News and Views
January 9, 2020
Posted in: WATSON Views
As we look forward to 2020, we have three things on our minds – people, purpose, and a proactive approach. As your board enters a new decade, consider how these “3Ps” impact your work.
A focus on people continues to be imperative.
In recognition of the impact of human capital and culture on organizational performance, boards need to continue to focus on people. Here are three key areas we see a need for boards to continue to be proactive when it comes to people.
1. Given broad trends in CEO/executive turnover, boards need to ensure that talent development is well defined and executed. And, as the market for quality executive leaders is tight, boards need to allow time to define the role and conduct the search.
Be proactive: Boards that develop more formal succession planning practices for key leadership positions will be better positioned both in times of crisis or planned transition.
2. Boards will need to continue to develop their approach to oversight of culture and consider more focused initiatives to address diversity and inclusion both within the organization and on the board.
Be proactive: Boards have a role in shaping an organization’s overall approach to diversity and inclusion, and should understand the policy, principles, and practices in place to support diversity and inclusion at all levels of the organization.
3. As vacancies arise, boards should seize the opportunity to meet their succession planning goals, which may be to bring on experienced directors who understand emerging risks and opportunities and/or to ensure strategically diverse perspectives around the boardroom table.
Be proactive: Whether directors are elected or appointed, under any model, boards should optimize succession planning practices for directors. It is critical to identify needs beyond the next six to twelve months and to consider the organization’s purpose, longer-term strategy, and operating context. In order to build out the desired profile, actively ask where the organization is going and what is the board profile that will help ensure continued success into the future.
The notion of corporate purpose will continue to evolve.
For many organizations, discussions of corporate purpose have traditionally focused on what the organization does (e.g., produce widgets), with a corresponding focus on results or profit. Today the notion of purpose is seen to encompass considerations of underlying intention and broader social purpose. The dialogue has shifted beyond what does the organization do, to what is the object or the end that we are aiming for?
As the dialogue on purpose expands, so do considerations of the corporation’s relationship with a broader group stakeholders, from employees and customers to impacted communities.
In 2020 and beyond, the conversation is no longer about whether purpose and profit are separate ends – it’s clear that they are inextricably linked and connected to an organization’s social license to operate in this rapidly changing world. From the board’s perspective, acting in the best interests of the organization requires thoughtful consideration of a wider range of stakeholders and non-financial issues (including climate change, human rights, and diversity) and ensuring transparent, meaningful dialogue with an ever-increasing range of stakeholders.
Be proactive: Put purpose on your forward calendar for 2020 and dedicate time to discuss your organization’s purpose, re-examining or ensuring alignment on purpose and how the organization’s purpose is fulfilled.
See related WATSON articles of interest:
Happy new year from the WATSON team.