The board of directors is responsible for ensuring that correct management is in place to run the organization. This includes hiring, evaluating, and—when circumstances merit—removing or replacing the chief executive officer.
This Quick Guide reviews the process by which the board carries out this function.
It provides answers to the questions:
• How are qualified CEOs identified?
• What skills and experiences are needed?
• Are “inside” CEOs better than “outsiders”?
• How do boards plan for succession?
• What models or approaches do they use?
For an expanded discussion, see Corporate Governance Matters: A Closer Look at Organizational Choices and Their Consequences (Second Edition) by David Larcker and Brian Tayan (2015): http://www.gsb.stanford.edu/faculty-research/books/corporate-governance-matters-closer-look-organizational-choices
Buy This Book: http://www.ftpress.com/store/corporate-governance-matters-a-closer-look-at-organizational-9780134031569
For permissions to use this material, please contact: E: corpgovernance@gsb.stanford.edu
Copyright 2015 by David F. Larcker and Brian Tayan. All rights reserved.
Employee retention is one of the ‘Global headaches’ of many Organisation as well as Recruiters. Hiring without any expansion is showing the in effectiveness of talent acquisition. There are many internal/external factors which would be adversely affect the employee retention.
During my tenure with last Company, I have seen a lot of employees were leaving the Organisation on a rapid way. Finally I came to know that, we can reduce the attrition on a handsome margin if we looking in to the following very sincerely.
Employee Retention: Key Ways to Retain Your Top TalentKaufman Global
Employee retention is about compelling great people to stick around. This can be hard to achieve and sustain, because it isn’t just the money – it requires good data, a plan and mild effort. Learn how having a solid retention strategy can help you succeed against the headwinds of: post-merger integrations, skilled labor shortages, and changing technologies when you put the engagement of your people first.
To understand the drivers of engagement and retention and how to develop and implement a retention strategy
• Aligning retention with an integrated TM framework
• Understanding motivation, engagement, commitment and retention
• customising retention drivers and initiatives
• Diagnostics to test actual drivers and impact of current and future initiatives – interviews, focus groups, surveys, best practice research
• Talent segmentation
• Prioritising initiatives and building a road-map for retention
• Successes and Lessons learnt
Presentation to Using the Employee Lifecycle as Your Roadmap to Employee Enga...Elizabeth Lupfer
This is the complementary presentation to the "Using Employee Lifecycle as Your Roadmap to Employee Engagement" #infographic. Presented by Elizabeth Lupfer at the Talent Management Alliance's Employee Engagement conference in July 2014, this presentation is a walkthrough each area of the employee lifecycle and identifies how organization's can develop an employee engagement framework through adaptability, relevancy, sustainability and execution. If you've realized this spells ARSE, then you've got it. Because an ARSE is the foundation for any successful relationship -- employee engagement and the employee lifecycle.
Employee retention is one of the ‘Global headaches’ of many Organisation as well as Recruiters. Hiring without any expansion is showing the in effectiveness of talent acquisition. There are many internal/external factors which would be adversely affect the employee retention.
During my tenure with last Company, I have seen a lot of employees were leaving the Organisation on a rapid way. Finally I came to know that, we can reduce the attrition on a handsome margin if we looking in to the following very sincerely.
Employee Retention: Key Ways to Retain Your Top TalentKaufman Global
Employee retention is about compelling great people to stick around. This can be hard to achieve and sustain, because it isn’t just the money – it requires good data, a plan and mild effort. Learn how having a solid retention strategy can help you succeed against the headwinds of: post-merger integrations, skilled labor shortages, and changing technologies when you put the engagement of your people first.
To understand the drivers of engagement and retention and how to develop and implement a retention strategy
• Aligning retention with an integrated TM framework
• Understanding motivation, engagement, commitment and retention
• customising retention drivers and initiatives
• Diagnostics to test actual drivers and impact of current and future initiatives – interviews, focus groups, surveys, best practice research
• Talent segmentation
• Prioritising initiatives and building a road-map for retention
• Successes and Lessons learnt
Presentation to Using the Employee Lifecycle as Your Roadmap to Employee Enga...Elizabeth Lupfer
This is the complementary presentation to the "Using Employee Lifecycle as Your Roadmap to Employee Engagement" #infographic. Presented by Elizabeth Lupfer at the Talent Management Alliance's Employee Engagement conference in July 2014, this presentation is a walkthrough each area of the employee lifecycle and identifies how organization's can develop an employee engagement framework through adaptability, relevancy, sustainability and execution. If you've realized this spells ARSE, then you've got it. Because an ARSE is the foundation for any successful relationship -- employee engagement and the employee lifecycle.
Presented at the Montana Hospital Association's Spring 2009 Conference.
See more at: http://www.integratedhealthcarestrategies.com/knowledgecenter.aspx.
Employee retention is a process in which the employees are encouraged to remain with the organization for the maximum period of time or until the completion of the project
This presentation is based on promotion and transfer in commercial world which clearly explains the circumstances, challenges faced during the promotions and transfer.
And the techniques to do this task in better and proper manner.
Employee retention is the magic of leading successful organisations. Spinning mills need to implement tried out successful mesures to retain its employees.WINSYS SMC has explained through this training session.
A STUDY TO REDUCE EMPLOYEE ATTRITION IN IT INDUSTRIESIAEME Publication
The research project entitled ‘Reduction of Employee Attrition’ is an attempt to understand the opinion and attitudes of the various categories of employees of IT sector towards the reduction of employee attrition in the organisations. Employee attrition is a serious issue, especially in today’s knowledge-driven marketplace where employees are the most important human capital assets, attrition directly or indirectly impacts on organization’s competitive advantage.
