A couple of high-profile CEO resignations in Vancouver this week got me wondering: do stakeholders expect the board of directors to be transparent about the reasons underlying a CEO's untimely departure? Do they believe the published account put forth by the PR folks? I think I can safely answer 'not usually' to the second question. Sometimes the situation is what it seems - health reasons, family reasons, turns out not to be the job they want. But often, there is something else going on. And a couple of conversations (thanks to the universal law of 'six-degrees of separation') can quickly get you closer to the truth.
The number one reason people leave jobs and companies is to escape their boss. CEOs are just like the rest of us. An unexpected CEO departure frequently has its roots in the relationship between the CEO and the board, often the board chair. There is a mis-alignment of vision. There is no chemistry. The CEO isn't listening or open to coaching. The board chair is meddling. The board is being pressured by key stakeholders around results. The board has questions about the CEO's style, decisions, leadership effectiveness. The CEO railroads the board. The board tramples the CEO. The board is suspicious information is being withheld. The CEO is suspicious the board is talking to people behind his back. The board feels the CEO they have isn't the one they thought they hired. The CEO discovers the job she was pitched doesn't match the one she is doing. With one CEO and 10 board members, most of whom have pretty strong egos, the potential for dysfunctional interpersonal dynamics to emerge is not insignificant. And once it starts, it does not take much to spiral someone right out the door. That person is, almost always, the CEO.
This takes me back to my first question: does it matter to stakeholders when boards don't tell the whole truth about why the CEO is leaving?
A version of this article was first published in my monthly HR column on Troy Media June 24, 2015.
I recently read a blog by marketing guru and all-round provocative thinker Seth Godin entitled “The fruitless search for extraordinary people willing to take ordinary jobs” (June 4, 2015). It took me back to a board room conversation about executive pay. Every company has a ‘compensation philosophy’ that it uses to guide how it sets the pay of employees, from the CEO on down. We talked about the challenges we were having meeting the performance expectations of shareholders and our need to increase the level of talent in the organization. Then, as if we had just forgotten the previous conversation, we reconfirmed our compensation policy - to target pay at the market median (otherwise known as ‘average’). We were doing exactly what Mr. Godin proposes as lunacy - expecting above-average talent to deliver above-average results for average pay. Guilty as charged. Reflecting on this got me thinking about other ways organizations and leaders ‘kill’ the potential for excellence:
Rate everyone’s performance as ‘above expectations’. A few years ago I had the opportunity to help a client ‘fix’ their performance review process. We discovered there was nothing wrong with the performance criteria, the forms or the process. The problem was the ratings - the average performance score was 4.2/5. Only 10% of employees scored a 3 (‘meets expectations’) and no one scored less. If the organization was delivering exceptional results perhaps this statistical improbability could be overlooked. But it wasn’t. The organization was reinforcing average performance and getting exactly what it deserved - average results.
Reward loyalty and effort. Long-service, loyalty and effort are all laudable and should be encouraged. But they are insufficient if the goal is to create organization excellence. The world stopped being a meritocracy several decades ago. One of the most common reasons I hear for keeping long-serving but poor-performing employees around is their knowledge and institutional memory. We are in the information age. It is time to think long and hard about how you are managing and transferring knowledge in your enterprise. The statute of limitations on gold service pins has run out.
Offer a defined benefit pension plan. You are not enjoying one of these unless employed by a large corporation or anything resembling a government. Had I understood the implications of the pension when I was 20, I would now be happily retired and vacationing on a desert isle. Pensions are wonderful things and of tremendous benefit to employees and society, and I wish we all had one. They are also guaranteed to stop people who really need to get out and do other things from voluntarily leaving your organization.
Ask extraordinary people to work for average leaders. Talent is attracted to talent. If your goal is to bring in exceptional people, you need to staff your leadership roles with people who will inspire and engage them. A strategy of recruiting exceptional people to shore up an organization’s weaknesses is guaranteed to create a revolving door.
