This blog is based on Episode 7 of the The Corporate Director Podcast, where we interviewed Nora Denzel, a board member at AMD, Talend Software, and Ericsson.
Corporate boards are under pressure to become more diverse – in age, gender, skill set and geography – while stepping up their level of performance. But younger executives already have full plates, and being a corporate director is becoming an increasingly tough job – one that seems less attractive to younger candidates than in years past. Meanwhile, the C-suite (where most boards seek potential director candidates) is an even less-diverse pool of talent than boardrooms are these days. So, are corporate boards heading toward a labor crisis? And why is the director role becoming so challenging?
We recently sat down with Nora Denzel, a Silicon Valley tech executive who serves on the boards of AMD, Talend Software, and Ericsson, about how things are changing in corporate boardrooms and where we’re heading.
“The amount of time that I spend now in public board work, it’s probably double what I spent 10 years ago,” Denzel said. The game is changing, and directors are challenged to keep up; board composition and performance have reached the tipping point.
Board Performance Matters
Denzel identifies three “buckets” of responsibilities corporate directors must tackle.
(1) Strategy: “The questions we have to ask are do we really have a strategy and is it the right one?” Nora said. Directors want data here including quantitative and qualitative measures around the strategy, market size, growth rates, competitors, and more along that vein.
(2) CEO:“Is this the right person to lead the strategy?” Nora said. Exploring data from the vantage points of stakeholders, employees, customers, shareholders, partners, and communities is the right approach. “It’s all-important to have a 360 degree view,” she added.
(3) Risk:“What are the biggest risks and how do we work to mitigate them?” Nora said. This data comes from a variety of sources–and you’ve got to know which questions to ask to find these out.
To frame the necessity of getting your data right, Nora adds two more questions: (1) Where are we an outlier? Meaning, do we pay more or less than everyone’s paying? Do we disclose more or less than everyone else? If we are an outlier, is it a conscious decision or is it just some kind of accident? (2) How slow can we go? “Go slow to go fast,” Nora said. “This means we spend a lot of time upfront getting the questions right.”
The whole goal of all of these questions is that the first time the topic is on the board agenda, the right data is there. “The discussion can be rich because we’ve asked the right questions ahead of time,” she said. If the data is relevant, complete, and orderly, the board can be infinitely more productive.
Refreshing Your Brand Strategy
A board is a coach, not a player. It aims to get the best out of the company by asking questions and having management see the same thing as the board–while thinking it’s their idea. Sometimes you really need a brand refresh, though.
“The way not to do it is to insist,” Denzel said. “There’s probably more effective ways to do that. But if it really does need a refresh, you want to ask the right questions,” Denzel said.
Questions such as how the strategy differs from the employee experience, the customer experience, the supplier experience. “A brand strategy is really a promise, a promise to customers, suppliers, and everyone who engages with the company,” Denzel pointed out.
The board is responsible for safeguarding that promise–and if it misses something big, it needs to own up. “We trust management, but we’ve verified the data to ask better questions,” Denzel said.
Another role of the board is to act as a buffer for the CEO, to protect her or him from the short-term noise of market change.
“The board should be spending time to help the CEO look above the horizon,” Denzel said. She suggested a good long-term view was three to five years to make sure the board is helping the CEO steer in the right direction.
“Some of the best techniques I’ve seen are to spend more time on strategy,” she said. She describes strategy at every meeting now, not just on an annual retreat, for example.
Bolstering Board Culture
(1) Boards need to be inclusive. “I’ve been the youngest and the only female board member a couple of times, and it’s just not healthy when some people feel excluded,” Denzel said. In a healthy board, no topic is taboo. The elephant in the room has been invited to the table, so to speak.
(2) Boards need to be accountable. In the circumstance of boards not holding themselves accountable, there are really only two things you can do. “If you feel like you can’t have any say, just get out of the situation, because it won’t get better,” Denzel said. The other option is more hopeful–wait for the board to refresh, to become more open and vibrant, by playing as active a role you can in that process.
(3) Boards need to be willing to change. Sometimes, seeking an outsider to conduct the yearly board survey can be highly motivating in the change arena.
You can’t necessarily affect a board’s fundamental willingness to change, but if they are willing, you can do a lot of good with an outsider experienced in how companies work and what board dysfunctions could be.
“If the outsider is skilled in facilitation, if you know the root of the problem, and if you take the process seriously, the board really does listen,” Denzel said.
By asking the right questions about data, refreshing brand strategy as needed, and supporting your board culture, the forecast of your board will be a high-performing and accountable influence on business.
- Corporate Board Practices in the Russell 3000 and S&P 500: 2019 Edition, The Conference Board
- U.S. Department of Labor, Bureau of Labor Statistics, July 5, 2019 Employment Situation Summary
- 2018 U.S. Spencer Stuart Board Index
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- World Economic Forum: This is what the world’s CEOs really think of AI