic-is-your-board/
  61. 61. Question # 10 To what extent and how are external people involved?
  62. 62. http://www.pwc.com/us/en/corporate-governance/annual-corporate-directors-survey/assets/pdf/pwc-annual-corporate-directors-survey-full-report.pdf Level of influence that various groups have over board’s decisions on executive compensation
  63. 63. A growing tendency to engage outside experts has improved the quality of board decision making in recent years. Good boards now bring in governance experts to review their practices and provide clear feedback. http://hbr.org/2014/03/the-boardrooms-quiet-revolution/ar/3
  64. 64. Invite outsiders to critique the company’s strategy in the boards’ strategy sessions. http://hbr.org/2013/11/you-cant-be-a-wimp-make-the-tough-calls/ar/1
  65. 65. Shareholder engagement activities will likely continue to increase among organizations and boards. http://www.corpgov.deloitte.com/binary/com.epicentric.contentmanagement.servlet.ContentDeliveryServlet/USEng/Documents/Deloitte%20Periodicals/H ot%20Topics/Hot%20Topics%20-%20Shareholder%20engagement%20-%20A%20new%20era%20in%20corp%20gov%20-%20Sept%202013%20-%20Final.pdf
  66. 66. To test whether a board is doing its job well or not, observe the growth and involvement of activist investors. If the board is doing its job well, there are no activist opportunities. http://www.mckinsey.com/insights/corporate_finance/Are_you_getting_all_you_can_from_your_board_of_directors
  67. 67. Further inspiration http://blogs.hbr.org/2014/08/so-you-want-to-join-a-board http://www.ssireview.org/blog/entry/boosting_nonprofit_board_performance_where_it_counts http://www.ft.com/intl/management/better-boards http://blogs.hbr.org/2014/10/boards-arent-as-global-as-their-businesses
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