References:
Mathis, Robert L. Jackson, John H (2010). Human Resource Management 13th Edition. South-Western Cengage Learning. ISBN 9780538453158
Employee Retention. Retrieved from: http://www.whatishumanresource.com/employee-retention
Employ Key Employee Engagement Strategies PowerPoint Presentation Slides to create a happy culture and more productive employees so that your organization grows. Indulge your employees in employee engagement strategies to increase the levels of productivity, retention of best talent, increased sense of health and well-being, and more. This content-ready employee engagement complete PowerPoint slideshow will show you ways to empower your employees. Assign a mentor to a newcomer, have a themed day office, include team photos, encourage charity, encourage innovation, and more. Not just this, this ready-to-use employee engagement PPT deck covers topics such as employee engagement key statistics, survey questionnaire, and survey analysis to get a clear picture of employee engagement in your organization. Understand employees and nurture them to bring out the best in them. Improve company’s performance by enhancing employee engagement strategies. Incorporate professionally designed key employee engagement strategies PPT templates to boost your employee’s morale. Assess the invention with our Key Employee Engagement Strategies Powerpoint Presentation Slides. Figure out how to improve it further.
Employee engagement is a property of the relationship between an organization and its employees. An "engaged employee" is defined as one who is fully absorbed by and enthusiastic about their work and so takes positive action to further the organization's reputation and interests.
Categories in employee engagement
Engaged
Not engaged
Actively disengaged
Engaged-
•The employee works in passion
•Highly motivated and ready to go extra mile
•Focused and keen to take up challenges
•Problem-solving attitude
Not engaged-
•They usually step walking through the day
•Zero energy and passion in the given work
•Putting in hours instead of energy
•Actively undermine coworkers and sabotage projects
Actively disengaged-
•Always complaint about the given tasks
•Try to demoralize colleagues also
•Lack of enthusiasm
•Failure to take responsibility
Aon Hewitt’s Engagement Model-
Aon Hewitt’s employee engagement research represents a variety of companies, industries, and geographic regions throughout countries in Asia-Pacific, Europe, Latin America, and North America. Research has shown that there are 21 areas, shown in the following diagram, known as “Engagement Drivers,” that can potentially drive people’s engagement.The Model goes beyond measuring people’s satisfaction with each of these drivers. The model prioritizes the areas for improvement based on their potential impact on engagement and, therefore, business performance.
http://www.gallup.com/topic/employee_engagement.aspx
A board of directors requires professionals with a diverse mix of managerial, functional, and other specialized knowledge in order to properly advise and oversee management.
This Quick Guide reviews the process by which companies select, compensate, and evaluate board members.
It answers such questions as:
• How are qualified directors identified?
• What skills and experiences are needed?
• How are directors paid?
• How are directors evaluated?
• How are “bad” directors removed?
For an expanded discussion, see Corporate Governance Matters: A Closer Look at Organizational Choices and Their Consequences (Second Edition) by David Larcker and Brian Tayan (2015): http://www.gsb.stanford.edu/faculty-research/books/corporate-governance-matters-closer-look-organizational-choices
Buy This Book: http://www.ftpress.com/store/corporate-governance-matters-a-closer-look-at-organizational-9780134031569
For permissions to use this material, please contact: E: corpgovernance@gsb.stanford.edu
Copyright 2015 by David F. Larcker and Brian Tayan. All rights reserved.
Presented at the Montana Hospital Association's Spring 2009 Conference.
See more at: http://www.integratedhealthcarestrategies.com/knowledgecenter.aspx.
Employee retention is a process in which the employees are encouraged to remain with the organization for the maximum period of time or until the completion of the project
This presentation is based on promotion and transfer in commercial world which clearly explains the circumstances, challenges faced during the promotions and transfer.
And the techniques to do this task in better and proper manner.
Employee retention is the magic of leading successful organisations. Spinning mills need to implement tried out successful mesures to retain its employees.WINSYS SMC has explained through this training session.
A STUDY TO REDUCE EMPLOYEE ATTRITION IN IT INDUSTRIESIAEME Publication
The research project entitled ‘Reduction of Employee Attrition’ is an attempt to understand the opinion and attitudes of the various categories of employees of IT sector towards the reduction of employee attrition in the organisations. Employee attrition is a serious issue, especially in today’s knowledge-driven marketplace where employees are the most important human capital assets, attrition directly or indirectly impacts on organization’s competitive advantage.
References:
Mathis, Robert L. Jackson, John H (2010). Human Resource Management 13th Edition. South-Western Cengage Learning. ISBN 9780538453158
Employee Retention. Retrieved from: http://www.whatishumanresource.com/employee-retention
Employ Key Employee Engagement Strategies PowerPoint Presentation Slides to create a happy culture and more productive employees so that your organization grows. Indulge your employees in employee engagement strategies to increase the levels of productivity, retention of best talent, increased sense of health and well-being, and more. This content-ready employee engagement complete PowerPoint slideshow will show you ways to empower your employees. Assign a mentor to a newcomer, have a themed day office, include team photos, encourage charity, encourage innovation, and more. Not just this, this ready-to-use employee engagement PPT deck covers topics such as employee engagement key statistics, survey questionnaire, and survey analysis to get a clear picture of employee engagement in your organization. Understand employees and nurture them to bring out the best in them. Improve company’s performance by enhancing employee engagement strategies. Incorporate professionally designed key employee engagement strategies PPT templates to boost your employee’s morale. Assess the invention with our Key Employee Engagement Strategies Powerpoint Presentation Slides. Figure out how to improve it further.
