Story: I’m just finishing up Module 3 of the University of Toronto’s, Rotman School of Management, highly touted ICD Directors Education program. I’m learning a great deal from a world class faculty and classmates, all current or aspiring Board members. One thing I’m quite surprised about is the number of Boards that are underperforming relative to CEO succession. That is one of the most important responsibilities of a Board of Directors, and it’s stunning to learn how many examples where that is not the case. (I’m proud to say the Board of the company I work for is an all-star group of directors. They have won prestigious Governance awards for that very reason, and are proving that as we go through our current CEO succession). Ideally, Boards oversee a CEO succession process that has at least the next 20 years covered with potential internal candidates (assuming minimum five year CEO terms). Furthermore, the Board has an obligation to ensure the company has a sustainable strategy and reviews the performance of a CEO in that context. This includes proactively planning for the new CEOs succession the first day they start. This accountability is part of the fiduciary responsibility and duty of care expected of any Board of Directors in public companies.
Key Point: Most of us will never be CEOs or Board members. Yet, we are well-served to know and understand the membership and duties of Boards in the organizations where we work. They set the tone from the top with the CEO. When you work in organizations where the culture, strategy, and results are excellent, you can be quite sure the Board and management are highly functional and well aligned. The opposite is also true. High performing Boards are exceptionally engaged, proactively lead governance, risk, audit, and all aspects of human resources including, but not limited to, the compensation framework. And fortunately, in Canada, the Board is accountable to do their best for the entire corporation, including keeping in mind the impact to employees, customers, shareholders and all other stakeholders. This is more comprehensive than simply looking after the shareholders’ interest. They do all this while being accountable for any liability that might occur. Most Board members commit because they care about the institution and its purpose. Except for a few big Boards of high profile public companies, their pay is not commensurate with the personal obligations, tremendous workload, and potential personal liability involved.
Personal Leadership Moves:
- Take some time to know who the Board members are in your organization. Appreciate why they personally have been selected, what they do, and what committees they are on. Recognize that they are there to do their best in good faith, and to keep your organization thriving.
- Appreciate that well-run Boards go through a rigorous self-evaluation process, often including tough-minded peer review. If they aren’t performing and continuously developing, the Chair will replace them. They also undertake a very thorough review of the CEO’s performance.
- One of the well-used operating guides for Board members is “nose in, hands out.” The CEO runs the company, while a great Board rigorously shepherds along the way.
Hugging Board members in Personal Leadership,
One Millennial View: This is a great lesson from upper management that most Millennials likely overlook. Even most team managers might have a hard time finger pointing, or naming the Board members in their organizations. Even though the action is metaphorical, it’s tough to hug someone when you can’t even pick them out from a crowd at the next company event.
Edited and published by Garrett Rubis