As I have sustained before, we are undergoing a transformation of traditional corporate governance practices that were in need of adaptation to remain effective and valuable, considering the current speed of business and the emergence of new risks to be overseeing by the Board.
Board governance and oversight has never been more challenging than right now and this is precisely what was covered in a Webinar that I participated last week, sponsored by Diligent and Directors & Boards magazine.
The content discussed in the Webinar was based in the book ‘Governance in the Digital Age’, by Brian Stafford, CEO, and Dottie Schindlinger, VP of Thought Leadership, Diligent Corporation, which I will start reading soon.
The Webinar was very useful because it avoided just focusing on the challenges and went on to suggest practical tools and solutions that were mentioned by some of the Board members that were interviewed as part of the research featured in the book. Bear in mind that due to age, skill set, experience and others, some of the individuals interviewed for the book are not necessarily natural, early tech adopters; however, they are causing a positive impact on changing governance in this era.
There were some expected practices mentioned, including:
- Holding board meetings more frequently than 4 times a year, even if more informally conducted and/or with some members connecting over the phone
- Increasing diversity of members, not just based on gender, but also in experience, skills, nationality, industry, age, race, ethnicity, etc.
- Closing tech savvy gap, by incorporating at least one member with tech/ digital experience
- Establishing tenure and age limits as a mechanism to refresh the Board composition
- Limiting number of Boards in which a Board member can participate at the same time.
- Being more open-minded about Board member profiles and not just focusing on the next rising star CEO to attract to the Board but search for talented executives one level down.
However, it is not enough to bring one or two younger, more diverse and tech savvy members; it is equally important to introduce mechanisms for the existing members, who most likely did not grow up with digital in mind and probably had their first smartphone when they were in their 40s, to get up to speed and more digital minded. Some practices that have proven to be useful include coordinating field trips to analogous, but not in direct competition, companies to learn what they are up to. I am a believer that taking a team out of the room and offering them opportunities to become more literate on new trends is a great tool to have more substantive and nourished discussions, particularly because it raises the level of creativity and curiosity from each member.
There were other practices mentioned as well, namely: bringing in outside speakers; or requesting Board members to read a book and then have a discussion; or asking a member – on a rotating basis – to watch a TEDTalk and share the takeaways with the others; etc.
Overall, the Webinar was realistic on the challenges that Boards are currently facing, while highlighting the actions that are being taken by Board members to raise their awareness, engagement and oversight bar. Undoubtedly, for these actions to be successful, it is critical for the Management to support them, to avoid tension and to encourage collaboration to make the Board and the Company smarter and better prepared for the future.
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