Published in Forbes
By Stuart R. Levine
This month I had the pleasure of being invited to give a keynote address at the Corporate Issuer & Institutional Investor Forum, the Fourth Annual Corporate Governance Forum Co-Hosted by Broadridge Financial Solutions & The University of Miami – Herbert School of Business. It was a privilege to partner with Paul Washington, Executive Director, The Conference Board, ESG Center on delivering this keynote. This conference focused on shareholder value, board governance and responses to ESG realities.
The group including academics, issuers, institutional investors, and corporate business leaders was convened to look to the future and how best to ensure the continuing evolving nature of business organizations. Participating in conferences of this nature challenges you to prepare, learn and share with other highly engaged people. Leaning into learning is critical and a key differentiator. Those who don’t want to continue to push themselves to learn and stay current will be rendered useless.
The conversations and exchanges were impactful. Building new relationships based upon experience and values, builds renewed trust and confidence. This trust is critical for leading, managing business, attracting new business, creating new strategies, and successfully executing those strategies. At a high level, there was a conversation about future focus on the well-being of all people throughout an organization. Specifically, a future trend that is evolving rapidly relates to the physical and mental health of leadership.
For me, being able to reconnect with Professor John Quelch, Vice Provost of Executive Education & Dean of the Miami Herbert Business School, University of Miami whom I originally met while attending a Harvard University management program and later served with as Lead Director on a healthcare board, was a very impactful experience. In his introduction, he focused on the decisions made by those directors we served with together and how those decisions were focused on values and required character. It reminded me of the strength of these value-based decisions and the importance of this criteria in selecting those people you choose to both work and serve with.
Building and maintaining a dynamic board requires establishing the right board culture. To complicate matters even more, with the pandemic and virtual meetings becoming the norm, the human interactions that used to occur among directors in between in-person meetings helped to establish a more productive board culture. Things get lost in translation virtually. And virtual attention spans are certainly not at the levels required by in-person meetings. Bringing directors back to being engaged as high performing boards is critical. It’s difficult to build the depth of trust from afar, whether it’s related to board culture or an organization’s culture.
Board culture includes ensuring board member diversity. Directors must be able to share different life experiences and be open to allowing all voices to be heard. Conducting independent board assessments to ensure that the board culture, committee charters, and skillsets will enable the implementation of the right strategies and market realities like ESG, provides a foundation for candid board reviews.
Perfunctory board assessments are not helpful. Assessments that are done correctly generate tremendous trust based upon the way they are conducted. Confidentiality and independence are key. Effective assessments should look at both individual board members, committees, and the full board’s performance. Conducting rankings on a scale of one to five doesn’t fully describe the effectiveness of a committee.
Diversity discussions should be occurring as an integral part of strategic overviews. Not attracting a workforce reflecting diversity and demographic trends is a significant risk that will impair your ability to innovate and create new products and services. Diversity is not a check the box exercise. It has serious implications for rounding out your board in terms of skills, experience and thinking. Diversity is no longer just a “nice to have.’ It has become a “must have.” And the numbers show that diversity yields positive performance. BCG reports higher innovation revenue at companies with diverse leadership and we know from experience that diverse thinking attracts better talent and greater productivity.
The focus is not just on investors and the financial performance of the company as it was in the past. Today, stakeholders include employees, customers, local communities, and the global communities at large that are consumed with political and social issues reaching well beyond the company or organization at large. Social media now enables voices to be heard with the click of a button worldwide, making what CEOs and boards do and how they respond even more transparent.
The responsibilities of directors have never been more serious, and the focus needs to be on how boards and directors can become more effective and accountable. The tasks at hand are demanding and require values, continuous learning, ongoing strategic communication and trusting relationships. Without these, you will never achieve both long-term individual and organizational visions.
