Welcome to our new regular series of articles, Actionable Insights! Here, we will take you behind the scenes at our Competent Boards education sessions to bring you exclusive corporate tips and tricks. We will share with you some of the valuable knowledge and advice from our faculty speakers, a global pool of board directors, and industry experts.
In our February sessions, we examined ways of managing risks and opportunities in today’s rapidly changing business environment. Our faculty speakers tackled topics such as preparing for the future, crisis management, stakeholder communications and how to lead with good values.
Here are five takeaways and talking points:
Embracing change
Board directors and senior leaders must be adaptable and receptive to new concepts to safeguard their organizations against various challenges, such as pandemics, geopolitical risks, supply chain disruptions, and climate change.
“It is extremely important to build the business for the future,” said Jens Moberg, Grundfos chair. “Today, we are planting the trees under whose shade we may never sit. Therefore, leadership means fulfilling our current commitments while also laying the groundwork for the future of the business. It is not a choice between one or the other, but rather a balance of both.”
Companies must develop a long-term vision and strategy that takes into account regional and national regulations, customer preferences, and geopolitical factors. Proactive communication with management and relevant stakeholders is the key to success.
Anticipating and mitigating risks
Board directors and senior leaders need to be in a position to anticipate and successfully navigate unexpected crises. To achieve this, they need to keep up to speed on emerging risks and opportunities and ask challenging questions of the senior leadership.
“Expect a problem. When you’re on a board… better-led boards are much more engaged and much more ready for a crisis when it inevitably comes,” said Eric Wetlaufer, TwinRiver Capital managing partner and board member at several companies. “Things will go wrong, things do go wrong, [so] be prepared [and] run scenarios.”
Maintaining transparent communications
In times of crisis, companies need to communicate effectively, honestly and transparently with both internal and external stakeholders. In doing so, you will gain their trust and respect, even during difficult times. Board directors and senior leaders must work closely with their communications team so that the right information gets to the right stakeholders at the right time.
However, companies must be careful not to promise something in the heat of the moment that they cannot then deliver. A broken promise is bad for corporate reputation.
Doing the right thing
Doing the right thing no longer needs to be at odds with maximizing shareholders’ value. Many consumers today expect companies to take a stand on environmental and social responsibility, and they are more likely to support those that align with their values.
Companies can maintain a social licence to operate by focusing on the triple bottom line of people, planet and profit. However, companies must avoid greenwashing, which can harm the company’s reputation and erode stakeholders’ trust.
To strike a balance between being a responsible corporate citizen and maximizing value to shareholders, the company must have a strong culture.
“Culture comes from actions, not just design. Many organizations attempt to design their culture, but it’s ultimately their actions that shape it,” said R. Gopalakrishnan, author, corporate advisor, and retired Director of Tata Group and Vice Chair of Unilever India. “And if a culture is to be designed, it must be done with simplicity in mind. For example, Tata Group has this in big bold letters as you enter their main units: ‘Humata, Huktha, Hvarshta [Good thoughts, good words, good deeds]’ — a simple yet powerful Zoroastrian philosophy.”
Evolving the role of corporate directors
The responsibilities of corporate directors have become more complicated due to the rapidly evolving business environment, increased regulatory pressure, and economic uncertainty. Companies are actively seeking experienced board members who can navigate these challenges. In addition to diversity in ethnicity, gender, age, and sexual orientation, diversity in expertise, such as geopolitical, sustainability or digital, is essential for creating a well-rounded board. If any gaps exist, outside advisors should be brought in to supplement the board’s knowledge.
“The responsibilities of the board are becoming increasingly challenging,” said Dottie Schindlinger, executive director at the Diligent Institute. ”Many corporate directors have shared their view that these responsibilities will likely continue to expand in the next three to five years.”
“Over the past five to 10 years, the role of corporate directors has significantly evolved, and now they’re required to possess a diverse range of skills and experiences. Consequently, boards are beginning to resemble management teams, with expert board members selected based on their specific areas of expertise, rather than a group of individuals who share the same skill set.”
These takeaways come from the first two sessions (Understanding new geopolitical risks and expectations for companies) and (Dealing with dilemmas: Turning business risks into opportunities) of our most recent sold-out ESG Designation Program, which started in February. We have more cohorts rolling out this year and in 2024, so book your place today to be a part of a fascinating community of knowledge-sharing!
Elvin Madamba is Competent Boards’ Program Manager, and Maria Shamim is Competent Boards’ Research Analyst. Follow Competent Boards on LinkedIn.
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