The bar for director performance has been raised. A volatile economic environment, increased regulatory scrutiny, impending cybersecurity threats, and shareholder activism have all shifted the expectations for what should happen in the boardroom.
Responding to those growing expectations for directors, The National Association of Corporate Directors (NACD) has developed a new program—called Advanced Director Professionalism®—that focuses on understanding the market forces and “next practices” that will shape the boardroom in coming years.
At the inaugural Advanced Director Professionalism program in Philadelphia June 1-2, nearly 60 directors joined corporate leaders and subject-matter experts to discuss these market forces and next practices. Five key insights from the event follow:
Avoid the “tyranny of unanimity.” In a structured, interactive, scenario-based workshop, participants were confronted with a board of seasoned directors who were reluctant to dissent from the majority at critical decision-making moments. Such groupthink dynamics preempt consideration of viable alternative strategies and responses—a failure that can lead to disastrous business outcomes.
A healthy board culture is needed. Even effective boards are not immune to dysfunctional dynamics, such as hasty decision-making, disengaged directors, and too much deference to authority; yet the warning signs of dysfunction often go unrecognized. Continuous and rigorous evaluations can identify unhealthy dynamics early on, while periodic rotation of board leadership roles helps infuse fresh perspectives and approaches.
Focus on dynamic agenda-setting. Participants learned how to maximize the limited time that directors spend with each other and with management. While some full board and key committee agenda items are mandatory, these need not dominate meetings. Instead, board leaders should ensure that agenda development is clearly linked to major strategic opportunities and risks, and should plan reviews throughout the year in response to changing marketplace realities.
Cybersecurity is no longer an IT issue but an enterprise-wide strategic risk. The ramifications of cybersecurity breaches now include undermining customer trust, damaging operational effectiveness, and jeopardizing corporate strategy, to name just a few. Ownership of cybersecurity risk is distributed across the entire firm, from the CEO to frontline employees, who must all engage in secure behaviors with respect to system and data access. Boards should examine how effectively cyber risk is governed internally.
Become the keeper of corporate strategy. Board members often have a longer tenure than the CEO, which enables them to see long-term strategies through to completion. They can help ensure an effective strategy development process and engage management throughout strategy execution. Boards should challenge the fundamental assumptions on which the strategy rests—during periods of stability and steady profits, as well as times of disruption and emerging threats—and provide guidance to management as it considers alternative options.
So how does the track system work? Whatever your interests–from social media and technology, to audit and regulatory issues, addressing emerging risks, and more–you’ll find educational sessions that meet your specific professional development needs. Just select your categories of interest, and you’ll see which of our many sessions align best with what you’re looking for.
There are 11 tracks to choose from, but there’s no need to commit to just one. You’ll note that some sessions may even fall under more than one category.
Risk – sessions include Cybersecurity and the Boardroom and Corporate Sustainability: The Board’s Role.
Compensation – sessions include The Unintended Consequences of Proxy Advisors and Shareholder Engagement: The New Normal.
Nominating and Governance – sessions include CEO Succession Planning and The Effective Chairman and Lead Director.
NACD Directorship 2020® – sessions include Geopolitical Risk and The Board’s Role in Innovation.
Future Trends – sessions include The Internet of Everything and Meet the Disruptors.
SocialMedia & Technology – sessions include Surviving Corporate Crisis in a Socially Networked World and Social Media: Regulatory and Practical Pitfalls.
Global – sessions include Trade and Business in North America and Translating Corporate Culture Across Borders.
Story Circle – sessions include The Mindfulness Revolution and Stories of Pushing Past Personal Limits.
Audit and Regulatory – sessions include Your 10-K and Proxy in the Age of Transparency and Inside the SEC: Anatomy of an Agency.
Private Company – sessions include How Family Owned Companies Use Boards for Critical Choices and The Challenges of a Private vs. Public Company.
Small-Cap Company – sessions include Growth Strategies for the Small-Cap Director and Building the Small-Cap Board.
These learning track program options and our peer-exchange roundtables will help you meet other directors who serve similar industries, organizations, and committees–and share your boardroom concerns.
A recent blog by British twitter maven Lucy Marcus got me thinking about where new thinking and fresh strategy comes from. Lucy rightly points out that new beginnings take time and that, in this cost-conscious era, there is a risk that no company has the patience to sew seeds and give them time to grow. We’ll call this impatience, and certainly it is a failing that often besets the super-bright who are restless company executives, and their peripatetic counterparts who become board members.
There are other stumbling blocks in the way of innovation too, and chief amongst them is information overload. At NACD’s recent Investor Insights Roundtable , Denny Beresford revealed that he had seen proxy statements that were longer than the 10-K. Anne Sheehan, director of corporate governance for CalSTRs, concurred. “Don’t send me the charter; I can read that for myself,” she pleaded, making a request for only critical information, presented in a concise and accessible form. As all of us know, too much information can be as bad as too little. Swamp your readers and they’ll find it all too easy to miss your point.
But there is one shortfall that always stands in the way of progress for fresh thinking, and that is lack of imagination. Too few C-suites, committees and other information providers really think about the message they wish to convey, and ways to engage the audience they seek. The best teachers understand that without engagement, there is no education. Information is passed and knowledge is gained through story-telling, entertaining experiences that stick in the mind, and the thoughtful paring down of data and equally thoughtful pumping up of passion, color and context. These are skills and approaches that have value in every area of life, business and governance. They should not be confined to the classroom.
our engagement quotient was high: Richard Levick discussed crisis planning at the board level, using the miserable face of an oil-soaked shag and the equally miserable face of former BP CEO Tony Hayward to make his key points; Rob Galford, compensation chair at Forrester Research, used his physical presence and party tricks (“point your finger in the air. Now, on the count of three, point it at the spokesperson in your group”) to drive home some interesting thoughts on performance metrics; and Charles Elson, a director on the board of HealthSouth corporation, used catch phrases (“Don’t be sleazy; Don’t be sloppy”) to help more than 60 directors grasp the essence of the Duty of Loyalty and the Duty of Care.
All of this leads me to an interesting opportunity for washed-up television producers such as myself: We should position ourselves as Chief Engagement Officers for corporations prone to boring their boards to death. We could be creative conduits, taking the dry, dense and dusty and turning it into presentations worthy of prime-time. Similarly, all boards should look for comedians down on their luck, children’s book illustrators with a gift for detail that captivates, and song and dance acts capable of rhyming “audit” with either “plaudit” or “sod it.” Once identified, this rag-tag group should form an Engagement Oversight Committee with advisory status to the board. This EOC would work alongside the GC and reshape anything terminally turgid into a director’s delight. It would solve an unemployment problem in the entertainment sector, and would greatly enhance not only board meetings, but also board, company and stock performance. It might also offer an interesting second career opportunity for burned out teachers…
If you sleep at night surrounded by spreadsheets and with PowerPoint as your pillow, urge your company to consider this engagement initiative, and soon you’ll look forward to board meetings: We put the “Glee” in governance.