Make personal development optional. My job requires me to regularly ask people ‘what is on your current development agenda?’ The answers I typically hear makes me want to tear my hair out. ‘Nothing really’ or ‘I actually don’t have a development plan right now’, or ‘I still need to have that conversation with my boss.’ I used to think people were busy working away on things designed to help them get better and just didn’t want to tell me about it. I turned out to be wrong. Many of us don’t seem particularly concerned about honing our performance, as if personal excellence has little to do with organizational excellence. Leaders, when they put off having those conversations with their teams, are complicit. Organizations who take a casual attitude toward people development will never deliver consistently outstanding results. Because for a business to survive these days requires constant improvement, and we’re not just talking about processes and IT systems.
Building and sustaining organizational excellence requires exceptional people dedicated to the task and supported by the right values, expectations, processes and leadership. Jack Welch was a lighthouse for all of us on the topic of organizational excellence. As the CEO of GE he taught us exceptional performance is a relentless and disciplined pursuit, not a happy accident. Jack may have retired and moved on, but that idea still burns bright.
Seth Godin, June 4, 2015.
If It Talks Like a Duck: How Confusing Leadership Presence with Leadership Effectiveness Leads to Bad Hiring Decisions
Taylor is one of those confident, outgoing guys who stands out in a crowd. He looks like a leader, talks like a leader, and collects fans the way charismatic types do. He has built an impressive career. When I asked him what has been key to his success, he spoke about the importance of never staying too long in any one job or organization and being aggressive and aspirational in pursuing the next opportunity. The funny thing about Taylor is, if you stop and objectively evaluate his success beyond the positions he’s held, he comes up short. While he’s been successful, the projects he’s managed, the teams he’s built, the businesses he’s led have not been particularly remarkable or successful. In fact, he is someone who consistently disappoints. In his case, moving from one company and opportunity to another helped him evade questions about his real effectiveness. Because Taylor looks like a leader and talks like a leader, people have - erroneously - assumed he is a leader. This is a common, and potentially disastrous, human decision-making error: confusing leadership presence with leadership effectiveness.
It is this very human error that tends to get us, as citizens, into trouble in the political realm. We are naturally attracted to those candidates who possess leader-like qualities and we get behind them. It isn’t until after the fact we discover that, sometimes, looking like a leader and sounding like a leader does not translate into an ability to lead.
It is this same human error that gets CEOs and boards into trouble when they make judgments and decisions about personnel. When we use ‘executive presence’ as a proxy for effectiveness, we run the risk of hiring or promoting someone who proves unable to translate their leadership presence into results.
Strategies to Avoid Getting Duped by Leaders Who are ‘Big Hat, No Cattle’
There are things you can do to avoid hiring people who possess more leadership presence, confidence and ambition than they do real ability.
Be aware of the natural tendency to be attracted to and distracted by leadership presence. Knowledge is power. If you know we tend to correlate leadership emergence with effectiveness you can guard against it. When you hear yourself thinking or saying ‘she really stands out as a leader,’ follow up with ‘I wonder how effective she really is.’
Seek out and supplement intuition with hard data. Sometimes it is easier to make judgments and get to the heart of someone’s effectiveness when there isn’t so much veneer. When there is a lot of veneer, this is the time to be more diligent in supporting your gut reaction with facts. Expand the reference pool and dig deeper. I recently did a 360- feedback process for someone who got glowing reviews from everyone I spoke with. It wasn’t until I dug in and asked about results that I heard things like "yeah, I really like her and would work with her again in a second, but to be honest, while she did okay she really wasn’t as successful as we were expecting". Things to watch out for include: a track record of promotions generated by moving between rather than within an organization and frequent job changes before results can be adequately assessed.
Psychometrics can be your friend. In my leadership practice I use both in-depth interviews as well as psychometrics (you know, those pesky online leadership assessments) to understand leadership effectiveness. They can provide important supplemental information about leadership style and personality variables that are missed by interviewers. Leader-like people perform exceptionally well in interviews. Good psychometric tools can help to tease out leadership presence from leadership effectiveness so you don’t get duped.
