Eskil is a Boardroom Development Company supporting Chair CEO Director and Senior Leadership Teams (SLT) in Europe, Middle East, Africa and The Americas including The Caribbean - we focus on driving the future boardroom
As a boardroom development company, there are some fairly standard questions that we look to be answered when meeting with a client for the first time – what was fit-for-purpose in 2007 is not the case today. Are you driving the development of the future boardroom?

“How ethical is your leadership?”

It’s fair to say that Corporate Governance was truly defined in 1991.

Following such financial malpractice as money laundering at BCCI (the 7th largest bank in the world), the misappropriation of a large pension fund by Robert Maxwell and the fraud of Polly Peck, there was a greater call for the ethical (and legal) management of businesses.

Let’s not forget that, in 2002, The Sarbanes–Oxley Act resulted from the fraud-driven Enron collapse in 2001 and was used in the case of the bankruptcy of USA’s second largest long distance telephone company, WorldCom in 2003 (again due to large scale fraud).

More recently, we see the Ponzi scheme of Bernard Madoff in 2008, business malpractice with Barclays (2012 revelation of manipulating inter-bank lending rates) and Volkswagen (2015 admission of manipulating emissions data) – as ever, corporate governance is all about ethics.

In many cases, malpractice happens because of weak regulation being exploited by unethical leaders. Whilst boardrooms have some influence but not necessarily authority of how the regulators work, the boardroom DOES have control over it’s own destiny.

“Are you handling mega-change?”

If we look at the statutory compliance associated with Corporate Social Responsibility (profitability, impact on people / communities, impact on the ecology / planet) which encapsulates corporate governance then many organizations are doing their part. However, to take the competitive advantage we need to go further – we need to be proactively exceeding the bare minimum expectation.

During the course of a facilitated board session, we are interested to see if the board members are solely focused on the past & present (governance & compliance) or if they also have an interest in what’s waiting over the horizon for them. A key question to be addressed is whether or not the boardroom is anticipating and influencing the future.

Organizations tend to look at what is going on within their own immediate spheres of influence – their own boundaries – and this is reflected in governance and compliance activities. Beyond these boundaries, however, is a world of massive change.

The modern boardroom needs to be aware of so many external factors and their future implications:

  • Climate Change – for example, how will oil markets respond to the social push for clean energy and how this affect national revenues which, in turn, impact your customers?
  • Population Demographics – younger people are accessing intellectual properties for free – how do you sell to them? They are also more ‘values-based’ – will they choose you as a supplier / provider or employer?
  • Social Change – the developing world creates new issues and opportunities: the growing middle class in China sees a new customer base but we also see a growth of ‘western diseases’ and the impact of pollution – what can your organization do to leverage this?
  • Shift Of Global Economies – financial boundaries and economic strengths are shifting. Are we seeing the rise of African economies? How long will the UK struggle post-Brexit? Is China due for another surge of growth? How will the Middle East deal with declining oil demands?
  • Technology – how will your organization be impacted by artificial intelligence and automation? How will this affect society as a whole and what will your organization do to benefit?
  • Digitisation – there will be an inevitable impact on your organization as digitisation grows – shorter feedback loops inside and outside the business; collaborative tools; big data turning into big information – all of these things call for a leaner-thinking enterprise that can ‘join-the-dots’ to not only see the bigger picture but also influence the new world.
  • Disruptor Culture – all too often, the next competitor to your business is going to be a startup – are you managing this risk? Do you encourage innovation within the organization (or do you penalise those who try to be different)?

In many cases, some board-level thought has been given to this, but there is still only small percentage of boardrooms with an assigned Transformation Director in the C-Suite. Whilst the examples above look at what is happening outside of the organization, there are also issues to be considered internally.

“How agile is your boardroom?”

Accepting that the world outside of your organization is in a state of flux, you will need to be developing an agile and forward-looking boardroom. Some of the aspects on your mind will probably include:

  • Join-the-dots – reasonably, your boardroom excels at ‘doing the right thing’ – complying with laws and regulations, running the business in an appropriate manner according to your corporate governance. However, mega changes will have an impact: strategic thinking is required. If you look at reports from all of the major management consultancies, you will see them referring to how little strategic thinking takes place in the boardroom – to survive in times of volatility, you need to see patterns of opportunity where you can influence and benefit from change.
  • Ambiguity – continual change can be confusing for everyone concerned and the convergence of industries contributes to the confusion: for example, is Facebook a technology company or a media company? The French telecoms company Orange is launching it’s own bank following the 69% acquisition of Groupama Banque in 2016. Are we equipped for digital disruptions that will eat away at our competitive advantage? Are we aware of competitors from non-standard areas? Are we genuinely innovating at all levels in the organization?
  • Political Cycles – many governments are subject to election cycles (e.g. half of the UAE Federal National Council serves 2-year terms; the first general elections for the Consultative Assembly in Qatar are due c. 2019, etc.). Crucially, the election cycles of other countries impacts on your own (e.g. Germany, USA and Iran are every four years whilst the UK is every 5 years). Government changes lead to policy changes (home and abroad) – and the impacts are ongoing. Political sentiment can end large-scale programs. In the UK there is a program called HS2 (High Speed 2) – a new high speed railway – which will be completed in 2033. Consider that, 2 years’ ago, Britain was not considering life outside of the EU and the first noticeable effects has been talk of another recession – do we think that HS2’s 2033 goal will be reached without a hitch? How is the board exploring volatility: are there short- mid- and long-term strategies in place and are we able to explain this to the media if required?
  • Talent – succession planning is an ongoing issue. According to Business Insider magazine, the typical timeframe for publicly announced technology companies to source a new CEO ranges from 2-10 months. Some transitions are planned and (for example, Uber) some are a little more sudden. Whether it is planned or otherwise, finding the right talent can be problematic. How well is the board executing current plans and do we have the right people in place for the future? Are we investing in their education and support (mentoring)?
  • Regulatory shifts happen all the time – in the UK, the push now is for a public declaration of a CEO’s salary in comparison to the lowest-paid workers. Such incidents as Volkswagen and Barclays shows us that regulatory bodies need to be strengthened and this will impact upon your boardroom.
  • Composition – Diversity is a huge issue at the moment – family-owned businesses are expected to include non-executive directors for balance (with the NEDs reporting into your chair) – but does your board accommodate the reasonable expectations regarding sexuality, ethnicity, physical ability, and more?
  • Stakeholders – the word is changing and, with the growth of social media, there is a need for closer stakeholder engagement. This includes having stakeholder representation on the board.

 

The Future Boardroom

It’s not surprising that there is a renewed focus on improving corporate governance (particularly when the fallout from boardroom malpractice goes far beyond the walls of the organization and into different stakeholder communities).

Change is not only here to stay but also demands that corporate leaders guide, lead and benefit from them – and this calls for a boardroom that looks to the future as much as it does to the past and present.

Is your boardroom fit for purpose?

Feel free to contact Neil for a confidential discussion about the director of your organisation.

Driving The Future Boardroom