Ten things for boards of directors to avoid – Deloitte


 Avoid presentation overload

Presentations should not dominate board meetings. If your board meetings consist of a scripted agenda packed with one presentation after another, there may not be sufficient time for substantive discussions. The majority of board meetings should be focused on candid dialogue about the critical strategic issues facing the company. The advance meeting materials should comprise information that provides the basis for the discussions held during the meeting. Management should feel confident that the board will read these pre-meeting materials, and the board must commit an adequate amount of time in advance of the meeting to do so.

Avoid understating the importance of compliance

There is no room for a culture of complacency when it comes to compliance with laws and regulations. As noted in the Deloitte publication

Avoid postponing the CEO succession discussion

CEO succession planning is one of the primary roles of the board. With the changing governance landscape and new and proposed regulations, the board has a full agenda these days. However, it is important to occasionally take a step back to ensure the board is addressing this important responsibility. During this time of rebuilding and prior to the implementation of new regulations, boards should assess where time is being spent and perhaps redirect focus on succession.

It is important to note that the succession planning process is continual and doesn’t end when a new CEO is selected. As the company evolves, its needs change, as do the skills required of the leadership team. The board needs to ensure that a leadership pipeline is developed and that its members have ample opportunity to connect with the next generation of leaders.

Avoid the trap of homogeneity

The topic of board composition and having the « right » people on the board continues to receive much attention. The SEC has proposed rules that would require more disclosure about director qualifications, including what makes each director qualified to participate on certain board committees. The shift to independent board members facilitated a move away from a « friends on the board » approach to a new mix. However, the board needs to assess whether this new mix translates into a positive and productive board dynamic. Boards should take a closer look at the expertise, experience and other qualities of each member to ensure the board that can provide the right expertise. Diversity of thought provides the perspectives needed to effectively address critical topics, which can contribute to greater productivity and ultimately a stronger board.

Avoid excessive short-term focus

Perpetual existence is one of the principal reasons for the initial development of a corporation. However, recent history offers many examples of modern corporate entities managing to reach short-term results at the expense of long-term prosperity. The board can demonstrate its leadership by being the voice of reason and openly discussing the sustainability of strategic initiatives. This can result in a well-governed company with a greater chance of achieving long-term, sustainable success.

Avoid approvals if you don’t understand the issue

Complex issues can have significant implications for the survival of an organization. It is up to directors to make sure that they understand issues that can alter the future of an enterprise before a vote is taken. This doesn’t require dissecting every detail, but it should consist of a thorough investigation and assessment of the risks and rewards of proposed transactions. If you don’t adequately understand the issue, ask for more education from management or external experts. It comes down to being able to ask the tough questions of management and probing further if things do not make sense. Consensus doesn’t mean going along with the crowd. True consensus results from a thorough debate and airing of the issues before the board, resulting in a more informed vote by directors.

Avoid discounting the value of experience

As a director, it is important to recognize the value that your experience can bring to the issues at hand. Good governance doesn’t mean checking all the right boxes. Rather, it is bringing together the diverse skills and experiences of each director to lead the company through challenges. Directors can provide greater insight by being ‘situationally aware’ when evaluating events and courses of action to take. Just as the captain of a ship needs to understand the various environmental factors that influence navigation, boards need to understand the external risks that may have an impact on the navigation of the company. Consider the context of the current issue, how it is similar to, or different from, previous experiences, what alternatives could be considered, and how outside forces may impede a successful outcome. Don’t discount the value of experience just because it was gained outside the boardroom.

Avoid stepping over the line into management’s role

A board that makes management decisions will find it difficult to hold the CEO accountable for the outcome. A director’s role is to oversee the efforts of management rather than stepping into management’s shoes. Directors must make a concentrated effort to ensure that they have clarity on management’s role, which is to operate the company. The distinction between the board and management is often blurred by directors who forget that they are not charged with running the day-to-day operations of an enterprise. This doesn’t prevent a director from getting into the details of an issue facing the company, but it does mean that directors should avoid stepping over the line.

