BOARDROOM DYNAMICS CASE STUDY

Transcription

1 BOARDROOM DYNAMICS CASE STUDY Session 5 Objectives What is a board all about? When is it time to take action? The art and power of a question 2 1

2 The Role of the Board Shareholders Chairman Board Meetings Company Secretary Reporting & Disclosure Board Operations Board of Directors Achievement of strategic objectives and value creation Fulfil responsibilities and duties in law and prescribed functions Strategy Corporate Policies & Procedures Board Governance Instruments Monitoring and Evaluation Information Communication Board Committees CEO & Management Governance system and controls Audit Committee Remuneration Committee Other Committees Combined Assurance Model Executive Committee Internal Controls & Assurance Internal Audit External Audit Other Assurance Providers Management 3 Differing Focus and Priorities of Board Work Developed Markets Emerging Markets Executive compensation vs. Regulation of related party transactions RPTs) Board composition vs. Competence of directors Investor activism vs. State activism Market-driven incentives vs. Non-market mechanisms Fiduciary duty to shareholders vs. Subpar disclosure and internal controls Board-management relations vs. Independence from controlling shareholder Regulating increasingly sophisticated issues vs. Capacity gaps for rigorous enforcement Cycles of scandals, corruption and collapse vs. More of the same (nepotism, self-dealing, market abuse) Multinationals and listed companies vs. Family- or state-controlled companies Preventive risk management vs. Crisis management/reactive risk management 4 2

3 Board Role: Different Perspectives The Board s View The job of the board is not clearly defined in the mind of the general or even the business public One can actually observe different opinions about the role of the board around this same broad table In addition, very few boards pay conscious attention to this issue by asking themselves explicitly what they see as their role The Legal View The corporate law is not very clear in the definition of the board s work It leaves ample room for choice of agenda and the degree of involvement in the tasks that have been named The law is often behind the practical developments There are frequently substantial discrepancies between the de-jure and the de-facto role of the board Advice! A board should regularly raise the question what role it wants to play deeply involved or laid back The contribution of the board must be: distinctive (i. e., nobody else in the corporation does it) and additive (i.e., the involvement of the board makes the decision better and/or prevents that the company is exposed to unacceptable risks) 5 IFC Progression Matrix Attributes 1 star 2 stars 3 Stars 4 stars A. Commitment to Corporate Governance B. Structure and Functioning of the Board of Directors C. Control Environment and Processes D. Transparency and Disclosure E. Treatment of Minority Shareholders 6 3

4 SlavaBanca s CG Assessment (I) 7 SlavaBanca s CG Assessment (II) 8 4

5 The Fluent Role of the Board I. Support the Transition II. Drive for Excellence High Management Performance Low Advice! Support management on the tough choices Add value through professional advice Give management enough space to act Carry the message to the external stakeholders Prepare the next steps: How can a similar through be avoided III. Get Your Hands Dirty Lead management through the through (become involved) Be present visibly where and when needed Communicate with stakeholders if appropriate Use your network to stabilize company cut your losses early Low Company Performance Define stretch targets and standards (e.g. x percent above industry benchmarks) Reward management excellence Challenge management productively Add value by introducing new ideas IV. Lead the Transition Set specific targets for management (e.g. benchmarks) and define limits of patience Push for change and communicate the reasons with all stakeholders (e.g. personnel consequences) Plan succession and invest in HR development High Check your own performance regularly (e.g. are you properly evaluating management, follow up on issues, give input to corporate evolution, fulfill your responsibilities )? 9 Working questions Question? Group 1 ( Directors ): Looking at the dynamics of the board meeting (e.g. the corporate governance assessment vs. real status; expectations vs. reality), should Carla take action? If yes, how? If no why not? Group 2 ( Generals ): What kind of resistance should Carla expect to her Emser Depesche? Format? 1. In 4 groups (2x Generals, 2 x Directors), discuss questions 2. In plenary get your points across 5

6 The Power of the Question Questions for creative problem solving (e.g. why, why, why...? ) Questions for (re-)directing the thinking (e.g. what do you think about that? ) Questions for leadership, inspiration (e.g. what would happen if we increased...?, what if we tried...? ) Questions showing empathy (e.g. how can I help? ) Questions for critical thinking (e.g. why is the emperor naked? ) Questions for goal setting (e.g. what can we do to get a new customer now? ) 11 Advice! Questions that force justifications or too negative are often bad questions (e.g. why do we always fail? ) Key Messages Don t hope to be everbody s darling. Board work is real hard work Start driving change with low-hanging fruits and avoid Pyrrhic victories. Be a woodpecker: always on the same spot, without getting a headache. 12 6