Board member development


Presentation Description

How do board members develop themselves?


Presentation Transcript

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Board member development

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Question 1 What values do board members have

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All parties but especially CEOs should acknowledge different points of view and work to minimize the conflicts that inevitably arise from them. This requires high-level listening skills the ability to see situations from the other person’s perspective and the wisdom to understand the basis for the different points of view.

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Board members need to understand and trust each other. Only when they can have candid conversations will they ultimately reach a consensus that has positive and far- reaching implications for the company. Trust becomes even more important when meetings are conducted by telephone which is often the case in crises.

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Further inspiration

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Question 2 To what extent do board members work to fulfill the company purpose

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The board of CVS decided to stop selling cigarettes - a USD 2 billion annual business. Larry Merlo chairman of the board at CVS: “It is the right thing for us to do for our customers and our company to help people on their path to better health. Put simply the sale of tobacco products is inconsistent with our purpose.”

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Further inspiration

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Question 3 How different are board members

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Board diversification is an increasingly important topic inside boardrooms.

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Aspects of diversity  Skill / knowledge diversity.  Gender diversity.  Nationality diversity.  Experience diversity.  Age diversity.

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slide 13: Survey shows that boards with a higher level of racial diversity pursued more breakthrough product improvements.

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Research from multiple sources has shown that competive advantage innovation and increased shareholder value among other benefits are linked to a diverse board of directors.

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Being around people who are different from us makes us more creative more diligent and harder-working.

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Boards that look more like their target market have a better understanding of their target market.

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Non-national directors on boards - Europe

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Companies targeting significant growth in emerging markets benefit from having board members from those countries.

slide 19: Proportion of women on the board

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17 of SP 500 directors are women up from 12 in 2002.

slide 21: Over time advocates of quotas hope that a sudden large increase in the number of women in leadership will change attitudes. They point to the results of a law passed in 1993 in India that reserved positions for women in randomly selected village councils. A decade later women were more likely to stand for and win elected positions in those villages that had by chance reserved positions for women in the previous two elections.

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Further inspiration

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Question 4 How much time do board members invest in their work

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Board members are increasingly devoting 2-3 days per month of work plus extra hours for conference calls retreats and other check-ins.

slide 25: Time that board members invest per year working on company matters Region Days invested Board members of North American companies. 22 days. Board members of European companies. 29 days. Board members of Asian companies. 34 days.

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Number of days a year board spends

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Board meetings per year

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Private equity directors spend on average 54 days on their roles. Directors at public companies spend on average 19 days on their roles. Even in the bigger FTSE 100 companies the average commitment is only 25 days a year. In both models of ownership directors spend 15-20 days a year on formal meetings. Private equity non-executives devote an additional 35-40 days to hands-on informal interactions for example field visits ad hoc meetings with executives phone calls internet communication while nonexecutive directors at public companies only spend 3-5 days a year on hands-on informal interactions.

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We need not another layer of legal procedures but a new culture of governance one in which professional directors view their role as their primary occupation.

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If a potential director can’t put in 300 to 350 hours a year she shouldn’t take the job. David Beatty

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Only 43 of the nonexecutive directors of public companies believe they significantly influence strategy. For this to change board members must devote much more time to their roles. 4-5 days a month obviously give a board member much greater understanding and impact than the 3 days a quarter of which two may be spent in transit devoted by the typical board member of a public company.

slide 32: Most effective factors for improving overall board performance

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How can companies achieve the right degree of commitment What does actually help is a board environment that encourages participation and allows board members to derive meaning inspiration and satisfaction from their work.

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Board members educate themselves more

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Question 5 What tasks do board members invest their time on

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Traditional board agenda

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slide 38: Board members understand the respective company’s financial position better than its strategy

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Additional forward looking board activities

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slide 41: Many board members want to invest much more time on strategy

slide 42: Percent of time that board currently spends on issue

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Ensuring that a company has a great strategy is among a board’s most important functions.

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Engaging in strategy and resource allocation is really where boards can help the most to create value.

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To better prepare for succession boards should have multiple discussions each year to identify the company’s next generation of leaders.

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Question 6 How do board members develop technology competence

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Missing skill among many board members: Knowledge about technology.

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5 of board members in non-technology companies have digital competencies. Denmark and Spain rank lowest 2. Sweden ranks highest 8.

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Digital is so far-reaching - think e-commerce mobile security the Internet of Things IoT and big data - that the knowledge and experience needed goes beyond one or two tech-savvy people on the board.

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At the board level there is a need for knowledgeable independent directors with experience and perspective in putting technology to use.

slide 51: Consider involving a technology entrepreneur to your board who can help educate other board members.

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Open and transparent interactions with the CIO can help the board stay current on the fast-changing nature of technology and its impact on the company.

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Question 7 How can board members evaluate IT performance

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Question 1: How well does technology enable the core business Examples of numbers used to measure:  Percentage of business processes that have been automated.  Minutes used to do business process x.

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Question 2: What value is the business getting from its most important IT projects Examples of numbers used to measure:  Costs of project x.  Plan / schedule for project x.

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Question 3: How long does it take IT teams to develop and deploy new features and functionality Example of number used to measure: Percentage of IT teams that can develop and deploy new relevant functionalities in 4 to 8 weeks in a secure repeatable way.

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Question 4: How efficient is IT at rolling out technologies and achieving desired outcomes Example of number used to measure: Number of incidents reported per software app.

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Question 5: How strong is our supply of next-generation IT talent Example of number used to measure: Percentage of project roles that could not be adequately staffed over a 12-month period because of a lack of internal skills.

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