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Question # 1: How large is the board? …

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 should the relation between CEO and Chairman be?
Question # 10: To what extent and how are external people involved?

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  • 1. Board development
  • 2. Question # 1 How large is the board?
  • 3. 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
  • 4. Companies with small boards perform better http://online.wsj.com/articles/smaller-boards-get-bigger-returns-1409078628
  • 5. Question # 2 How different are board members?
  • 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. 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. 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. 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. Non-national directors on boards - Europe http://www.heidrick.com/~/media/Publications%20and%20Reports/HS_EuropeanCorpGovRpt2011.pdf
  • 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. 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. 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. Proportion of women on the board http://www.heidrick.com/~/media/Publications%20and%20Reports/HS_EuropeanCorpGovRpt2011.pdf
  • 15. 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. http://www.economist.com/blogs/economist-explains/2014/03/economist-explains-14
  • 16. Further inspiration http://www.slideshare.net/frankcalberg/gender-diversity-9869793
  • 17. Question # 3 What values do board members have?
  • 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. 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. Further inspiration http://www.slideshare.net/frankcalberg/questions-to-discover-your-values
  • 21. Question # 4 How much time do board members invest in their work?
  • 22. 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. http://www.mckinsey.com/Insights/Strategy/Improving_board_governance_McKinsey_Global_Survey_results
  • 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. Board meetings per year http://www.heidrick.com/~/media/Publications%20and%20Reports/HS_EuropeanCorpGovRpt2011.pdf
  • 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. 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. If a potential director can’t put in 300 to 350 hours a year, she shouldn’t take the job. David Beatty http://www.mckinsey.com/insights/corporate_finance/Are_you_getting_all_you_can_from_your_board_of_directors
  • 28. On boards where I am chairman, I speak to the CEO a couple of times a week. Markus Wallenberg http://www.mckinsey.com/insights/Strategy/The_power_of_enduring_companies
  • 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. Most effective factors for improving overall board performance http://www.mckinsey.com/insights/leading_in_the_21st_century/governance_since_the_economic_crisis_mckinsey_global_survey_results
  • 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. 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. Question # 5 What tasks do board members invest their time on?
  • 34. Traditional board agenda
  • 35. http://www.mckinsey.com/Insights/Strategy/Building_a_forward-looking_board
  • 36. Board members understand the respective company’s financial position better than its strategy http://www.mckinsey.com/insights/strategy/tapping_the_strategic_potential_of_boards
  • 37. Additional forward looking board activities
  • 38. http://www.mckinsey.com/Insights/Strategy/Building_a_forward-looking_board
  • 39. Many board members want to invest much more time on strategy http://www.pwc.com/us/en/corporate-governance/annual-corporate-directors-survey/assets/pdf/pwc-annual-corporate-directors-survey-full-report.pdf
  • 40. Percent of time that board currently spends on issue http://www.mckinsey.com/insights/leading_in_the_21st_century/governance_since_the_economic_crisis_mckinsey_global_survey_results
  • 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. 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. 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. Question # 6 How are board meetings done?
  • 45. Further inspiration 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 http://www.slideshare.net/frankcalberg/feedback-tips
  • 46. Question # 7 How is communication done between meetings?
  • 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. 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. http://m.theglobeandmail.com/report-on-business/industry-news/marketing/social-media-still-a-mystery-for-canadian-company-directors/article15369773/?service=mobile
  • 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. 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. 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
  • 52. Question # 8 How is the annual general meeting done?
  • 53. Further inspiration http://www.slideshare.net/frankcalberg/annual-general-meeting-innovation
  • 54. Question # 9 How should the relation between CEO and Chairman be?
  • 55. Boards should be independent of management. http://knowledge.wharton.upenn.edu/article/is-one-global-model-of-corporate-governance-likely-or-even-desirable/
  • 56. Percent of listed companies with split Chairman-CEO roles http://www.mckinseyquarterly.com/Governance/Leadership/Chairman_and_CEOone_job_or_two_1413
  • 57. 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
  • 58. If you currently have a combined chair/CEO, has your board discussed splitting the role during your next CEO succession? http://www.pwc.com/us/en/corporate-governance/annual-corporate-directors-survey/ assets/pdf/pwc-annual-corporate-directors-survey-full-report.pdf
  • 59. 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/
  • 60. Question # 10 To what extent and how are external people involved?
  • 61. Level of influence that various groups have over board’s decisions on executive compensation http://www.pwc.com/us/en/corporate-governance/annual-corporate-directors-survey/assets/pdf/pwc-annual-corporate-directors-survey-full-report.pdf
  • 62. 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
  • 63. 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
  • 64. 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
  • 65. 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
  • 66. 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/