Employee engagement is a property of the relationship between an organization and its employees. An "engaged employee" is defined as one who is fully absorbed by and enthusiastic about their work and so takes positive action to further the organization's reputation and interests.
Categories in employee engagement
Engaged
Not engaged
Actively disengaged
Engaged-
•The employee works in passion
•Highly motivated and ready to go extra mile
•Focused and keen to take up challenges
•Problem-solving attitude
Not engaged-
•They usually step walking through the day
•Zero energy and passion in the given work
•Putting in hours instead of energy
•Actively undermine coworkers and sabotage projects
Actively disengaged-
•Always complaint about the given tasks
•Try to demoralize colleagues also
•Lack of enthusiasm
•Failure to take responsibility
Aon Hewitt’s Engagement Model-
Aon Hewitt’s employee engagement research represents a variety of companies, industries, and geographic regions throughout countries in Asia-Pacific, Europe, Latin America, and North America. Research has shown that there are 21 areas, shown in the following diagram, known as “Engagement Drivers,” that can potentially drive people’s engagement.The Model goes beyond measuring people’s satisfaction with each of these drivers. The model prioritizes the areas for improvement based on their potential impact on engagement and, therefore, business performance.
http://www.gallup.com/topic/employee_engagement.aspx
A board of directors requires professionals with a diverse mix of managerial, functional, and other specialized knowledge in order to properly advise and oversee management.
This Quick Guide reviews the process by which companies select, compensate, and evaluate board members.
It answers such questions as:
• How are qualified directors identified?
• What skills and experiences are needed?
• How are directors paid?
• How are directors evaluated?
• How are “bad” directors removed?
For an expanded discussion, see Corporate Governance Matters: A Closer Look at Organizational Choices and Their Consequences (Second Edition) by David Larcker and Brian Tayan (2015): http://www.gsb.stanford.edu/faculty-research/books/corporate-governance-matters-closer-look-organizational-choices
Buy This Book: http://www.ftpress.com/store/corporate-governance-matters-a-closer-look-at-organizational-9780134031569
For permissions to use this material, please contact: E: corpgovernance@gsb.stanford.edu
Copyright 2015 by David F. Larcker and Brian Tayan. All rights reserved.
Exclusive research conducted with CEOs to understand how satified, or not, they are with the performance of their marketing function.
Fieldwork courtesy of CEO Magazine (USA, 2014).
Authored by: avid F. Larcker, Brian Tayan, CGRI Research Spotlight Series. Corporate Governance Research Initiative (CGRI), April 2020
This Research Spotlight provides a summary of the academic literature on board composition, quality, and turnover. It reviews the evidence of:
The appointment of outside CEOs as directors
The importance of industry expertise to performance
The relation between director skills and performance
The stock market reaction to director resignations
Whether directors are penalized for poor oversight
This Research Spotlight expands upon issues introduced in the Quick Guide Board of Directors: Selection, Compensation, and Removal.
Many believe that the selection of the CEO is the single most important decision that a board of directors can make. In recent years, several high profile transitions at major corporations have cast a spotlight on succession and called into question the reliability of the process that companies use to identify and develop future leaders.
In this Closer Look, we examine seven common myths relating to CEO succession. These myths include the beliefs that:
1. Companies Know Who the Next CEO Will Be
2. There is One Best Model for Succession
3. The CEO Should Pick a Successor
4. Succession is Primarily a “Risk Management” Exercise
5. Boards Know How to Evaluate CEO Talent
6. Boards Prefer Internal Candidates
7. Boards Want a Female or Minority CEO
We examine each of these myths and explain why they do not always hold true. We ask:
• Why aren’t more companies prepared for a change at the top?
• Would directors make better hiring decisions if they had better knowledge of the senior management team?
• Would they be more likely to hire a CEO from within?
• Would they be more likely to hire a female or minority candidate?
• How many succession should a director participate in before he or she is considered “qualified” to lead one?
Read the Closer Look and let us know what you think!
Creating a High Performance Culture for Competitive AdvantageJoydeep Hor
In this webinar, Joydeep Hor the Managing Principal of the fastest growing workplace relations firm in Australia, People + Culture Strategies brings his 17+ years' experience in advising some of the world's largest corporations on what it takes to introduce a high performance culture.
What is your organisations currently like? Joydeep lists several questions for a self-audit.
What have some organisations done to address this?
Welsh Consultants publishes- This article aims at setting out which mindsets and practices are proven to make CEOs most effective. The article is based on a study of performance data on thousands of CEOs and the efforts at helping them enhance their leadership approaches. The article provides a set of empirical, broadly applicable insights on how excellent CEOs think and act. It could help CEOs (and CEO watchers, such as boards of directors) determine how closely they adhere to the mindsets and practices that are closely associated with superior CEO performance. All CEOs, new or long-tenured, can use these tools to better apply their scarce time and energy.To answer the question, “What are the mindsets and practices of excellent CEOs?,” let’s first reflect upon the six main elements of the CEO’s job—elements touched on in virtually all literature about the role:
1. Setting the Hierarchy of Goals & the Strategy
2. Aligning the Organization
3. Leading the Top Team
4. Working with the Board
5. Being the Face of the Company to its External Stakeholders
6. Managing one’s own Time and Energy.
This article explores the subject in detail. Author, Founder- Manish P
By many measures, current CEOs should be the best candidates to serve on boards of directors. They have extensive strategic, operational, and risk management expertise, as well as experiences and leadership attributes that are important for a firm’s long-term success.