Avoid ignoring shareholders

A company’s shareholders are among the most important and potentially vocal constituents of the enterprise. Concerns can sometimes be addressed by providing shareholders an audience with the board to air their concerns. Historically, compliance with the SEC Regulation Fair Disclosure (Reg FD) rules has been perceived as a hindrance to directors engaging in shareholder dialogue and meetings. As outlined in the Millstein Center for Corporate Governance and Performance policy briefing.

Avoid a bias to risk aversion

With the recent focus on excessive risk-taking and its impact on the credit crisis, there is concern that companies and boards may become risk-averse.

Boards dysfonctionnels et actionnaires floués


Vous trouverez, ci-dessous, les coordonnées d’un site portant sur les comportements dysfonctionnels et les effets destructeurs de plusieurs Boards. À lire (commentaires et livre de John Gillespie and David Zweig)

Money for Nothing moneyfornothingthebook.com

How the failure of corporate Boards is ruining American Business and costing us trillions. John Gillespie and David Zweig take readers deep inside the elite world of these corporate leaders to reveal its inner workings and show…

Le pouvoir d’un CEO face à un CA


Excellent article basé sur une recherche empirique qui tend à démontrer qu’un CEO dominant a besoin d’un CA puissant pour équilibrer le pouvoir. La combinaison d’un CEO plus discret et d’un CA moins puissant semble favoriser une meilleure performance de l’entreprise car le travail de l’équipe de direction est alors plus mis en évidence.

New business school research suggests it all depends on who’s watching the…

Conflicts of interest – CEO/Chairman


Chairing deliberations over your own performance is a conflict of interest, whether you’re a mayor or a CEO.

Planification de la relève du CEO


Here are five reasons succession planning is so poorly practiced, and the steps board members can take for a smooth change in leadership

Diversification de la composition du CA.


La nécessité de viser à obtenir un conseil d’administration diversifié.

A call to action business.financialpost.com

It will take courage and enlightened leadership to change board composition, but it can be done.

Conseils de McKinsey sur la dynamique des CA


Un bon résumé des avis de McKinsey concernant les pratiques et la dynamique du Conseil

Règles anticipées de la SEC concernant le whisleblowing


NACD BoardVision nacdonline.org

NACD’s Peter Gleason and PwC’s John Barry discuss the much anticipated final rules from the SEC on the Dodd-Frank whistleblower provisions.

La fraude dans les entreprises


Excellent article de « The Gardian » sur le rapport de KPMG concernant la fraude à haut niveau dans les organisations.

Global analysis suggests that the typical fraudster is male, aged 36-45, with a senior job in Finance.

Composition des CA en France


Voici le témoignages de femmes qui ont choisi de siéger sur les CA du CAC-40.

Rencontre avec cinq pionnières de la féminisation des conseils du CAC 40. Leurs parcours sont éloquents.

La gouvernance des entreprises chinoises


Très bon article sur la problématique de la gouvernance dans les sociétés chinoises

Ask most what is the biggest economic risk facing China today and you will probably hear about food inflation, property prices, or growing imbalances between the rich and working class in society. Those are all worthy…

Gestion des risques et CA


Dix (10) questions que les CA devraient se poser en ce qui concerne la gestion des risques : Une compilation de Norman Marks

Norman is a practitioner and thought leader in internal audit, risk management, compliance and ethics, and has led large and small internal audit departments, been a Chief Risk Officer and Chief Compliance Officer, and managed IT Security and governance functions.

 

A good reference for boards is the 20 Questions series from the Canadian Institute of Chartered Accountants. The series includes one on risk management. I have my own set of 10 questions (OK, they have follow-on questions). These were developed for boards, but they would probably be a good basis for questions auditors could ask as well.

