News and Views
January 29, 2016
Posted in: WATSON Views
CEO transition is a high-risk game. Business journals are full of statistics of new CEOs who are hired with enthusiasm and fired within the first 18 months of their tenure. The recent public airing of the events leading up to Arvind Gupta’s resignation as President of UBC brings to life such a statistic and provides insight into the kinds of challenges that can arise.
Bringing on a new CEO is an exciting and important time for any organization. It is often a pivot point to help the organization re-energize or move to the next level. However, CEO transition can also be a time of high risk. Key challenges for a new CEO often include:
- Lack of alignment between the board and new CEO on the role and expectations
- Failure to build key relationships
- Failure to understand the culture and
- Failure to demonstrate results.
In our experience, boards typically invest significant time and effort in the recruitment process to find the next CEO. However, where many boards fail is that they take their hands off the wheel once the contract is signed and assume that the new CEO will address the organizational challenges as they expect.
In order to increase the chances of CEO transition success, boards must direct considerably more effort to the onboarding and feedback process. They must be intentional and proactive in their approach to help the new CEO integrate into the organization, culture, team, function and role.
We have recently worked with a number of boards to help them develop onboarding processes for new CEOs.
Key Factors to A Successful CEO Transition
Based on our work, we believe there are a number of key factors that can increase the chances of a successful transition.
- Broaden the scope. The idea of onboarding opens up when you see it as more than just the first week of meetings and the binder containing every organizational policy ever created. For us, onboarding is a process that is intentionally designed by the Board to set up the CEO for success.
- Clarify expectations. Create the space for the board to meet with the CEO to talk about roles, expectations and priorities. These can be incredibly powerful conversations that foster clarity, alignment and trust.
- Help with the relationship transfer. Great relationships don’t just happen. Boards need to think through the critical relationships, plan for meaningful introductions and have a way to monitor these relationships.
- Don’t underestimate the importance of the cultural fit. CEOs are often hired for skill and fired for fit. Don’t underestimate the importance of cultural fit in the hiring process and the onboarding process. Use the onboarding process to create the space for the CEO to learn about the organization’s culture and become part of it.
- Design effective feedback processes. High quality, objective feedback is critical, especially when you are new to a role. A new CEO will likely ruffle some feathers in the beginning – that might even be the plan. Having a set of touch points scheduled where the Board and the CEO can offer feedback is incredibly valuable – perhaps at the 3-month, 6-month and 12-month points. We also strongly encourage a 360-degree feedback process within the first year that can offer a clear picture into the CEO’s strengths and areas for improvement and progress towards agreed upon results.
- Open and Accessible: Ensure the CEO has easy access to seek counsel from directors and meet with the board as required to test and confirm strategic priorities, share challenges, confirm ongoing roles and build relationships.
Ensuring your organization has the leadership it needs is one of your most critical responsibilities as a director. Leaving it all to the search process is a high risk strategy. In order to help a new CEO be successful, boards must be intentional about setting the stage for success. A well thought out on-boarding program facilitates alignment between the CEO and board on strategic priorities, articulates well-defined performance expectations for the CEO, provides mentorship and support for the CEO, and includes informal and formal feedback mechanisms to build a culture of dialogue and ensure issues of concern are addressed early.
January 13, 2016
Posted in: WATSON Views
How would you describe your board? Are they engaged in their work and a valuable asset to your organization? Or do they simply go through the motions, spending time and energy on low value activities? At WATSON, we have been helping improve governance for over a decade and have seen a direct correlation between a competent, engaged board and organizational success. We know that successful boards govern with intention, engaging in dialogue that is challenging, persuasive, and inspiring.
What Does an Engaged Board Look Like?
An engaged board acts in the best interest of the organization in every aspect of its role. This includes directors arriving to meetings prepared and working cohesively as a team, both within the board and with management, towards the organization’s long-term strategic goals. Effective boards keep their directors engaged by selecting the right candidates, encouraging learning and growth, and providing constructive feedback. The most engaged boards don’t simply talk about engagement, they practice it regularly, tackling their underlying issues, evaluating their effectiveness, and adjusting their processes accordingly to become high functioning teams.
