Posts Tagged ‘Risk Management’

Hu, Valukas, and Markopolos on Corporate Governance

November 10th, 2010 | By

As the country emerges from the worst financial downturn since the Great Depression, directors, executives and other corporate governance experts gathered to honor the 100 most influential players in the boardroom and analyze recent mistakes and how they can be avoided at the NACD Directorship 100 Forum held Monday and Tuesday in New York City. The 100 honorees were commended at a dinner Monday night in a keynote address by Henry Hu, director of the SEC’s Division of Risk, Strategy and Financial Innovation.

Hu presented his “decoupling” concept, and explained how it relates to boards’ current challenges, especially as directors face the new Dodd-Frank Act. He pointed to the Act as the “most comprehensive change in generations… representing a new era for corporations and boards that introduces new challenges and new opportunities. It is important to get the balance between corporate governance and financial innovation right.”

The Forum’s second day featured Anton Valukas, court-appointed examiner in the Lehman Brothers’ bankruptcy, explaining the actions that the Lehman board could have taken to better prepare for the company’s failure. While Valukas does not believe that failure was preventable, he did explain that, had the board asked more important questions, the fall would have had less severe of an impact on the U.S. economy. 
“In this case,” said Valukas, “one word would have made the difference: transparency.” (read Valukas’ full report here)

Also featured was Harry Markopolos, author of No One Would Listen, which details his ten-year-long investigation of Bernie Madoff’s Ponzi scheme, the largest in history.  Markopolos took a firm tone with the directors of the room, imploring them to “use your experts and don’t take numbers from management, for the sake of your shareholders and stakeholders. That’s your job.”

The Global Question: Do Directors Have What it Takes?

November 3rd, 2010 | By

Having a global perspective – or at least someone on the board asking the right questions relating to global changes – is critical for today’s companies. Major international demographic changes are taking place in the U.S. and around the world. These changes impact how we do business and where our opportunities and challenges are.

At a recent gathering of corporate directors, many questions were raised about “the global question.”

  • About who in the boardroom is raising the questions, and do we have the range of skill sets, experiences, and backgrounds necessary to address these changes in the competitive environment?
  • Is someone asking what our crisis communication plan is? The plan needs to be developed well before a crisis in order to be out in front of the social media avenues, delivering the message concerning the crisis.
  • For insights on how former Exxon Mobil director Reatha Clark King and former ConocoPhillips chairman and CEO Archie Dunham handled major crises at their companies, view NACD’s webinar  (complimentary for NACD members); for more and for sample plans, see NACD’s Board Leadership for the Company in Crisis, (full disclosure: I co-authored this publication).
  • Do we have board members raising the right questions about communications in this new environment of social media, blogging, and real-time news? (p.s., have you seen some of the headlines in NACD Directors Daily about this issue – Social Media vs. Anti-Social CEO, Facebook, Twitter Help Companies Connect, or The Democratization Of Corporate Philanthropy?)

If we are to protect the reputation of the company, we can’t be the last to get the message out. Changes in criteria for board leadership to meet today’s challenges can be overlooked as well. We need to look carefully at the challenges and opportunities in our current and future environment, our short-term and long-term strategy, and ask ourselves whether the right people are at the table to meet those challenges. Click below to see a quick video about how NACD’s Board Advisory Services can help your board meet global (and other) challenges head-on.

NACD Board Advisory Services: Custom, Confidential In-Boardroom Corporate Board Education and Evaluations

Beyond Strategy: How Boards Can Accelerate ROI of a Deal

October 8th, 2010 | By
Highway of Life: Expect Delays

Highway of Life: Expect Delays

An old comic strip in my office shows the character Ziggy in a car facing two billboards: “Highway of Life” and “ Expect Delays.”  This sentiment seems to apply to Sanofi-Aventis’s prolonged merger negotiations with Genzyme.

According to published reports, the apparent source of the delay has been agreement upon price, given the manufacturing problems at Genzyme. However, a bigger question the board must assess is whether senior management can address these issues within a timeframe that provides the expected return on investment.

This situation is not unique. As opportunities for “bargain” deals resulting from performance problems become more plentiful in our rapidly changing business environment, it’s critical for boards to go beyond questioning the logic and price of the deal and also assess the potential impact of cultural issues that can make or break success.

Here are questions to ask senior management:

  • What are the business culture strengths and obstacles that will impact integration (e.g., speed of decision making, communication flow, etc.)?
  • What plans exist to deal with the natural organizational anxiety and resistance that comes with mergers?
  • What is the plan for communicating with stakeholder groups to gain their support before and during integration?

Asking these and other questions regarding culture, combined with questions regarding strategic fit, will enable your board to not only accelerate ROI in the short term but in the long term as well. 

Pamela S. Harper

Pamela S. Harper

Pamela S. Harper

Pamela S. Harper is founding partner and CEO of Business Advancement Inc (BAI). and author of the book Preventing Strategic Gridlock (Cameo Publications). She is on the boards of two nonprofit organizations. Since 1991, BAI has collaborated with senior executives and boards to develop strategy, increase leadership effectiveness, and improve organizational engagement and capability for maximum innovation, growth and profitability.