August 18, 2021
August 18, 2021
This is an abbreviated version of a more thorough Directorship magazine article exclusively for NACD members. If you are an officer or director of a public, private, or nonprofit organization, you can become an NACD member to view the complete article and related resources.
A sea change in the relationship between investors and the companies they put money into was initiated at a Drexel University corporate governance event more than a decade ago when Vanguard CEO F. William McNabb III suggested that boards engage with investors. Since then, the symbiosis between shareholders and stakeholders has firmly taken root amid growing concerns about how companies manage and how boards oversee environmental, social, and governance (ESG) issues.
As the board’s role has grown more complex, management consultant Ram Charan has spent much of the last six decades traveling the globe to advise CEOs and boards on leadership and governance. Charan translates some of his collected wisdom into books; he has authored or coauthored more than two dozen volumes on subjects ranging from leadership to talent development.
During the pandemic, Charan, dubbed a “CEO whisperer,” stayed put for a few months in Hawaii, where his walks on the beach ultimately culminated in an idea for another book, this one to be cowritten with Dennis Carey, the vice chair at Korn Ferry with vast experience placing executives in C-suites and on boards. Carey and Charan have collaborated on two previous books.
Charan suggested a third perspective—that of the investor—and reached out to McNabb, who in 2018 stepped down as chair of Vanguard, one of the world’s largest institutional investors. Since then, McNabb has become an active independent director. He currently sits on the public company boards of UnitedHealth Group, IBM Corp., and Axiom Law, and also chairs EY’s independent audit committee.
These three extraordinarily different and ambitious men collaborated on the newly published book Talent, Strategy, Risk: How Investors and Boards Are Redefining TSR (Harvard Business Review). The slim volume is written specifically for investors and directors of private, public, and family-owned companies, and the title concept is substantially more than mere wordplay. It provides clear-eyed advice on how boards, management teams, and the investment community can more effectively navigate their sometimes conflicted roles.
In the introduction, McNabb exhorts companies—led by their boards—to focus their attention on the new TSR: “From the perspective of permanent capital and long-term value creation, we think the best way to create total shareholder return is by focusing on talent, strategy, and risk—the new TSR.”
In an interview with Directorship editor Judy Warner in mid-June, Charan and Carey (McNabb was not available) talked about their collaboration to provide directors a deeper look into their big idea.
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