However, there is currently no widely accepted, rigorous study that demonstrates that current CEOs are better board members or that companies with CEO directors benefit in terms of improved advice or monitoring. In fact, recent survey data suggests that active CEOs might not always be the best board members because of the time constraints of their full time job and personality attributes that may make it difficult for them to contribute constructively to a boardroom environment.
We examine this issue in closer detail and ask:
1. Should companies reassess the importance of this criteria when looking for new board members?
2. Does the requirement for CEO-level experience limit the pool of available directors, particularly diversity candidates who may be less likely to have this experience?
3. If the availability of CEO directors is low, should professional directors be recruited to fill the gap?
4. Do the positive qualities of a retired CEO deteriorate, or do they never become outdated?
Read the attached Closer Look and let us know what you think!
CEO Turnover
By David F. Larcker, Brian Tayan
CGRI Research Spotlight Series. September 2016
This Research Spotlight provides a summary of the academic literature on relation between CEO performance and turnover. It reviews the evidence of:
The relation between performance and likelihood of termination
The relation between board attributes and likelihood of termination
Other factors that might influence CEO performance oversight
This Research Spotlight expands upon issues introduced in the Quick Guide “CEO Succession Planning.”
The CEO Succession Planning Process Discussion PieceLarry Holmes
When a CEO leaves, the organization’s Board of Directors and Executive Management Team should have a process in place to attract the best candidates – internal or external. This is designed to help the planners remember keys points in putting together your organization's succession plan.
"Coaching in Asia: The First Decade" is the definitive guide to the principles and practices of empowering personal and organisational change.
Whether you're a manager or coach, living in Asia, Europe or elsewhere, Coaching in Asia is packed with case studies and coaching approaches to help you develop greater effectiveness. Each chapter is drawn from the firsthand expertise of a diverse group of coaches working in China, India, Indonesia, Singapore, Thailand, Japan, Hong Kong, and beyond.
Coaching is a global phenomenon that is best wrapped in cultural nuances. Coaching in Asia offers expert guidance on what has been done and more importantly, what is working. It will provide you with the ideas, methods, and practices to enable you to live out your leadership potential and be an agent of change for the good of the world.
The Book is available at leading bookstores across Asia Pacific and also on Amazon.com
Similar to CEO Succession Planning - Quick Guide (20)
Authored by: David F. Larcker, Bradford Lynch, Brian Tayan, and Daniel J. Taylor, June 29, 2020
Investors rely on corporate disclosure to make informed decisions about the value of companies they invest in. The COVID-19 pandemic provides a unique opportunity to examine disclosure practices of companies relative to peers in real time about a somewhat unprecedented shock that impacted practically every publicly listed company in the U.S. We examine how companies respond to such a situation, the choices they make, and how disclosure varies across industries and companies.
We ask:
• What motivates some companies to be forthcoming about what they are experiencing, while others remain silent?
• Do differences in disclosure reflect different degrees of certitude about how the virus would impact businesses, or differences in management perception of its obligations to shareholders?
• What insights will companies learn to prepare for future outlier events?
David F. Larcker and Brian Tayan, April 21, 2020, Stanford Closer Look Series
Little is known about the process by which pre-IPO companies select independent, outside board members—directors unaffiliated with the company or its investors. Private companies are not required to disclose their selection criteria or process, and are not required to satisfy the regulatory requirements for board members set out by public listing exchanges. In this Closer Look, we look at when, why, and how private companies add their first independent, outside director to the board.
We ask:
• Why do pre-IPO companies rely on very different criteria and processes to recruit outside directors than public companies do?
• What does this teach us about governance quality?
• How important are industry knowledge and managerial experience to board oversight?
• How important are independence and monitoring?
• Does a tradeoff exist between engagement and fit on the one hand and independence on the other?
Authored by David F. Larcker and Brian Tayan, April 1, 2020, Stanford Closer Look Series
We examine the size, structure, and demographic makeup of the C-suite (the CEO and the direct reports to the CEO) in each of the Fortune 100 companies as of February 2020. We find that women (and, to a lesser extent, racially diverse executives) are underrepresented in C-suite positions that directly feed into future CEO and board roles. What accounts for this distribution?
By John D. Kepler, David F. Larcker, Brian Tayan, and Daniel J. Taylor, January 28, 2020
Corporate executives receive a considerable portion of their compensation in the form of equity and, from time to time, sell a portion of their holdings in the open market. Executives nearly always have access to nonpublic information about the company, and routinely have an information advantage over public shareholders. Federal securities laws prohibit executives from trading on material nonpublic information about their company, and companies develop an Insider Trading Policy (ITP) to ensure executives comply with applicable rules. In this Closer Look we examine the potential shortcomings of existing governance practices as illustrated by four examples that suggest significant room for improvement.
We ask:
• Should an ITP go beyond legal requirements to minimize the risk of negative public perception from trades that might otherwise appear suspicious?
• Why don’t all companies make the terms of their ITP public?
• Why don’t more companies require the strictest standards, such as pre-approval by the general counsel and mandatory use of 10b5-1 plans?
• Does the board review trades by insiders on a regular basis? What conversation, if any, takes place between executives and the board around large, single-event sales?
Short summary
We identify potential shortcomings in existing governance practices around the approval of executive equity sales. Why don’t more companies require stricter standards to lessen suspicion around insider equity sales activity? Do boards review trades by insiders on a regular basis?