Know when to cut your losses
We all make mistakes, sometimes in spite of our diligence. It can be hard to face up to bad decisions - it is embarrassing to admit you have mis-judged someone. Discovering your new CEO isn’t very effective in leading the people or the business is a hard pill to swallow. But leadership effectiveness requires the building of managerial ‘muscle’ and ‘scar tissue’ over time and experience. Can you afford to try and transform this leader’s emergence into effectiveness at this stage in their career? If the answer is ‘no’, best to move on. If the answer is ‘yes’, you will need to figure out how you are going to do that. Step one is convincing that leader she is not as effective as she believes herself to be. It isn’t impossible, but it is probably not going to be very easy. After all, look at her track record.
What to Do if This is You
What if you are the person who possesses tremendous leadership presence but hasn’t been able to translate it into real and sustained leadership success? Sometimes our self-confidence and belief that we ought to be in charge can get in the way of the vulnerability that is required to actually learn how to be effective. The good news is, you are starting from a position of strength - people already see you as a leader. Here are some strategies to get you on your way.
Admit you may not be as great as you think you are. As they say, admitting you have a problem is the first step. My favourite people to work with are those who see themselves as always coming up short and in constant need of development to improve as leaders. Not surprisingly, these are usually the people who are most effective and need my help the least. When you say you want to improve, do you really mean that or is it a superficial acknowledgement? Where is the evidence to back up your commitment to change? Are you prepared to do the work?
Seek a deeper level of self-awareness. Not all of us are blessed with penetrating insight into who we are and what makes us tick. Strategies for supplementing your own insight include 360-reviews and those pesky psychometrics. These tools are designed to tell you, in very objective terms, about you.
Get professional help. I know that you don’t just want to be a leader, you want to be a good leader. If being an effective leader were so easy, you would have figured it out by now. It isn’t easy. So admit you need help transforming yourself into the leader you want to be and seek out the help and support of someone who can really help you make that happen. This isn’t a 30-day program. This is a lifelong pursuit.
This article was inspired by a webinar entitled The Impact of Narcissism on Leadership courtesy of Hogan Assessments (www.hoganassessments.com), the Alberta provincial election, and at least one ‘big hat, no cattle’ leader I’ve bumped into recently.
A version of this article was first published in my monthly Troy Media column and can be viewed at http://www.troymedia.com/2015/03/30/tips-to-becoming-a-strategic-thinker/
Last week I started working with a leader who suddenly finds herself on the executive team. A corporate restructuring caused her to skip a level and now she is sitting around the table asking, ‘am I strategic enough to do this job?’ Her question is not unique. Twenty years of working with leaders on their development has taught me there are 3 leadership success factors executives worry about most: public speaking, financial acumen and strategic thinking. The typical solution for the leader who wants to be more strategic is to attend an executive education program called something like "Strategic Planning for Executives". What usually happens is they take the program, have a wonderful time, develop some really good peer connections, and then complain the course was aboutplanning not strategic thinking.
What is strategic thinking?
Strategic thinkers demonstrate the following characteristics:
Can strategic thinking be learned?
First, the bad news. Everyone’s brain is wired differently. Some people are profoundly creative. Others have an intuitive sense around people. Your brain is your brain. Best to know what it does well, and where the wires don’t connect.
Now, the good news. If you understand how your brain works, and you know what you want it to do, you can apply it in new ways.
How to be more strategic
Not every strategist will be a leader, and not every leader will be a strategist. Being a strategic leader is a combination of strategic thinking and strategic action.
Tactics for developing strategic thinking include:
Tactics for developing strategic actions include:
Everyone wants to be strategic. While you might not be the most strategic thinker by nature, strategic action can be nurtured.
I sit on the board of a not-for-profit organization engaged in transforming leadership in the not-for-profit sector and we design and deliver a lot of governance education to executive directors and their boards. We strive to lead by example and model what we teach. We just completed our annual board evaluation process and many things are going extremely well in how we operate and govern. And then there is this comment: “We need to be careful to keep taking the longer view - we easily slip into the weeds in discussion.” Sigh. We are just like everybody else.
Pretty much every chief executive I have ever worked with has logged the same ‘observation’ of the board: they can get awfully mired in the detail. When I try to reassure them their experience is not unique, I tend to get a look of profound skepticism. Because when you are the chief executive and your board is triple-checking the math or debating the word in a sentence, you can get a little paranoid. A board that dives down and gets stuck in the weeds is, unfortunately, the rule rather than the exception. This dynamic occurs even though directors would rather shoot themselves than be described as tactical or meddling.
