Thursday, December 30, 2010

What REALLY Goes on in the Boardroom?

As a director, you are bound by your duties as a board member NOT to talk about the inner workings or deliberations that take place behind the closed doors.  So, how are new directors supposed to learn how to behave, how to contribute or even how to THINK like a director?

Julie Garland McLellan has written an excellent collection of real boardroom scenarios and asked internationally recognized governance professions for their “advice and consultation.”  The book, Dilemmas, Dilemmas, provides “Practical Case Studies for Company Directors” at listed firms, family-owned firms, private and venture firms, not-for-profit and government-owned entities. 

The dilemmas or case studies are taken from her newsletter, The Director’s Dilemma.  Twenty-two boardroom situations are presented from the perspective of an individual director – sometimes a new one, sometimes a director put into a specific and uniquely challenging situation.  “What would you do?” is the question posed to a number of directors or consultants representing a wide range of governance expertise, primarily Australian, but the experiences have relevance globally.  And Julie Garland McLellan regularly adds her own views as a professional non-executive director and consultant to boards and individual directors.

The introduction outlines each of the issues in focus for each case study.  The crucial question of directors’ duties provides a key emphasis for the majority of cases.  At the end of each scenario, the reader is challenged to decide for herself:

1.         Which answer provided does the reader prefer: why or why not?
2.         What aspects of the other answers would the reader incorporate into her chosen solution?
3.         What would the reader’s solution be?

There is no perfect or right answer.  The experts may agree, may offer unique insights or may offer an impossible response.  Every expert’s comments provide a powerful learning experience and unparalleled insight into boardroom challenges and deliberations.

At a minimum, the concluding impression is that boards – inside their boardrooms – face some extremely complex and intricate issues.  Ms. McLellan is to be commended for providing us with a balance and in-depth presentation of these tougher realities.

Friday, December 10, 2010

First Things First

We are making some progress in educating women what truly is required to serve on a corporate board in today’s tougher, more regulated economic marketplace.  It is possible to tell the difference between a serious, genuine and credible director candidate and the others.  There is a wealth of material available to women to help them understand the modern challenge of governance.  

Current directors, recruiters and nominating committees also are telling us the importance of “intangibles” in considering candidates – such factors as collegiality, an ability to pose questions effectively without being confrontational and a willingness to constructively debate and deliberate.  In other words, the demonstrated capability to participate in the give and take so essential to boardroom collaboration.

We talk about the dozen or so checklist of essential skills areas.  We also talk about the networks where serious candidates could become known.  In addition, the most important source of a board-level referral is your own performance on the job, within your profession, among colleagues who are counting on you to deliver results within your present position.  A crucial question is “What are you doing, NOW?” or “What is the value you’ve brought to the business lately?”

In writing my book, Outstanding in their Field: How Women Corporate Directors Succeed, the first essential step was to research the backgrounds and experience of the women directors.  What did the business community know about this person? That is where recruiters and nominating committees begin, as well, in order to get an idea of the problems or challenges a candidate is addressing currently or the solutions for which they have become known in the business world.  That is the foundation for selecting a candidate.

Women sometimes hide their talents under the proverbial bushel basket.  Or they are the eternal “support staff” behind other more outstanding corporate figures. If we cannot see what the individual is doing to address contemporary problems, what are we to think of her?

There are a host of major problem areas that business is attempting to address, any one of which provides the coattail for development of an effective career:

- cost effective health care programs that balance employer and employee needs
- health information technology that will cut costs and reduce waste
- building of effective internal whistleblower processes that deter real fraud, not simply pad law firm coffers
- dealing with global cultural differences while not running afoul of the Foreign Corrupt Practices Act
- motivating today’s multi-generational workforce
- understanding the internal corporate implications of hundreds of emerging regulations post Dodd-Frank
- identifying effective shareholder communication strategies without sacrificing the integrity of financial information
- investigating innovations such as virtual proxy meetings
- determining which sources of business risk will, when managed, reap benefits rather than discourage investment
- how to compete in global markets against emerging nations with trade preferences unavailable to US firms.

