Insights from Les Brun, Jami McKeon and Marc Miller on strategy, turnover, and staying ahead of the pace of change.
For corporations, the last 10 years have brought constant disruption, industry-changing innovations, global uncertainty and heightened stakeholder expectations. As companies and their leaders evolved to keep pace, so did the structure and function of their boards.
Recently, CEO Brian Tierney sat down with distinguished board and business leaders for a roundtable discussion about the strategic priorities of the modern board and what it takes to build (and become) a high-performing board in today’s market conditions.
The Breakfast with Brian event featured insights from:
With decades of experience as board members, company executives and advisors, each provided valuable perspective on the changing role and the needs of the corporate board. Here are five key takeaways:
Today’s board members need to be comfortable with the velocity of change.
“The pace of change in our world has been so rapid that boards have had to evolve to be able to withstand and be active in those environments,” said Les Brun. “You’re seeing a lot more sitting executives on the board. The Sarbanes-Oxley Act put a much greater liability on board members, and on board chairs in particular, to make sure that there was appropriate business experience and business judgment being exercised on behalf of the folks for whom we act as fiduciaries. And as a consequence of that, you see boards that are much more engaged in what’s really happening in the world today and how that enterprise interacts with that environment.”
Panelists discussed the strategic perspective that executives can bring when they are already engaging with shifting economic, global and technological forces in their day jobs.
“Really good board members understand not just the company, but the landscape of the industry,” said Jami McKeon. “The more knowledge you have about the industry, the organization and what they are trying to achieve, the better board member you can be. And there was a time when people really didn’t expect that of you.”
Organizations need their board members to be active strategic partners.
“The character of who’s on boards has changed a lot,” said Jami. “It used to be you were on a board because you were buddies with someone. Now what you’re seeing is people really look for well-rounded boards who are going to develop different areas of expertise while keeping in mind that their main job is to advise the CEO, not run the company. You want the CEO to feel like you are really helping the company and doing something that’s making a difference, not a rubber stamp.”
“I ask my board members, ‘What are your priorities?’ Most of them say risk management, and they are a great balance for me because I’m an operator and we want to go fast and do things,” said Marc Miller. “They slow us down a little bit and can see things from a different perspective. That’s what I lean on them the most for.”
As advisors to the CEO, panelists emphasized the value of board members that can bring expertise, instinct and emotional intelligence to the role, without drifting into operational territory and management decisions.
Regular board turnover is strategic.
“How you keep a board fresh and how you make sure that you’re getting the benefit of all the board members is much more of a focus for today’s CEO than it was before,” said Jami. “I’m a big fan of term limits. It gives people a graceful way to exit, and it gives you a mechanism to constantly be refreshing.
It can be really difficult to reduce the size of boards or tell people that they’re not needed as much any more. But it’s really important because otherwise you end up with a board that’s too big, or doesn’t have the right composition, or is not bringing to the table what you need. You have a fiduciary obligation to your company to make sure that the company has what it needs, and that includes the right board.”
“The world’s moving very quickly. The expertise that you need is changing. And that’s a reason that you might want to shuffle your deck a little bit,” added Marc.
As the composition of the board continues to evolve from personal acquaintances to a roster of carefully-selected experts, more companies are setting forth clear expectations about longevity (or term limits) from the start. Panelists noted that this practice allows corporations and board members to regularly re-evaluate fit and current needs, and keep the board composition aligned with company priorities.
The relationship between the board and CEO is a key factor in its effectiveness.
“The utility of a board and the benefit of a board is a function of how the CEO perceives the board, in many respects,” said Les. “The most successful CEOs are the ones that recognize that the board is a resource and can come to the board with enough self-awareness and self-confidence to not fear it but to bare their soul and get some guidance and advice.”
Panelists noted that clear expectations, ongoing communication about what board members and executives need from each other to be successful, and mutual trust allow both parties to bring their best to the company.
“The number one thing that keeps our clients’ boards up at night is the relationship between the CEO and the board,” noted Jami.
First-time board members need to understand these shifts and be prepared to serve as a resource.
“It’s important to understand why you’re joining that board,” said Marc. “What are you trying to get out of it? And more importantly, what is the company looking for from you? That sets the groundwork so that you can be successful.”
“If I’m advising a new board member, I’ll tell them that it’s on you to really understand not just the company, but also the industry, and stay on top of what the issues are that are affecting the company and the industry,” said Jami.
The modern board should be a careful composition of leaders and experts that bring diverse perspectives and strengths to the company, panelists emphasized. And the responsibility to create value lies first with the board member.
As Les said, “As a board member, you want to wake up every day and look in the mirror and say, ‘Am I bringing my A game? Am I doing what I have a responsibility to do?’ There are too many who think of the role as just another merit badge.”