One of the most difficult and often unexpected tasks a chief executive undertakes is the management of his or her board. A first-time CEO is often blown over by the nuanced complexity of this task. And for some reason, prior experience as a board member seems to be little pre-requisite for effectively managing your own board.
Rather than write one more article reminding us all of the role of the board and the difference between governance and management, I thought it might be worth exploring - from the point of view of a psychologist - why the ‘detail-absorbed board’ phenomena is so prevalent and what you can do to alleviate it.
Why boards get in the weeds
Some of the reasons boards struggle with maintaining a strategic focus have more to do with being human than they do with being a board member.
The human brain uses data and detail to create big pictures and spot trends. Our brains formulate narratives by accumulating details. Because the board member’s brain actively engages with the organization sporadically, it takes time, and a lot of data, to build up a coherent picture and elevate facts to insight. Management tries to help by providing (often hundreds of pages of) information which it expects board members to digest in 7 days or less. It reminds me of my first week in graduate school when each professor handed out 350 pages of reading for discussion in next week’s class. When board members ask a lot of detail-oriented questions, it is probably because their brains are still trying to piece together information and make sense of it. And some brains require (and adore) more data than others. Given the nature of the human brain, it is possible that ‘dropping into’ an organization a few times a year may not be an ideal rhythm when the goal of the board is to provide strategic oversight and input.
The role of the board member is complex and multi-faceted. In the world of not-for-profit board governance and leadership excellence, we talk about three roles boards play: fiduciary, strategic and generative (Chait & Ryan & Taylor, 2005). Fiduciary responsibility is a natural draw for the detail-oriented. Strategic responsibility can also elicit its fair share of detailed questioning as board members seek to understand an organization’s priorities, rationale and method of executing on those priorities. Generative responsibility is the playground for future-oriented, strategic, conceptual thought. It needs more than a 10-minute time slot. If you look at your board meeting agenda and the topics up for discussion, it will probably become painfully clear why board members show up with their pencils sharpened.
Under stress, strategists become obsessive-compulsive detail-oriented problem-solvers. Personality is a funny thing. There are our normal tendencies and then there are our stress behaviours. For some strange reason, stress behaviour is often the exact opposite of normal behaviour. Since the issues boards face are rarely run-of-the-mill, are frequently high-stakes, and the voting members do not have any control over their execution, stress responses kick in. Suddenly you find yourself staring down a group of highly strategic people who all want to dive in and solve the problem - or even argue about the right method to solve the problem - instead of formulating brilliant questions that cast a light on the shadowy corners.
How to elevate the contribution of the board
There is a tendency for us to make assumptions and draw conclusions about the character and competency of board members when it might be more helpful to take a step back and think about them as human machines with predictable patterns of behaviour. If you can anticipate, you can try to over-ride. Here are three suggestions for facilitating the strategic contribution of the board:
Manage the human brain. The way information is prioritized and communicated can lighten the cognitive load and help the board maintain a strategic focus. If you communicate strategically, you increase the likelihood of getting strategic input in return.
Make space for generative contribution. Recognize the board is being asked to play multiple roles. If you want a strategic contribution you have to create the time and headspace for that. The middle of the audit committee meeting may not be the best place to insert a conceptual discussion about the evolution of the risk management model.
Anticipate stress reactions. When people walk into a room to deal with an issue, they have probably had just a few days or weeks to get their heads into it and, suddenly, you are asking them to make a high-stakes decision. As a board member, what I hate most is being surprised with something and then told a decision is urgent. What it says to me is that the chief executive is a) not on top of the business, b) lacks respect for me, my role and my decision-making process and/or, c) wants to rush something through before I’ve had a chance to think about it. If you are going to ask the board to confront an important decision that will likely cause anxiety, plan for that.
A board can make a significant contribution beyond fiduciary due diligence. And this is, in fact, why most people sign up to serve. Not just for the pleasure of combing through financial statements and risk management policies, but also to ignite the strategic capacity of an organization. Do they get too stuck in the detail? Probably. And, maybe, it isn’t just their fault.
