Category: Director Education

Problem-Finding: A Vital Board Skill

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Solange Charas is the president of Charas Consulting, Inc. and a senior-level human capital professional with 20-plus years of experience as corporate CHRO and consulting firm practice director. She is currently pursuing her doctor of management at Case Western Reserve. She has served as the chair of the remuneration committee for a NASDAQ-traded company.

Michael Roberto, author of Know What You Don’t Know: How Great Leaders Prevent Problems Before They Happen, shared his insights with the 200 directors who attended last week’s NACD Directorship Forum in NYC. He explained why it makes more sense to concentrate on “problem- finding” than “problem-solving.” Practicing problem-finding helps leaders spot and address emerging concerns while they are still manageable and before they turn into disasters. It is a vital board skill.

Roberto opened his talk with examples from the Cuban Missile Crisis and recounted his conversations with Robert McNamara about that perilous time. He also gave examples from the 2003 NASA shuttle failure from his interviews with then Space Shuttle program manager, Linda Ham. Using these two examples he illustrated the fundamental value of actively seeking out problems before they find you.

I think his presentation had the attention of the audience—there was something seductively compelling about the idea of using proactive techniques to anticipate and avoid dangerous problems. Yet, despite our intellectual agreement that being proactive is always more effective than being inactive or reactive, what’s the trick? How do we set about successful problem-finding?

Roberto offered these seven steps to becoming a proactive problem-finder instead of a reactive problem-solver:

  1. Circumvent the gatekeepers – get unfiltered information.
  2. Become an ethnographer – watch what your constituents are doing and stay alert to what’s happening in the periphery. Watch for “Hirschman’s exit” or “voice” phenomena;
  3. Hunt for patterns – try to draw on past experiences but don’t get caught in the trap of misusing analogies.
  4. Use intuition to “connect the dots;” lessons learned from small problems can contribute to understanding the path of large problems.
  5. Encourage innovative thinking and risk-taking on a small scale – piloting programs and experimenting may be the key to learning. “Fail often, succeed sooner.”
  6. “Watch the film” – what is your team and the competition doing? “Adopt the military’s “After Action Review” (AAR) process to learn and improve;
  7. Create a climate of information-sharing – encourage people to speak up and have a mindset of “openness.”

In my opinion, our shareholders and stakeholders expect us board members to do our best to steward the organization. To do that, we need to listen to our inner dialogue to understand what can inhibit our participation in important activities. What can cause us to abdicate our leadership role? Is it fear that we may be viewed as pariahs and shunned if we voice a dissenting opinion?  Do we feel safer if we ignore an issue? Like the Ravenous Bugblatter Beast of Traal in Douglas Adams’s Hitchhiker’s Guide to the Galaxy, do we believe that if we can’t see the problem, then it can’t see us? Or do we assume that someone else will tell us about the problem when it get big enough? All perilous pitfalls—which might be avoided by practicing problem-finding.

Read more about the NACD Directorship Forum here and here.

To reserve your seat for the NACD D100 Forum, November 8-9 at the Waldorf Astoria, NYC. Sign up to learn from Jet Blue director General (rtd) Stanley McChrystal, Polymer Group CEO Ronee Hagen and HealthSouth CEO Jay Grinney among others, and be our guest at the gala dinner celebrating the NACD D100 and Director of the Year honorees.

The Promise and Risk of Information and Technology at NACD Directorship Forum

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Solange Charas is the president of Charas Consulting, Inc. and a senior-level human capital professional with 20-plus years of experience as corporate CHRO and consulting firm practice director. She is currently pursuing her doctor of management at Case Western Reserve. She has served as the chair of the remuneration committee for a NASDAQ-traded company.

One of the benefits of attending NACD events is the opportunity to learn from directors and executives of big-name boards. The NACD Directorship Forum held May 23-24 did not disappoint: sessions on shockproofing the board, learning from the financial crisis and finding the best leadership model for your board and company were led by board members and C-suite leaders from companies including Jet Blue, GM, Ford, AIG and Best Buy.

The session I thought most interesting from both a content and “sociological” perspective concerned the promise and risk of information and technology. I am a “device diva”—a real technology junkie—so the topic was fascinating to me and it seemed to engage the 200 or so directors in the room. The panel represented some of the best thinking in the hi-tech and communications industries, with professionals from Oracle and Levick Strategic Communications sharing interesting technology “tales.”

                                                                How familiar are you with the concept of cloud computing?

