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ARTICLES:
International
Group
CHASEAMERICA, Inc.
IS YOUR BOARD UP TO PAR?
The continuing saga of corporate failures and accountability breakdowns in the private sector can often be linked to the failures of boards of directors to fulfill their primary responsibilities over time. That’s why it is important for a board to develop leadership information systems for itself to validate progress, spot trends and develop early warnings to potential bumps in the road.
As most boards lack an effective selection system that properly defines the leadership and talent essential for ensuring the organization’s long-term strength, many are turning to executive search firms like CHASEAMERICA for help in developing a strategic roadmap to identify talent and develop a matrix of characteristics that become a SWOT analysis of the current board, as regards issues, skills expertise, diversity and contribution performance. From there, we lay out fundamental issues to prioritize goals and objectives and fill in the gaps, so we can work with the Committee Chair and CEO in recruiting, interviewing and selecting new independent members who bring capacity and content to the organization with diversity in age, gender, race, geography and skills.
As our search professionals are located in 100 offices in 50 countries, our daily interactions with executives and relationships with talent are extensive and cut across many industry sectors. And, because of our specialty practice group in the Board area, we have knowledge of top talent that would like to serve on boards.
Message: Use an outside source to review board practices, individual and collective board contributions. Create a strategic roadmap to fill in gaps to ensure diversity and skill expertise.
The future of any organization depends on the quality and skills of the people who serve on and lead the board. If the right set of people are nominated and elected, the organization will thrive. The wrong set of people can ruin the organization before the next election. An effective governance committee is essential to a strong board, and it should be led by one of the most respected members of the board.
Building an effective Board of Directors requires defining roles and expectations so that members can be engaged and accountable. When members of a board know they make a difference in setting the direction of an organization and assuring its success, they tend to actively participate in meetings, serve on committees and volunteer support for special projects or fundraising. The board in cooperation with staff should determine where the organization is going and look toward the horizon to identify opportunities and challenges. This is the strategic planning function. Effective boards add value to the organizations they serve by providing strategic direction, guidance, resources and oversight.
In an age of increased accountability and scrutiny, many organizations are beginning to realize the value of a separate audit committee that has an arm’s length relationship between the board’s budget and finance committee.
Message: Effective Boards need to be engaged and accountable. Appoint the right chairman. Look for high levels of competency in Strategic Focus, Financial Orientation, Independence, and Stakeholder Relationships.
The value of the board has grown substantially since the scandals of Enron, Arthur Andersen, Tyco and others. According to a survey by Booz Allen Hamilton, of the 2,500 largest public corporations, corporate boards are quicker than ever to give CEOs the axe. Since 1995, the annual CEO turnover rate has increased 59 percent. In 2006, CEOs departing due to mergers and buyouts accounted for 22 percent of departures; and exits due to boardroom brouhahas were up to 11 percent from 2 percent in 1995. When the king falls, he tends to take his handpicked knights and nobles with him, which partially explains the rising turnover rates for CIOs, CMOs, CFOs, and CAOs. A change in regime means a change for everyone. Whether the board decides to can a chief executive, or the company has just been acquired, the wave of change washes through the entire executive suite.
Message: Make succession planning the first priority. Selecting the best candidate for CEO is almost certainly the board’s single most important task, as is ensuring the board has the right blend of skills and expertise to complement the CEO.
Defining what the board needs and recruiting the best candidates is a year-round process. It begins with identification of the current attributes and priorities for board development. A board self-assessment tool and the governance committee identifying the best potential board prospects follows. Some of the best board members, however, come from outside immediately apparent prospects. That’s the value-added of working with CHASEAMERICA. We develop a detailed and comprehensive search for the best candidate(s), not those most convenient, known or serving someone else’s personal agenda. Backed by our worldwide professional search specialist, we can help companies win in a competitive marketplace with a shrinking talent pool.
Message: Effective boards have a clear advantage in attracting and retaining top shelf Board talent and corporate leaders.