Board members must know how to manage pitfalls in governance and leadership

Our last two days in the Women on Boards program, organized by Yale School of Management, covered the role of Directors when the company faces pitfalls due to Executive Management (particularly the CEO) or even Stakeholders actions.

We learned from Yale Professor Elise Walton about the Board Engagement Continuum model, which classifies the Boards based on the level and type of engagement exercised by their members. The model goes from Passive Boards, that basically function at the discretion of the CEO to Operating Boards that makes operating decisions and Management proceeds to implement.

There are other three more reasonable type of Boards in between these two extremes, namely: Certifying Board that oversees and certifies the CEO’s performance; the Engaged Board, which is the preferred approach and emphasizes a partnership with the CEO to provide advice and support in key decisions; and the Intervening Board, where the Board becomes intensively involved as a result of a crisis situation. It is common for Boards to adapt from one approach to another one, depending on the circumstances, but what is clear is that the Passive Board should be avoided in all accounts.

We reviewed with Yale Deputy Dean for Academic Programs, David Bach, the consequences of deficient stakeholder and CEO management through the Uber case study, covering the tactics for disarming or converting critics and when to employ them and analyzing whether or not they were applied by Uber during the different stages of the crisis.

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Time was dedicated in the program to review some of the areas where it is becoming important for Board members to participate and understand, due to the potential damage that any incident may cause to the company and its reputation, namely: Environment, Social and Governance (ESG) and Cybersecurity and Data Privacy, taught by Yale Professors Todd Cort and Laura DeNardis, respectively.

In the case of Todd, he highlighted the fact that companies have started to realize that there is an economic and social benefit attached to responsible handling of ESG issues and he introduced us to a number of international principles, guidance and standards that allow companies to assess their ESG risks and to address comparability among them. Laura’s participation ended with a valuable list of the ten corporate cybersecurity governance questions every board member should ask.

The program concluded with a comprehensive discussion of the role of the CEO, the importance of maintaining an appropriate CEO Succession Planning at all times (even if there are no signs of problems) and recommendations on how to overcome adversity when problems arise. This last segment was taught by Jeff Sonnenfeld and included a telephone participation from Joanne Lipman, author of “That’s What She Said”, a paper-back copy of which we all got!

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Overall, the Women on Boards program exceeded my original expectations and represented an amazing experience. It allow me to identify my value proposition, to realize the timeline to get a Board seat, to confirm why do I want to do this and to create a great network of mutual support and bonding with the other participants.

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