By David F. Larcker, Brian Tayan
Core Concepts Series. Corporate Governance Research Initiative,
A roadmap to understanding the fundamental concepts of corporate governance based on theory, empirical research, and data. This guide takes an in-depth look at the Principles of Corporate Governance.
Authors: David F. Larcker and Brian Tayan, Stanford Closer Look Series, November 25, 2019
Among the controversies in corporate governance, perhaps none is more heated or widely debated across society than that of CEO pay. The views that American citizens have on CEO pay is centrally important because public opinion influences political decisions that shape tax, economic, and regulatory policy, and ultimately determine the standard of living of average Americans. This Closer Look reviews survey data of the American public to understand their views on compensation. We ask:
• How can society’s understanding of pay and value creation be improved and the controversy over CEO pay resolved?
• How should the level of CEO pay rise with complexity and profitability, particularly among America’s largest corporations?
• Should pay be reformed in the boardroom, or should high pay be addressed solely through the tax code?
• Are negative views of CEO pay driven by broad skepticism and lack of esteem for CEOs? Or do high pay levels themselves contribute to low regard for CEOs?
By David F. Larcker and Brian Tayan
CGRI Survey Series. Corporate Governance Research Initiative, Stanford Rock Center for Corporate Governance, November 2019.
In fall 2019, the Rock Center for Corporate Governance at Stanford University conducted a nationwide survey of In October 2019, the Rock Center for Corporate Governance at Stanford University conducted a nationwide survey of 3,062 individuals—representative by age, race, political affiliation, household income, and state residence—to understand the American population’s views on current and proposed tax policies.
Key findings include:
--Tax rates for high-income earners are about right
--Majority favor a wealth tax … but not if it harms the economy
--Americans do not want to set limits on personal wealth
--Americans do not believe in a right to universal basic income
--Trust in the ability of the U.S. government to spend tax dollars effectively is low
--Americans believe in higher taxes for corporations who pay their CEO large dollar amounts
--Little appetite exists to break up “big tech”
By David F. Larcker, Brian Tayan, Dottie Schindlinger and Anne Kors, CGRI Survey Series. Corporate Governance Research Initiative, Stanford Rock Center for Corporate Governance and the Diligent Institute, November 2019
New research from the Rock Center for Corporate Governance at Stanford University and the Diligent Institute finds that corporate directors are not as shareholder-centric as commonly believed and that companies do not put the needs of shareholders significantly above the needs of their employees or society at large. Instead, directors pay considerable attention to important stakeholders—particularly their workforce—and take the interests of these groups into account as part of their long-term business planning.
• While directors are largely satisfied with their ESG-related efforts, they do not believe the outside world understands or appreciates the work they do.
• Directors recognize that tensions exist between shareholder and stakeholder interests. That said,
most believe their companies successfully balance this tension.
• In general, directors reject the view that their companies have a short-term investment horizon in
running their businesses.
In the summer of 2019, the Diligent Institute and the Rock Center for Corporate Governance at Stanford University surveyed nearly 200 directors of public and private corporations globally to better understand how they balance shareholder and stakeholder needs.
by David F. Larcker and Brian Tayan, Stanford Closer Look Series, October 7, 2019
A reliable system of corporate governance is considered to be an important requirement for the long-term success of a company. Unfortunately, after decades of research, we still do not have a clear understanding of the factors that make a governance system effective. Our understanding of governance suffers from 1) a tendency to overgeneralize across companies and 2) a tendency to refer to central concepts without first defining them. In this Closer Look, we examine four central concepts that are widely discussed but poorly understood.
We ask:
• Would the caliber of discussion improve, and consensus on solutions be realized, if the debate on corporate governance were less loosey-goosey?
• Why can we still not answer the question of what makes good governance?
• How can our understanding of board quality improve without betraying the confidential information that a board discusses?
• Why is it difficult to answer the question of how much a CEO should be paid?
• Are U.S. executives really short-term oriented in managing their companies?
David F. Larcker, Brian Tayan, Vinay Trivedi, and Owen Wurzbacher, Stanford Closer Look Series, July 2, 2019
Currently, there is much debate about the role that non-investor stakeholder interests play in the governance of public companies. Critics argue that greater attention should be paid to the interest of stakeholders and that by investing in initiatives and programs to promote their interests, companies will create long-term value that is greater, more sustainable, and more equitably shared among investors and society. However, advocacy for a more stakeholder-centric governance model is based on assumptions about managerial behavior that are relatively untested. In this Closer Look, we examine survey data of the CEOs and CFOs of companies in the S&P 1500 Index to understand the extent to which they incorporate stakeholder needs into the business planning and long-term strategy, and their view of the costs and benefits of ESG-related programs.
We ask:
• What are the real costs and benefits of ESG?
• How do companies signal to constituents that they take ESG activities seriously?
• How accurate are the ratings of third-party providers that rate companies on ESG factors?
• Do boards understand the short- and long-term impact of ESG activities?
• Do boards believe this investment is beneficial for the company?
By David F. Larcker, Brian Tayan, Vinay Trivedi and Owen Wurzbacher, CGRI Survey Series. Corporate Governance Research Initiative, Stanford Rock Center for Corporate Governance, July 2019
In spring 2019, the Rock Center for Corporate Governance at Stanford University surveyed 209 CEOs and CFOs of companies included in the S&P 1500 Index to understand the role that stakeholder interests play in long-term corporate planning.