Governance as Leadership: Reframing the Work of Nonprofit Boards. Richard Chait, William Ryan & Barbara E. Taylor. John Wiley & Sons, Inc, 2005.
Your future success as a leader depends upon your ability to translate feedback and awareness into a tangible development plan. Unfortunately, you probably have no idea where to start. After 20 years in the business of helping to transform leaders and organizations I am convinced, more than ever, that the ‘black box’ in bridging the gap between leadership potential and reality is development. There are endless solutions for acquiring feedback that point in the direction of change. There are, likewise, endless solutions for measuring and rewarding performance. What is most often missing is what happens in between - a fundamental understanding around how to move from leadership aspiration to reality. In essence, how to change behaviour. If you are a leader interested in how you can transform yourself, read on.
Step 1: Gain Clarity Around You Who Are and Who You Aspire to Be
Why should anyone be led by you? We don’t spend enough time asking ourselves who we want to be when we grow up and why we should be leaders. How can you tackle your development if you really don’t know who you are and what you stand for? I have had the privilege of working for leaders who ‘get’ this and the less-than-inspiring experience of working for those who do not. Quite honestly, there is nothing more frustrating or disillusioning than working for someone who really does not have an interest in developing their identity as a leader.
Defining Who You Are as a Leader
I will admit I can be a tedious leadership coach. When I am working with leaders in the context of personal transformation, before we even discuss where they should focus in terms of their development, I ask them to answer these questions:
Step 2: Setting Development Targets and Priorities
The goal of leadership development is to align intent with behaviour in order to achieve higher-order objectives in the context in which you find yourself. So often, leadership development springs from a mis-match between what a leader is striving to do and what is coming across to key stakeholders. The extent to which you are aware of and can objectively assess your development opportunities determines your ability to develop strategically and intentionally.
Questions leaders should ask before determining development priorities and next steps
Not everything that you get feedback on is worthy of development. I don’t particularly care what your 360 feedback, leadership assessment report or leadership coach have to say about how you need to change. Instead, I suggest you ask yourself a series of questions to get at the heart of where you should focus your development:
Making Change Stick
Where the rubber hits the road around personal development is translating your desired future behaviour into tangible action steps that will result in real change. I have seen a lot of development plans; I have seen a lot less actual development. If you are serious about actually transforming who you are as a leader, the very best resource I have found for changing behaviour is James Clear’s Transform Your Habits. My summary of how to translate development intent into sustainable behaviour change is:
Transform Your Habits (2nd Ed.). James Clear. www. jamesclear.com
According to recent surveys, employee engagement is at an all-time low. At the same time, the focus on engagement seems to be at all-time high. Even worse, organizations have handed off driving employee engagement to the human resources department when so clearly it is a leadership accountability. The culprits of low satisfaction scores of old - poor wages or working conditions, lack of training and tools, insufficient communication, no recognition, lack of empowerment - have largely been resolved in many of our work places. And yet malaise is increasing. What is going on and how do we fix it?
Why we are disengaged at work
Recession fatigue. The fragility and inconsistency of the economic recovery is wearing us down. For most organizations cost-management and ‘operational efficiency’ seem to have permanently replaced growth and innovation as a strategic vision. It is hard to get excited about pinching pennies 7 years in a row. The human spirit needs a more meaningful purpose.
Technology fatigue. Whatever lines used to exist between work and life have been erased by the phone-sized computer we carry in our back pocket. Other than the few hours when we are asleep, chances are we are constantly multi-tasking job and life responsibilities. Although humans invented computers, we are not computers and we do not function well when we are all-systems-go, 24/7. The human physiology needs a different set of rhythms and programs.
‘Just world’ hypothesis fatigue. There was a time when we believed in a just world - that commitment and hard work were rewarded and the world, including the workplace, was a fair and just place. Instead, we see a world that is not so fair. The rich and powerful get richer and more powerful while the rest sit on the sidelines waiting for a turn that never comes. Average CEO pay has risen 22% since 2010 while average wages have declined or barely kept pace with inflation (Mishel & Davis, 2014). It's no wonder employees are disgruntled.