  1. How has the executive team become familiar with leading risk management practices? When you manage risk, and uncertainty in general, are you using a recognized risk standard or framework?
  2. Risk management is about managing uncertainties that may impact our ability to achieve our goals. In broad strokes, can you describe how you identify, assess, and determine how to manage those uncertainties?
  3. How do you integrate the consideration and management of risk in the setting of strategy, achievement of goals and objectives, optimization of performance and management of major projects?
  4. How have you assigned the management of risk within the companies? Is it clearly part of each manager’s responsibilities, or is it seen as the responsibility of the risk officer, CFO, or other person? If the latter, why? If the former, how are they informed, educated in risk management techniques, and provided the tools for the task?
  5. How are risk criteria, including risk appetite and tolerance, set? How are those levels and expectations for taking risk communicated across the organization? How do you know when the levels are exceeded?
  6. If each manager is responsible for managing risks within their sphere of operations, within their set of responsibilities, how do you make sure you as an executive team have a clear view of risk across the organization? How do you manage the accumulation and interplay of risks when a single situation can affect multiple areas, or when the activities of one manager affect others?
  7. Are you managing risk fast enough, so you can act when necessary? Is the organization agile? Are you able to change strategic directions if risk levels change?
  8. What is your process for involving the board? Under what circumstances will you notify us? What information will you share and when?
  9. If you have a risk office, what is their role relative to the responsibilities of management? Where do they report, do they have access to executives and the board, and are they adequately resourced?
  10. How do you make sure the risk management process is working as you expect? Are you using internal audit to obtain that assurance?

Rémunération globale des CEO en forte hausse


Compensation Is Going Up — But Only At The Top blogs.forbes.com

For those who didn’t get a chance to read The New York Times over the long weekend, it may be worth a glance back at the Sunday business section. The Times ran a piece about the compensation levels for the top executives at 200…

 

Comportements appropriés des membres au CA


Très bons conseils sur les comportements attendus dans les réunions de CA (partagé par Richard Leblanc dans le groupe Board Advisor)

Directors & Boards: Feature directorsandboards.com

Executive compensation


Un bon article de Canadian Business sur la complexité de la tâche des comités de RH lors de l’établissement de la rémunération globale de la direction

Executive pay is a hard problem; no wonder shareholders are hesitant to second-guess.

La gouvernance chez News Corporation


Canadian Business s’entretient avec Dr Richard Leblanc sur la situation de la gouvernance dans le cas d’entreprises contrôlées par un actionnaire majoritaire tel Robert Murdock.

A corporate governance expert explains why boards fail.

Créer un lien entre la planification de la relève et la rémunération de la direction


Un bon article sur la relation qui devrait exister entre la planification de la relève et les modes de rémunération de la direction (un article suggéré par Richard Leblanc)

If solid succession plans increase shareholder value, then executive compensation should be linked to succession planning effectiveness.

Membres de CA et médias sociaux


Bon article de BoardMember.com sur l’mportance des réseaux sociaux pour les membres de CA. Six questions que le Board doit se poser. (partagé par Richard Leblanc)

Six Questions Board Members Should Ask About Social Media Usage – Boardmember.com

Corporate Board Member’s Boardmember.com is the public company director’s source for corporate governance education. Boardmember.com offers webcasts, articles, and interviews with corporate governance experts, as well as…

Lettre de l’Institut français des administrateurs (IFA), partenaire du CAS


Connaissez-vous l’Institut français des administrateurs (IFA), partenaire privilégié du Collège des administrateurs de sociétés (CAS). Voici leur dernière lettre de juin 2011. Vous y retrouverez, en autres, deux articles sur la transmission d’entreprises, un domaine dans lequel nos cousins français sont passés maîtres.

Questions que le Board de News Corp doit se poser maintenant !


Bon article de HBR Blog Network sur les questions qu’un conseil d’administration doit se poser en situation de crise – le cas de News Corp (article partagé par Richard Leblanc).

 

News Corp and Questions Boards Need to Ask blogs.hbr.org

Business bloggers at Harvard Business Review discuss a variety of business topics including managing people, innovation, leadership, and more.