Key Findings
• CEOs Are Divided On Whether Stakeholder Initiatives Are A Cost or Benefit to the Company
• Companies Tout Their Efforts But Believe the Public Doesn’t Understand Them
• Blackrock Advocates … But Has Little Impact
By David F. Larcker, Brian Tayan
Core Concepts Series. Corporate Governance Research Initiative, June 2019
A roadmap to understanding the fundamental concepts of corporate governance based on theory, empirical research, and data. This guide will take an in-depth look at Shareholders and Activism.
By Brandon Boze, Margarita Krivitski, David F. Larcker, Brian Tayan, and Eva Zlotnicka
Stanford Closer Look Series
May 23, 2019
Recently, there has been debate among corporate managers, board of directors, and institutional investors around how best to incorporate ESG (environmental, social, and governance) factors into strategic and investment decision-making processes. In this Closer Look, we examine a framework informed by the experience of ValueAct Capital and include case examples.
We ask:
• What is the investment horizon prevalent among most companies today?
• Do companies miss long-term opportunities because of a focus on short-term costs?
• How many companies have an opportunity to profitably invest in ESG solutions?
• What factors determine whether a company can profitably invest in ESG solutions?
• Can investors earn competitive risk-adjusted returns through ESG investments?
• If so, how widespread is this opportunity?
This Research Spotlight provides a summary of the academic literature on environmental, social, and governance (ESG) activities including:
• The relation between ESG activities and firm value
• The impact of environmental and social engagements on firm performance
• The market reaction to ESG events
• The relation between ESG and agency problems
• The performance of socially responsible investment (SRI) funds
This Research Spotlight expands upon issues introduced in the Quick Guide “Investors and Activism”.
This Research Spotlight provides a summary of the academic literature on how dual-class share structures influence firm value and corporate governance quality. It reviews the evidence of:
• The relation between dual-class shares and governance quality
• The relation between dual-class shares and tax avoidance
• The relation between dual-class shares and firm value and performance
This Research Spotlight expands upon issues introduced in the Quick Guide “The Market for Corporate Control.”
By Courtney Hamilton, David F. Larcker, Stephen A. Miles, and Brian Tayan, Stanford Closer Look Series, February 15, 2019
Two decades ago, McKinsey advanced the idea that large U.S. companies are engaged in a “war for talent” and that to remain competitive they need to make a strategic effort to attract, retain, and develop the highest-performing executives. To understand the contribution of the human resources department to company strategy, we surveyed 85 CEOs and chief human resources officers at Fortune 1000 companies. In this Closer Look, we examine what these senior executives say about the contribution of HR to the strategic efforts and financial performance of their companies.
We ask:
• What role does HR play in the development of corporate strategy?
• Does HR have an equal voice or is it junior to other members of the senior management team?
• Do boards see HR and human capital as critical to corporate performance?
• How do boards ascertain whether management has the right HR strategy?
• How adept are companies at using data from HR systems to learn what programs work and why?
By David F. Larcker and Brian Tayan, Stanford Closer Look Series, December 3, 2018
Companies are required to have a reliable system of corporate governance in place at the time of IPO in order to protect the interests of public company investors and stakeholders. Yet, relatively little is known about the process by which they implement one. This Closer Look, based on detailed data from a sample of pre-IPO companies, examines the process by which companies go from essentially having no governance in place at the time of their founding to the fully established systems of governance required of public companies by the Securities and Exchange Commission. We examine the vastly different choices that companies make in deciding when and how to implement these standards.
We ask:
• What factors do CEOs and founders take into account in determining how to implement governance systems?
• Should regulators allow companies greater flexibility to tailor their governance systems to their specific needs?
• Which elements of governance add to business performance and which are done only for regulatory purposes?
• How much value does good governance add to a company’s overall valuation?
• When should small or medium sized companies that intend to remain private implement a governance system?
By David F. Larcker, Brian Tayan, CGRI Survey Series. Corporate Governance Research Initiative, Stanford Rock Center for Corporate Governance, November 2018
In summer and fall 2018, the Rock Center for Corporate Governance at Stanford University surveyed 53 founders and CEOs of 47 companies that completed an Initial Public Offering in the U.S. between 2010 and 2018 to understand how corporate governance practices evolve from startup through IPO.
David F. Larcker, Stephen A. Miles, Brian Tayan, and Kim Wright-Violich
Stanford Closer Look Series, November 8, 2018
CEO activism—the practice of CEOs taking public positions on environmental, social, and political issues not directly related to their business—has become a hotly debated topic in corporate governance. To better understand the implications of CEO activism, we examine its prevalence, the range of advocacy positions taken by CEOs, and the public’s reaction to activism.
We ask:
• How widespread is CEO activism?
• How well do boards understand the advocacy positions of their CEOs?
• Are boards involved in decisions to take public stances on controversial issues, or do they leave these to the discretion of the CEO?
• How should boards measure the costs and benefits of CEO activism?
• How accurately can internal and external constituents distinguish between positions taken proactively and reactively by a CEO?
By David F. Larcker, Brian Tayan, CGRI Survey Series. Corporate Governance Research Initiative, Stanford Rock Center for Corporate Governance, October 2018
In summer and fall 2018, the Rock Center for Corporate Governance at Stanford University conducted a nationwide survey of 3,544 individuals — representative by gender, race, age, household income, and state residence — to understand how the American public views CEOs who take public positions on environmental, social, and political issues.