Middle child fatigue. Drawn in by the now infamous War For Talent argument (McKinsey & Co., 1998), organizations have concentrated their recruitment, development and retention efforts on executives and future executives. The remaining time is spent trying to manage the performance and exit of under-performers. Meanwhile, 85% of the workforce - solid contributors who are critical to success - have been left on the sidelines. Discretionary effort and emotional engagement are hard to muster when no one seems to be paying attention.
Engagement fatigue. It is possible we are all tired of being surveyed and then told that on top of everything else we are expected to do, we have to work on our attitude. There is no evidence proving organizations that measure and manage engagement in the same way they tackle equipment maintenance have more engaged employees. Workplaces visibly humming with engaged employees are probably not worried about measuring it.
How to improve engagement
Rather than focus on measuring engagement and spending countless days in post-survey focus groups and action planning committees, I have some ideas about how to instantly improve the engagement of employees:
Vision. Give people something to believe in and strive for that ignites their imagination and spirit. Say it like you really mean it.
Balance. Take the IT system off-line for 12 hours each day and/or encourage people to deal with pressing personal issues during work hours, whenever they may arise and no matter what is going on at the office.
Equity. Share the wealth. Consider skipping the executive team retention bonus and distribute it to the customer service reps or safety officers instead.
Respect. Treat everyone like they are important today and a critical part of the organization’s future.
Leadership. Ask teams to vote for the person they want as their leader and appoint them. Repeat annually.
These may seem like radical ideas at first blush. But, frankly, if you are really serious about having people show up at work excited, committed, giving it all they’ve got you are going to have to do something really different.
A version of this article was first written for my column on Troy Media and is posted at http://marketplace.troymedia.com/2015/01/29/5-sure-fire-ways-to-improve-employee-engagement/
CEO Pay Continues to Rise as Typical Workers Are Paid Less. Mishel & Davis, Economic Policy Institute, June 12, 2014.
The War for Talent. The McKinsey Quarterly, 1998 Number 3.
Because it is January, chances are you are frantically trying to schedule year-end performance reviews. The dreaded performance review - quite possibly the most detested HR program ever invented. It doesn’t matter what process, form or technology is in place to accomplish this task, it is always bad. But what if I were to tell you that you can put an end to the madness? It is probably not realistic to eliminate the task altogether (someone from HR will hunt you down eventually), but you can put an end to the dreaded part. I know I did.
Step 1: Focus on performance planning, not performance review
How would you feel, as a fan, if your favourite hockey team showed up on the ice without a game plan. Instead of carefully crafted and well-rehearsed strategies and plays to get the puck in the net, the coach decided just to ‘play it by ear’. That is what a lot of leaders do with their teams. Instead of investing time and energy in crafting well-considered performance contracts that align tightly with business objectives, a lot of leaders leave their direct reports to ‘wing it’ on a day-to-day basis. I have seen large, complex organizations with serious strategic objectives fail to engage employees in anything resembling a robust performance planning process. Each member of your team should have clearly defined deliverables that directly align with your deliverables, which should directly support your boss’ deliverables, and so on. This process takes effort, but at the end of it each of your team members will have a concrete business plan they will use to prioritize their time and performance. They will know what is expected of them and align their activities accordingly.
Step 2: Hold weekly review meetings based on the performance contract
When I took on managing a senior team my coach gave me a piece of advice: hold weekly 30 minute update meetings with everyone. The prospect of that seemed overwhelming to me at the time, but I decided to trust her and give it a shot. While it wasn’t always easy, and sometimes the weekly meeting drifted to a bi-weekly meeting, I can tell you it worked. For 30 minutes each week, team members provided a short and snappy update against their performance plan. Anything not directly related to the plan was dealt with in a separate meeting. What did this accomplish? Focus. Momentum. Timely, relevant two-way feedback. No surprises. Results. My team got the important stuff done. This is what performance management (and people leadership) is all about. More importantly, as a team we knew we were contributing in a significant way to helping the organization achieve results and we felt good about our accomplishments.
Step 3: Watch performance review become a non-event
When formal mid-year or year-end performance reviews were due, it was a non-event for us. Everyone knew where they stood because we tracked this on a regular basis. And because I knew my team were achieving their goals, I knew I was delivering on my commitments to my boss. So instead of spending time arguing about and negotiating performance ratings, we spent our time talking about development and career goals. And that is how you engage employees. Not by handing them a report card like they are still in grade-school, but by helping them paint a picture of their future.
