Topics:   Board Evaluations,Corporate Governance,Director Education,Leadership,Risk Management

Topics:   Board Evaluations,Corporate Governance,Director Education,Leadership,Risk Management

September 22, 2019

Channeling the Energy of Change

September 22, 2019

Editor’s Note: What follows is a version of NACD CEO and president Peter Gleason’s address to the audience at the 2019 NACD Global Board Leaders’ Summit. Couldn’t make it but want to follow along? Return to NACD BoardTalk for more coverage, or follow NACD’s social media channels.

Shift. That’s the theme of our summit this year. Five letters. One simple word. Yet, its meaning infers so much power to disrupt.

It’s uncanny how a single word can so aptly define the world in which corporate directors are operating today. Consider this:

  • Sixty-six percent of directors believe their companies will be vulnerable to the disruptive impact of emerging technologies in the next year. Shift.
  • Millennials and younger generations are bringing altogether different expectations to the workplace, challenging old models of doing business and upheaving human resources’ practices and staff retention rates. Shift.

Today, we lead in a world where change is coming at us at an unprecedented pace—and at every turn. Conventional approaches no longer make sense. Traditional models aren’t working. Issues that were insignificant in the past are now front and center.

ESG is a good example. ESG matters have become a point of discussion from the kitchen table to the board table, and the implications for businesses are so significant the board shouldn’t underestimate the importance of their oversight role. In these disruptive, ever-changing times, investors and other stakeholders now scrutinize the behaviors and values of companies, which means the abilities to monitor, analyze, anticipate, and pivot have become essential skills in directing organizations.

NACD president and CEO Peter Gleason addresses the audience at the 2019 NACD Global Board Leaders’ Summit.
Photo credit: Paul Morse

So, the big question for those of us in this room is this: in the face of all the disruption and change, how do we shift the way we direct?

As leaders, we don’t want to simply survive. We have to open the doors to new possibilities. We want to solve the most compelling problems. What we need is to channel the energy of change—to lead our organizations to a better place and to a better way of doing things.

Last year on this stage, I talked about our potential as individuals to be the transformation that we seek. Today, I want to talk about the collective power of our profession and how together we can capitalize on the energy of change to achieve something greater.

But to get there, we must first be honest with ourselves and acknowledge something fundamental: change is uncomfortable.

Change often means altering the way we work and letting go of old and familiar habits. And it throws us headfirst into new learning curves. It’s no wonder that people tend to resist it. But the reality is, in this modern, interconnected world, that every individual change inevitably sparks another. For us to lead effectively, we must guide our profession to solve the most pressing challenges that companies face today.

In short, we need to leverage our strengths, abilities, experiences, expertise, and our insights. And we must leverage them with purpose and precision.

I’d be remiss not to point out that prominent among all the shifts taking place around us is the increasing pressure from investors and regulators—which brings me to a decisively significant shift that NACD itself is making.

We sincerely believe that a nationally recognized certification program will help us to elevate our profession into the future. Thousands of you have benefited from the professional development credentials that we offer, namely the Governance Fellowship and the Board Leadership Fellowship.

But it’s time to reach higher.

We need to ask more of ourselves—and of each other—so that collectively we can make an even greater difference.

Next month, NACD is launching the very first director certification in the United States—which will go far in bolstering directorship as the bona fide profession that it is. If directorship ever was simply an honorary position, that’s no longer the case. Today, directorship is a true profession—and it demands specific knowledge and the right set of skills.

By setting professional standards that everyone can agree on, we will not only be providing a strong foundation for future directors but also taking the wheel of change to channel its energy and determine where it takes us as a profession.

Launching such an initiative couldn’t come at a more opportune time. In the 2018–2019 proxy season, 77 percent of all new public company directors were first-time public company directors. Yes, three out of every four new public company directors came into this leadership role for the very first time.

I encourage each of you to learn more about this important initiative on our website.

NACD also is leading the effort to ensure that our members have the information they need on new and emerging technologies such as artificial intelligence, blockchain, digital currency, the Internet of Things, and more. And we’re helping members leverage technological advances to maximize their own impact.

I am very excited to announce that NACD is partnering with Diligent Corp. on a digital tool that provides access to real-time, critical data—information that impacts board effectiveness and the ability to make data-driven decisions. We’re working together on giving boards tools like this, which we believe can be a game changer for the governance world. In short, NACD is committed to providing the practical resources directors need so that they can shift their own skills, knowledge base, and mind-sets to nimbly respond to the cascading changes of this modern era.

One reason the number of first-time directors is growing is that our efforts around diversity and inclusion are bearing fruit. As investors continue to press for diversity, there are more women and minority directors joining S&P 500 boards. In fact, in the 2018 proxy year, 40 percent of new directors were women, and 24 percent were minorities.

Embracing and advancing all types of diversity in the way we lead is one of the most impactful shifts that we can make in our profession. It will be that broad mix of perspectives which will fuel the innovation we’ll need to channel the energy of the changes ahead.

As part of NACD’s commitment to diversity, we’ll host our second annual awards ceremony tomorrow evening. This gala, part of our NACD NXT initiative, in collaboration with Deloitte, showcases boards that have leveraged diversity to create long-term value for their companies.

What’s more, we’ve started a scholarship program through our diversity affinity partners to prepare candidates for the boardroom. To that end, we’re giving complimentary access to our education and resources to support high-potential board candidates.

We’ve also kicked off our first podcast series, Future Fluency. This is another NACD NXT initiative, which reaches beyond our director audience to explore the links between diversity, culture, inclusion, and innovation. We’ve had more than 10,000 downloads just in the first few months! If you haven’t yet tuned in, please do—it’s fantastic!

Certainly, shift is a word that fully captures where we are for our 2019 Summit. But there’s another word that has caught attention in the media which has relevance to our profession as well. That word is empathy. And I believe that shifting the boardroom culture to one that leads with empathy is critical to channeling the energy of change.

For board directors, leading with empathy means truly understanding the people we serve, our stakeholders, and the talent who help us to achieve our goals. But leading with empathy requires change. It means letting go of outdated models and failed corporate cultures.

Leading with empathy is part of the new mandate for the board leader, which is the focus of this year’s Blue Ribbon Commission. This year’s Blue Ribbon Commission initiative, under the leadership of the Honorable Cari Dominguez and former US Air Force general Lester Lyles, takes a deep dive into how leadership must respond to shifts in every aspect of our social and economic lives. I invite you to attend the release of the report in a breakout session tomorrow morning.  

I urge you to make the most of this Summit. Get out of it as much as you possibly can. Take note over this coming year how NACD has shifted—to deliver value to you, our members—and how we’re definitely leading the way. Together, let us channel the energy of change, shift into a higher gear, and transport our profession to where wewant it to be.

I promise you this: NACD will continue to be at the forefront of change. And we look forward to continuing to guide and support you on our collective journey into the future.

Thank you.

Comments

Merribel AyresSeptember 22, 2019

How great to see NACD providing a portal to best practices on Board Performance!