“We find that the public is highly divided about CEOs who take vocal positions on social, environmental, or political issues,” says Professor David F. Larcker, Stanford Graduate School of Business. “While some applaud CEOs who speak up, others strongly disapprove. The divergence in opinions is striking. CEOs who take public positions on specific issues might build loyalty with their employees or customers, but these same positions can inadvertently alienate important segments of those populations. The cost of CEO activism might be higher than many CEOs, companies, or boards realize.”
“Hot-button issues are hot for a reason,” adds Brian Tayan, researcher at Stanford Graduate School of Business. “Interestingly, people are much more likely to think of products they have stopped using than products they have started using because of a position the CEO took on a public issue. When consumers don’t like what they hear, they react the best way they know how to: by closing their wallets.”
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Sustainability has become an increasingly critical topic as the world recognizes the need to protect our planet and its resources for future generations. Sustainability means meeting our current needs without compromising the ability of future generations to meet theirs. It involves long-term planning and consideration of the consequences of our actions. The goal is to create strategies that ensure the long-term viability of People, Planet, and Profit.
Leading companies such as Nike, Toyota, and Siemens are prioritizing sustainable innovation in their business models, setting an example for others to follow. In this Sustainability training presentation, you will learn key concepts, principles, and practices of sustainability applicable across industries. This training aims to create awareness and educate employees, senior executives, consultants, and other key stakeholders, including investors, policymakers, and supply chain partners, on the importance and implementation of sustainability.
LEARNING OBJECTIVES
1. Develop a comprehensive understanding of the fundamental principles and concepts that form the foundation of sustainability within corporate environments.
2. Explore the sustainability implementation model, focusing on effective measures and reporting strategies to track and communicate sustainability efforts.
3. Identify and define best practices and critical success factors essential for achieving sustainability goals within organizations.
CONTENTS
1. Introduction and Key Concepts of Sustainability
2. Principles and Practices of Sustainability
3. Measures and Reporting in Sustainability
4. Sustainability Implementation & Best Practices
To download the complete presentation, visit: https://www.oeconsulting.com.sg/training-presentations
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CEO Succession Planning - Quick Guide
1. David F. Larcker and Brian Tayan
Corporate Governance Research Initiative
Stanford Graduate School of Business
CEO SUCCESSION
PLANNING
2. • The “labor market for CEOs” refers to the process by which available supply
of talent is matched with demand.
• For the labor market to function efficiently, information must be available
on the needs of the corporation and the skills of the individuals applying to
serve in executive roles.
• The efficiency of this market has implications for governance:
– Correct hiring decisions (better “fit”)
– Incentive to perform (or risk being replaced)
– Appropriate compensation (fair market wage)
• If the market is inefficient, executives will be matched to wrong job, causing
loss of shareholder value.
LABOR MARKET FOR CHIEF EXECUTIVE OFFICERS
3. Several challenges exist to labor market efficiency.
1. Executive skill sets can be difficult to evaluate. Success in a previous
company or role may not translate to new position.
2. The labor market is limited by its size and by the ability of executives to
move among or within companies.
3. Companies are not uniform in their circumstances or hiring practices:
– Internal promotion vs. external candidate.
– Sound operating condition vs. turnaround situation.
– Long scheduled retirement vs. sudden transition.
CHALLENGES TO LABOR MARKET EFFICIENCY
4. LABOR POOL OF CEO TALENT
THE CHIEF EXECUTIVE OFFICERS OF PUBLIC U.S. CORPORATIONS
U.S. CEOs U.S. CEOs
NUMBER OF CEOs > 5,000 PRIOR TO CEO: FINANCE 22%
AVERAGE TENURE AS CEO 8 years PRIOR TO CEO: OPERATIONS 20%
%, 0-5 YEARS AS CEO 59% PRIOR TO CEO: MARKETING 20%
%, 6-10 YEARS AS CEO 24% PRIOR TO CEO: OTHER 38%
%, 11-15 YEARS AS CEO 9% INTERNATIONAL EXPERIENCE 34%
%, 16+ YEARS AS CEO 8% MILITARY EXPERIENCE 7%
SAME COMPANY ENTIRE CAREER 19% MBA DEGREE 40%
Spencer Stuart (2007, 2008); The Conference Board (2014)
5. • CEO turnover ranges from 9 and 14 percent per year, globally.
• CEO turnover is inversely proportional to performance. (CEOs who
underperform are more likely to be terminated.)
• However, CEO turnover is not very sensitive to performance. (Termination
rates for CEOs who underperform are not much higher than those for CEOs
who outperform.)
CEO TURNOVER
Huson, Parrino, and Starks (2001)
Top
Quartile
Bottom
Quartile
ROA 12.0% -3.7%
CEO Termination Rate 0.8% 2.7%
6. • Some evidence exists that companies with strong governance are more
likely to terminate an underperforming CEO:
– Boards that are not “busy”
– Boards with high percentage of outside directors
– Directors own large percentage of shares
– Shareholder base concentrated among handful of institutions
• Shareholders react positively to news that underperforming CEO is
terminated and replaced with outsider.
• Evidence is consistent with the theory that independent oversight reduces
agency costs and management entrenchment.
CEO TURNOVER
Fich and Shivdasani (2006); Brickley (2003); Huson, Parrino, and Starks (2001)
7. • Most new CEOs are internal executives (80 percent).
• Companies with strong performance are more likely to select an insider as
the new CEO.
• Companies who select an internal CEO tend to exhibit superior market-
adjusted returns post-succession. (However: did the internal CEO perform
better, or inherit a better situation?)