Women in leadership within our corporations are addressing issues on this scale.  They are visible, on the stage of that marketplace economy.  They do not rely upon “special networks” for their professional exposure.  They are working in the midst of the most active network available: the American economy, helping to rebuild it for future generations.

That is what is meant by putting “first things first.”

Saturday, December 4, 2010

The Ladder

We often hear the question, “How do I become a director? How do I get on a board?”  We tend to think of that position as something remote and distant.  Perhaps instead of thinking about a director role as if you were waiting to be invited to join some exclusive group, it might help instead to imagine yourself as the CEO of a company, considering how to build her very first board.

Let’s assume YOU are the CEO who is searching for the right people to populate that portion of your Articles of Incorporation or By-Laws that describe your corporation’s board of directors.  You’ve been in business maybe a dozen years or so, you’ve built a powerful reputation in your market, you’re making some reasonable money, and you’re ready to re-invest and grow your business to its next logical level.  You even have staff, maybe a CFO and some sales people.  You know you have to add to that team, maybe expand into new technologies or possibly reach out into international markets.  You need the wisdom of a small group -- reliable confidents to help you take this next step.  Now, maybe you can understand what it feels like to dare to put your firm in the hands of strangers. 

What kind of people will you bring to the table?  It certainly won’t be women marching with placards through the streets of your town.  You will only consider trustworthy people – individuals whom you know will not drive the company --  which you built with the sweat of your brow -- into the ground.  Let’s see how we find these very special people.

First, you will want people with a solid business education or an education that produced a demonstrable respect for business, in general, and for you, in particular, as a business person and everything you’ve tried to accomplish.  You will expect some fundamental financial literacy which might include economics, accounting, law, technology, marketing or communications – education valued by the business marketplace. Graduates of surf-city universities need not apply. Whatever the specific educational credentials, at a minimum, they will need to bring value to your business. Thus, the directions you want to take your business will guide the selection of skills you need to bring on board. And you will want someone who loves the concept of learning – about you, your business, your market, your industry and your challenges.

Next, you don’t want just any director who is warm and walking – you want people who acquired experience in the same areas where they invested in their education.  Those other people who studied in one field, then quit to become something else, probably won’t be able to handle the challenge of long-term strategic guidance.  What the candidate has done for herself will give you insight about what she could do for your business. Experience is good especially when it looks as if the individual loved the profession enough to acquire a lot of complementary skills over the years.

But, there are a lot of educated, middle management drones in the marketplace.  It’s YOUR business future we are talking about, so you want to bring in genuine expertise – some talent, some evidence that the individual isn’t just trying to get by.  You’d like to see candidates who could take the expert or witness stand and answer tough questions.  You want to see people who have done today’s tough research and analysis and are capable of talking about the important business issues you face --  in public debate, in presentations, and in dialogs that matter to you. Shy and retiring “help mates” won’t cut it. 

Still not good enough for YOUR business?  You need evidence.  It’s not enough that candidates can talk about what they think or what they are – you’re looking for people with a credible track record of achievement.  You’d like some external support – maybe evidence of a successful business, maybe a profitable enterprise similar to your own, but certainly some affirmative verification that what the individual did for herself or himself is probably what she could do for and with you. You might even search out a little reputational information or confirmation from others whose opinions you respect – just to be sure.  It IS your business, after all. 

But, wait, that’s not all!  There’s more!  You want to hear that the candidate has integrity -- that soft and squishy consistency of their actions, values, metrics, principles and outcomes.  You don’t want to be surprised, somewhere down the pike, by a candidate whom you believed was focused on competitive excellence, only to discover later on that she really was someone else who just wanted to advocate her own secret hidden agenda.  What does the candidate stand for in her every word and deed?  Is she the same person every time you talk with or about her?

If you can bundle these credentials altogether in a candidate, then you have that magic quality you seek in a director -- somebody in whose hands you can trust your business.  That is the gold standard.  If you can understand how difficult it is to find such a worthy candidate, then you are well on your way to becoming such an individual, climbing that career ladder to trust, capable of helping a colleague to take her business to the very highest level.