I have many shortcomings as a leader, but performance management is something I was pretty good at. But only because I was intentional in building it into my management routine and relentless in executing against it. So make this the last year you say you hate performance reviews. It’s January, after all. Time to get on that performance planning process.
This month's blog was inspired by a conversation on building organizational alignment with DC, a newly appointed CEO.
Talent On Board: To Increase Board Diversity Requires a Shift in Recruitment Attitudes and Practices
Evidence shareholders are being short-changed by traditional board composition is mounting with every research report linking the participation of women in senior management and on boards to positive business outcomes. In Canada, diversity is being given an extra push by the Ontario Securities Commission’s ‘comply or explain’ policy. Companies will need to publicly release information about how they are promoting and actively managing gender diversity. Board diversity is more than just about rectifying bad optics. It is about getting the best talent around the table. To do that will require more than good, heartfelt intent, which I believe we have a lot of in corporate Canada. Underlying the existing board composition patterns are a set of beliefs and attitudes that drive board recruitment and selection decisions. To change the outcome requires some fundamental shifts in how we think about and recruit board members.
Board Recruitment Attitudes and Practices Help Maintain the Status Quo
Historically, board members have been drawn from the pool of retired CEOs, COOs and CFOs with experience in a similar or related industry and often with a connection to one or more influential members of the board. Board recruitment was, and in many cases still is, informal and personal. The introduction of recruiters to the process has broadened the search, but the ideal candidate profile has remained relatively consistent. The traditional recruitment model poses a number of challenges when the goal is to diversify.
Diversity as a Strategy to Build Talent on the Board
Increasing diversity is more than just good PR. It helps boards and organizations better address key business and governance issues. There is tremendous breadth and increasing complexity in the issues facing organizations today. For example, according to Deloitte, the top board concerns for 2014 included: enterprise risk management, executive compensation, corporate strategy, shareholder activism and sustainability. The Conference Board (2014) identified the top five challenges for CEOs as: human capital, customer relationships, innovation, operational excellence and corporate brand and reputation. While former CEOs will continue to form the nucleus of corporate governance, boards made up of members who bring deep and diverse expertise are probably better equipped to help organizations anticipate, tackle and solve their most pressing problems. Diverse boards bring a more comprehensive collective view, are more attuned to risks and opportunities, and are in a better position to provide guidance and oversight to the organization. When talented people across multiple domains with diverse experience and perspective come together in the pursuit a common objective, good things can happen.
Spencer Stuart Board Index. Spencer Stuart, 2013.
Governance Trends Shaping the Board of the Future: Board Performance and Diversity. Annual Corporate Directors Survey, PwC, 2014.
The CS Gender 3000: Women in Senior Management. Credit Suisse, 2014.
Deloitte Center for Corporate Governance, 2014. www.corpgov.deloitte.com/site/us/board-governance/.
The Conference Board CEO Challenge® 2014: People and Performance. Conference Board of Canada, 2014.
Why Talent Management Investments Generate Poor Returns and What to Do About It: The Recruitment Problem
“Find us someone who will be ready for a VP job in 12-18 months but who is prepared to come in and prove it.” Those in the recruitment business will recognize this request as a growing trend. As demographics kick in and retirements loom, organizations find themselves with talent holes and a lack of ideal internal candidates to fill them. Asking recruiters to find and secure high potential talent willing to make a job change on the possibility of bigger things to come is certainly ambitious. And unlikely to be successful as a talent building strategy.
Why recruiting high potential talent works better in theory than in practice
When organizations have the opportunity to go outside for talent, they take it very seriously. The goal is, always, not only to attract the best possible candidate for a role but to increase the talent pool. Then reality sets in:
Strategies to increase your odds of success
For many organizations, the necessity of using external recruitment to bolster the talent pipeline is a reality. Here are a couple of suggestions to make this a more successful endeavour.
Stay tuned for my next article Talent on Board: How Traditional Board Recruitment Practices Help to Maintain the Status Quo.
The Risky Business of Hiring Stars (Harvard Business Review, May, 2004).