• Internal CEOs receive lower first-year total compensation.
– External CEOs must be bought out of contracts.
– Companies in poor financial condition have to pay more to attract a qualified
candidate.
NEWLY APPOINTED CEOS
The Conference Board (2014); Parrino (1997); Equilar (2013)
8. In general, there are four models of CEO succession planning.
1. External candidate
2. President and/or COO
3. Horse race
4. Inside-outside model
MODELS OF SUCCESSION PLANNING
9. Company recruits an external candidate.
(+) Tends to have proven experience as CEO
(+) More free to make strategic, operating, cultural changes
(-) Less familiar with company
(-) Leads to disruption among operations and staffing
(-) Board has not evaluated performance first-hand
(-) Leadership style might not translate to new environment
1. EXTERNAL CANDIDATE
10. Company promotes a leading candidate to position of president and/or chief
operating officer (COO).
(+) Board observes performance before promotion
(+) Scope of position is customized to company’s needs
(+) Executive gains experience interacting with board, analysts, press, and shareholders
(-) Adds complexity to the organization, decision making
(-) Responsibilities need to be clearly defined
(-) Responsibilities need to be clearly differentiated from CEO
(-) Risk of becoming “lifetime COO” if left in role too long
2. CHIEF OPERATING OFFICER
11. Company promotes two or more internal candidates to high-level operating
positions who compete to become CEO.
(+) Board observes performance before promotion
(+) Board does not commit to preferred candidate in advance
(+) Executives develop specific skills needed to succeed
(-) Highly public and brings unwanted media attention
(-) Creates internal factions who advocate a favored candidate
(-) Precipitates a “brain drain” when losers resign
3. HORSE RACE
12. Company develops internal talent and simultaneously evaluates external
candidates.
(+) Internal candidates develop new skills and experiences
(+) Levels the field between internal and external candidates
(+) External validation assures board that best CEO is selected
(-) Requires significant planning and oversight
(-) Breakdown in process can lead to erosion of trust
4. INSIDE-OUTSIDE MODEL
13. • Succession planning relies on the full engagement of the board and senior
management.
• As a best practice, succession planning is ongoing and includes
preparation for both scheduled and unscheduled transitions.
• Continued development of internal talent is critical.
• Companies should maintain a list of candidates they can turn to in an
emergency. They should also list the primary candidates to replace the
CEO in a planned succession.
CONSIDERATIONS IN SUCCESSION PLANNING
14. • When a succession event is scheduled, the board convenes an ad hoc
committee to oversee the process.
• Directors should be selected based on their qualifications and
engagement, rather than their availability.
• The outgoing CEO plays an important role in succession.
– Develops talent
– Coaches and mentors
– Challenges executives to learn new skills
• At the same time, it is important that the board maintain primary
control. The CEO should not be allowed to disrupt or influence the
objectivity of the evaluation.
CONSIDERATIONS IN SUCCESSION PLANNING
15. • The board should develop a written document that outlines the skills and
experiences required of the next CEO.
• The profile serves as a yardstick against which internal and external
candidates are evaluated.
• After a new CEO has been selected, the board should take active steps to
facilitate a smooth transition.
– Engage in open and honest dialogue
– Be forthcoming about expectations
• The outgoing CEO should remain behind the scenes but be accessible to
the new CEO to answer questions.
CONSIDERATIONS IN SUCCESSION PLANNING
16. • Survey data indicates a surprising lack of preparedness.
– 51% could name a permanent successor if required.
– 39% claim zero viable internal candidates.
– Boards spend an average of 2 hours per year on succession.
• Companies emphasize emergency rather than permanent succession.
– 70% have identified an emergency candidate.
– 68% report that this candidate is not a candidate for the permanent position.
• Board members have insufficient knowledge about internal candidates.
– 55% understand strengths/weaknesses of senior management team “well”.
– 23% participate in senior management performance reviews.
– 7% of directors serve as a professional mentor to senior managers.
HOW ARE BOARDS DOING?
Heidrick & Struggles and Stanford University (2010); The Conference Board, IED, Stanford University (2014)
17. • The evidence suggests that boards do not engage in rigorous succession
planning.
• This might explain why so many companies are ill-prepared when a CEO
steps down.
• Succession planning would be improved if it were treated as an element of
risk management. Viable candidates (internal and external) should be
identified in advance of a transition.
• Succession planning is more than “names in a box.”
CONCLUSIONS
18. Spencer Stuart. Route to the Top. 2007, 2008.
The Conference Board. CEO Succession Practices. 2014.
Mark R. Huson, Robert Parrino, and Laura T. Starks. Internal Monitoring Mechanisms and CEO Turnover: A Long-Term Perspective.
2001. Journal of Finance.
Eliezer M. Fich and Anil Shivdasani. Are Busy Boards Effective Monitors? 2006. Journal of Finance.
James A. Brickley. Empirical Research on CEO Turnover and Firm Performance: A Discussion. 2003. Journal of Accounting &
Economics.
Robert Parrino. CEO Turnover and outside Succession: A Cross-Sectional Analysis. 1997. Journal of Financial Economics.
Equilar. Paying the New Boss: Compensation Analysis for Newly Hired CEOs. June 2013.
Heidrick & Struggles and the Rock Center for Corporate Governance at Stanford University. 2010 Survey on CEO Succession
Planning. 2010.
The Conference Board, The Institute of Executive Development, and the Rock Center for Corporate Governance at Stanford
University. How Well Do Corporate Directors Know Senior Management? 2014.
BIBLIOGRAPHY