A Board for Today and Tomorrow

Catharina Mannerfelt, partner at Alumni, has extensive experience supporting boards and owners in board composition, board effectiveness and board development. Here she discusses some of the challenges and considerations she observes around board succession.

Preparing for the Unknown

Appointing board members is one of the most business-critical tasks company owners and Chairs will undertake. The standout objective is to ensure that the board remains an effective decision-making asset and that it is effectively adding value in the way it enables oversight, accountability, strategy, and financial performance. The importance of agile and adaptable boards was perhaps never more evident than during the COVID crisis, but disruption and change can come from any direction and at any time and turbulent business environments make it harder for boards to decide their direction of travel. Boards that have the right composition in both expertise and dynamics are those that will weather unexpected storms the best. Boards must ask themselves, do we have the composition, leadership, capability, capacity and culture to deliver success for our organisation?

“Boards that have the right composition in both expertise and dynamics are those that will weather unexpected storms the best.”

Establish a Baseline

According to our most recent Board Research Survey[1], more than a third of boards feel their collective competency does not represent the future needs of their company or organisation but to know this truly requires regular board evaluation, whether it is mandated through regulation or simply as best practice. Effective board evaluations will look at the board through a combined lens of professional expertise, experience, thinking styles, communication and circles of influence in order to ensure wider perspectives and improved decision-making.

Exploring other Networks

“The right person to challenge and support the exec team through changes can often be found in unexpected places.”

The perils of groupthink on boards are long established. If everyone on a board has a similar background, for example everyone has a technical or finance background, the board is less likely to be able to proactively identify new risks or recognise innovative solutions and strategies. Looking for board successors within familiar networks can be detrimental to creating diversity of thought. Looking to new sources of candidates can uncover hidden gems of potential non-executive talent. If the board is alert to changes reaching forward two or three years in time, then the right person to challenge and support the executive team through those changes can often be found in unexpected places, alternative sectors, or new geographies. Frank McKenna, MD of Global Healthcare & Public Sector at Alumni adds to Catharina Mannerfelt’s observations that designing the most effective composition of a board is at the heart of its ability to thrive and survive the various headwinds it will face.

“Effective board composition is only achieved by a serious investment in current and future capabilities and an honest appraisal by Chairs about what good looks like and whether there is ground to make up in their own board.”

— Frank McKenna, MD of Global Healthcare & Public Sector at Alumni

The Board Gender Gap or Trap?

Most of us want to see a business world based on inclusion, meritocracy and fairness, but in the peculiar world of the boardroom, gender representation is still too often driven by a short-term, tick-box idealism. This is especially true when diversity is mandated (or perceived as such) and can lead to less-than-ideal board composition. If a female non-executive leaves and must be replaced with another female NED, or a male replaced by a male, then does the Nominating Committee really have the freedom to appoint the best candidate regardless of gender? This may take changes to regulation to be more realistic in its goals, but gender diversity can be looked at more broadly, by looking at diversity over three years rather than one, or across complete portfolios of boards rather than for just one.

“Gender diversity can be looked at more broadly, by looking at diversity over three years rather than one, or across complete portfolios of boards rather than for just one.”

Further & Wider is Better

In conclusion, board succession will significantly benefit when boards commit to looking further into the future in terms of their competency matrix. Boards should establish their status quo through effective evaluation, and thereafter commit to a process of continuous improvement for its members through both individual and collective development. Having the insight, confidence and sensitivity to challenge “known truths” while maintaining a robust collaborative culture is an ideal quality for a non-executives and boards will benefit from looking more broadly at candidates in terms of their characteristics and expertise. Access to wider networks will also enhance the quality and breadth of advice, contribution and sector/market knowledge in the boardroom. Chairpersons must take responsibility to ensure that they, and their board are ‘future proofed’ and this requires them to take a proactive stance in the areas of reviews, succession planning processes and recruitment to the board.

References
[1] https://alumniglobal.com/board-research