WATSON’s Five Tips for Building a Better Board
The levers for building a high-performance board that will have an impact on engagement include:
1. Keep the focus on purpose
Every organization needs, at certain times, to re-evaluate why it exists. A successful board discusses why the organization exists and what role the board plays in the organization’s success. With clear purpose, boards perform to a higher standard and directors remain engaged and produce better results because they are able to see the value in their work.
2. Articulate roles and responsibilities
Role clarity is essential for board success. Invest time to ensure roles and responsibilities of board leaders, individual directors, committees, and officers are clearly defined in your board governance policies. When directors are clear on their roles and the expectations set out for them, they are able to focus on the right issues to guide an organization to success.
3. Deliver high quality information to directors
Management is responsible for providing the board with the right information before entering the boardroom. Ensure the information given to your board is high level enough that board meetings aren’t spent analyzing small details, but rather, discussing strategic matters of the organization. If the pre-meeting material is mired in detail or provides unrelated information, directors are left unprepared to make decisions and board conversations suffer. It is crucial that briefing documents focus on outlining strategic issues, risks to consider and decisions that need to be made. To ensure the right information is provided, schedule a conversation between the board and CEO to discuss the quality and quantity of information that is needed.
4. Seek out and prepare the leaders your board needs
One of the most important processes a board can create is a strong recruitment process to bring in excellent directors and future board leaders. A strong board or committee chair comes with experience navigating difficult and often political situations and is able to create a culture of full participation and engagement characterized by robust dialogue, intentional process, aggressive learning, and clear decisions. Through designing effective agendas and engaging and facilitating difficult conversations, the best board and committee chairs encourage all directors to voice their concerns and opinions in a manner that continually forwards the organization’s goals.
Most importantly, strong leaders need to be given education and support to be prepared for their roles. Equipping your directors with constant learning opportunities allows them to marry their knowledge and background with the processes that are most applicable to your organization’s success.
5. Provide proper support and feedback to directors
The highest functioning boards couple learning opportunities with structured processes for proper feedback. Whether this is regular board evaluations or in-camera feedback sessions, communicating board strengths and weaknesses allows your board to acknowledge underlying issues that may be hindering progress. It is also important for your board or governance chair to have one-on-one conversations with directors to identify learning needs on an individual basis. Once your board is able to recognize areas in need of improvement, you can begin to identify ways to address them individually or as an entire board.
Building a high-performing board takes effort on behalf of the entire board, directors, and the organization’s management and leadership team. It is an ongoing exercise that needs to find its place at the top of every board’s agenda. At WATSON boards are our business and we can provide the support your board needs to succeed. Contact us to discuss ways we can help to raise the level of your board’s engagement.
November 24, 2015
Posted in: WATSON Speaks
Teresa Budd addresses the role of the board, individual directors, in-house legal council and corporate secretaries at the Continuing Legal Education Society of British Columbia’s Corporate Governance 2015 forum.
Building on the statutory requirements outlined by co-presenter Gordon Chambers, Teresa explores how compliance isn’t a guarantee of effectiveness. WATSON believes the fundamental difference between good governance and great governance begins by Governing with Intention™. Building and sustaining an effective board is centred on the objective of designing the board you need rather than leaving it to chance. There is no one right approach to board renewal. A healthy approach involves two considerations: ensuring the board has the skills and expertise it needs to carry out its responsibilities and maintains a culture that promotes robust dialogue, strategic thinking and debate.
- Recruit – strength comes from diversity. Define your needs and actively market your requirements to potential directors
- Orient – help new directors achieve maximum value in the boardroom through a thoughtful, comprehensive approach to orientation
- Educate – tailor education to the needs of the entire board, committees and individual directors
- Evaluate – provide boards with dedicated time to reflect on the functioning and effectiveness of the board and their peers
- Embed – policies and processes into your governance framework
December 13, 2015
Posted in: WATSON at Events
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