10 reflections for Boards of Directors in 2020
10 discussions that the 21st century megatrends impose on boards of directors
In the previous article, I detailed the 10 implications for the Boards of Directors caused by the ongoing transformations of the 21st Century:
1. More focus on the future, less on the past.
2. New topics on the board’s agenda, with an emphasis on the human factor.
3. A greater optimization of the board’s time.
4. A more continuous and fluid performance of the board.
5. More time for debates, less for one-sided transmission of information
6. More emphasis on continuous learning and individual assessment.
7. More transparency and better communication with stakeholders.
8. Balance between expertise in emerging issues and industry experience.
9. Diversity with inclusion and camaraderie.
10. From a cerebral and liturgical approach of the chairperson to a human and cultural one.
As a result of these implications, we strongly recommend boards to reflect on 10 questions so they can stay relevant and add more value to their organizations in the 21st century:
- Does our board spend considerably more time (70% or more of the meetings) discussing strategic issues about the future of the organization instead of operational issues of everyday life or from its past, such as the retrospective analysis of financial indicators or the traditional “budget vs. actual” analysis?
- Does our board regularly discusses, based on objective indicators, issues related to:
- The purpose, values, and culture of the organization?
- The leadership styles prevalent at all levels of the company and their alignment with the desired behaviors?
- Human capital management, mental health, employee engagement and the creation of an environment characterized by high psychological safety that is conducive to ethics, experimentation and innovation?
- The growing social activism of stakeholders and the investors’ demands for better environmental, social and governance (ESG) standards?
- Artificial intelligence, digitalization of the economy, cyber risks, data management and privacy, and potentially disruptive technologies?
- Does our board review objectively and regularly how its meeting time is being spent to continually improve its agenda, time allocation and productivity?
- Is the culture of our board, manifested in the relationship between directors and management, fully aligned with the values and the aspired culture for the organization?
- Does each director clearly understand what is expected of his or her individual contribution to the board and is individually assessed against these expectations?
- Does our board have a structured process to deal with directors who have been underperforming?
- Does our board provide high transparency on its functioning to shareholders and other key stakeholders through a report that explains how our board has been adding value to the organization?
- Does our board have adequate diversity in its most varied dimensions as well as provide an inclusive environment in which all directors — especially the youngest, those recently appointed to the board or those belong to minorities — are equally heard?
- Does our board have an education program that ensures directors continuous learning on both soft skills as well as on emerging and critical issues for businesses in the 21st century?
- Collectively, does our board have the human capital appropriate to the challenges that our organization is going to face in the next five to ten years? (e.g. directors with expertise in emerging issues critical to the future of the organization, such as organizational culture, leadership, digital technologies, data science and environmental issues).
In order to add more value in the 21st century, therefore, boards need to deeply reflect on these questions related to its role, functioning, culture and composition.
By doing this, boards will ensure that their organizations are oriented towards a greater purpose, that daily decisions are driven by solid values, and that senior managers exhibit ethical behaviors in line with the desired culture.
Prof. Dr. Alexandre Di Miceli is a professional speaker, business thinker and founder of Virtuous Company, a top management consultancy that provides cutting edge knowledge on corporate governance, ethical culture, leadership, diversity, and company purpose.
He is the author of “The Virtuous Barrel: How to Transform Corporate Scandals into Good Businesses” as well as of the best-selling books on corporate governance and business ethics in Brazil, including “Corporate Governance in Brazil and in the World”, “Behavioral Business Ethics: Solutions for Management in the 21st Century”, and “Corporate Governance: The Essentials for Leaders”.
He thanks Prof. Dr. Angela Donaggio for her valuable comments and suggestions.