Panelists discussed cloud technology, alternatives to large-scale capital investments, security, and e-discovery. Then the talk turned to “social media.” Richard Levick asked directors to consider “who are your bloggers, tweeters and Facebook friends” resulting in participants looking at one another with raised eyebrows. Examples of Bank of America’s inadequate response to the threat of negative information disclosed by WikiLeaks and Taco Bell’s deft response to the “where’s the beef” scandal illustrated the power of social media—as opposed to traditional channels—in shaping public opinion.

Leave nothing to chance

The third and perhaps most interesting aspect of this session was the dynamic of the panelists— there was actual dissention!  The give-and-take, with each expert expressing his and her own perspective on the topics, resulted in a robust dialogue. Contrasting the other panels where there were polite “I agree with….” and “John makes a good point…” these panelists didn’t mince words and had the courage to express their dissenting opinions.   

What a treat for the audience to observe a healthy dynamic where collegiality is NOT confused with congeniality. This rich dialogue offered value to the audience—not only in content, but as a model to directors that healthy dialogue generates better outcomes. As Sydney Finkelstein and Ann C. Mooney (2003) stated in an article published in Academy of Management, the number one goal for directors is to “engage in constructive conflict,”—meaning that directors should express their diverse views. When this happens the exchange of ideas “help the board better understand issues surrounding the decision context and synthesize multiple points of view into a decision that is often superior to any individual perspective.”  

This is something for directors to think about, especially those on nominating committees. Diversity isn’t just about skin color, gender or nationality. It is about selecting directors who will promote diverse ideas and have the courage to express those ideas to generate rich and constructive dialogue. When collegiality is confused with congeniality, your board and the quality and effectiveness of the cognitive product of the board is compromised.

Read more blog posts from Solange here

To register for the NACD D100 Forum, November 8-9 at the Waldorf Astoria, NYC click here.

Powerful Peer Exchanges at NACD Directorship Forum

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Solange Charas is the president of Charas Consulting, Inc. and a senior-level human capital professional with 20-plus years of experience as corporate CHRO and consulting firm practice director. She is currently pursuing her doctor of management at Case Western Reserve. She has served as the chair of the remuneration committee for a NASDAQ-traded company.

There was an absolute buzz in the room when I joined the NACD Directorship Forum held in NYC May 23-24. Apart from the normal energy of New York City, there was a special quality in the air at the start (and continuing throughout) the one-and-a-half day event.

Maybe it was the grand opulence of the West Lounge of the Metropolitan Club where we sat surrounded by gilt cherubs who looked down from soaring ceilings, reminding us to be angelic in our dealings. Or maybe it was the opportunity to forge connections and relationships with close to 200 NACD members and staff attending the meeting. Whatever the reason, it was energizing and exciting.

The conference started off with multiple peer-exchange sessions. Each table had a discussion leader who facilitated a conversation between directors on topics from Executive Compensation to Board Building to Litigation and Liability to a topic called “How Boards Get Into Trouble.”  Of course, that’s the table I joined!

Artfully led by Jeffrey Rudman of WilmerHale, this was an extraordinarily interesting conversation on risk, class action suits and accountability, with voices representing the boards of public and private sector companies and non-profit and for-profit organizations of all shapes and sizes. The consistency of the issues faced by all at the table, each representing very different organizations, was notable. Also significant was the level of engagement of all participants at the table. Asking questions and generating awareness of the importance of “tone at the top” was offered as the key component to achieving consistent messages in the organization. Topics like values, impartiality, integrity, and sensitivity to shareholder optics were considered vital for excellent board and company performance.

The second peer exchange I attended explored Executive Compensation and was facilitated by a former colleague of mine from Hay Group – Irv Becker. While more technical in nature, this session also generated great dialogue. There were more “advisors” at this session—professional service firm representatives who shared interesting perspectives and anecdotes about their current client challenges. The “usual suspect” topics were covered: CD&A accountability, Dodd-Frank impact on disclosure, and a general discussion about performance-based pay optics.

An interesting observation at this peer exchange was made by a new-to-the-boardroom director who questioned the validity of ISS and other rating agencies. The conversation then became very focused and there was consensus from directors that they disliked the power of ISS as it influenced their actions and decision making in the boardroom. The folks around the table felt it shifted the focus from what’s good for the company and shareholders to “What do we have to do to placate ISS?” One participant said that the influence that outside agencies have on corporate governance is “huge” and perhaps “ridiculously inappropriate.” After this declaration, I was curious as to how others felt. At least six directors voiced a consistent message—some with more passion than others—that they feel a high level of frustration with ISS. Here’s an opportunity to explore and dialogue on how to adopt strategies that address stakeholders and ISS through good governance. Over to you…

To take part in the upcoming NACD D100 Forum at the Waldorf Astoria, NYC on November 8-9, 2011, click here.