2021 has been eventful.
I began with writing about strategic issues I expected Boards to have on their agenda for 2021. The pandemic raged on, creating uncertainty and several new people and workplace challenges.
Through the course of the year I was headhunted to interview for roles that I would not normally consider. Unsuccessful interviews have been instructive as I believe interviews to be a two-way street.
I was able to judge the real culture and board dynamic, versus things written-up in the headhunter’s brief, concluding how some boards were not right for me. Luckily in most cases that conclusion was mutual. I am aware this sounds vague if I do not name names; discretion being a crucial skill for a board director, the names shall remain un-mentioned unless you are one of my mentors, advisers, close friends, or indeed the headhunter who pitched me for those roles!
I have had more than one unsuccessful interview where the interviewers’ glowing feedback seemed at odds with their decision, but in the next breath they invited me to advise their boards and their CEOs on issues of importance to the businesses, for which they felt their boards were not sufficiently ready. I have been asked to provide advice to these boards on technological disruption, inclusion thinking, and risk.
One of my unsuccessful interviews resulted in introductions to several board chairs and new opportunities, as well as a very generous open offer to approach the chairman for interview prep, a reference, and mentoring advice.
For my part I referred several persons to headhunters seeking candidates for specific board roles and happily note that all of them are now serving on those boards.
***
These experiences also gave me the chance to observe some shared emerging trends related to boards.
***
Boards are in a liminal space right now. Many issues of concern are in flux.
Purpose and culture: Boards are morphing from being sort of post-retirement lunch clubs with like-minded people, mostly men, to spaces that enable debate, challenge, scrutiny, horizon scanning, and tough decisions, and offer some good camaraderie. It may sound like I am describing my current boards! I am, but in this shift being evident or emergent, I am also including some of the boards that interviewed me this year.
The shift is purposive in many boards, a tad begrudging in others. The difference is easier to notice as an outsider than as an insider perhaps. It is however happening for certain.
Agendas, meetings, and how work happens: It goes without saying that a good board meeting has an agenda. But it often does need to be said that engaged and alert boards do a lot of work outside formal board meetings and formal agendas. This work can be likened to a kind of glue that holds disparate perspectives, people, and approaches together so they can serve the shareholders and stakeholders whose interests they represent. Separate but together. Individually independent but collectively consensual. This is true of my boards and it seemed to be true of many of the boards that interviewed me this year, when I asked questions of them in turn.
This glue is often invisible but what if it is not! Much has been written to criticise what informal channels can do to derail boards. What if boards were to be more open about their own flaws and their own challenges? Self awareness and metacognition as kintsugi! A topic perhaps for another monograph.
Skills and talent: Many experienced CEOs share stories of how they were assured by friends and colleagues that headhunters would be beating a path to their doors once they left the CEO office. The reality is different. Some CEOs do indeed get approached by headhunters. They probably get approached by every headhunter in town and out of town! This however does not happen to everybody who leaves the CEO office.
Climbing to the top of the exec career totem pole does not automatically entitle one to a foothold on the boards totem pole.
For starters, there are fewer board seats to go around, despite the nine-year rule being enforced for listed companies, than there are aspiring board directors. While many boards demonstrably – and sadly, predictably – recruit for continued comfort, increasing numbers of others are wisely stepping into a place of discomfort.
Skills audits being undertaken at the boards before they advise an external advisor or headhunter are increasingly evident in how job descriptions (of sorts) are being written for the current rounds of succession. This means many people, who have had careers previously seen as non-traditional but who have skills and experiences and perspectives that are useful for guiding an organisation into relevance for the future, are being considered for board positions.
We must however be aware that the changes brought about by technology, climate change, and the exhaustibility of natural resources (bar some such as sunlight) are rapid, complex, multifaceted, and sometimes baffling. This means boards need to take a critical look very regularly, not just in succession cycles, at the question of themselves being fit for purpose. This conversation is difficult to have. Because it requires board directors to be self-aware and selfless in admitting that they may no longer be fit for purpose.
I have observed this year that the conversation is happening. With an added twist.
Compliance and all ‘em rulez, aka workload and liability and implications for talent: Experienced board directors often note that compliance burdens in the boardrooms are growing. Also growing are the risks of reputational damage and personal liability. These challenges, it is often argued, are going to shrink the talent pool available where competent professionals are willing to serve.
My take on this is slightly different.
Remember what I said earlier about boards no longer being post-retirement clubs for like-minded people?
So, while the work related to compliance, regulation, reporting, transparency, public accountability is indeed growing, we must remember people self-select to serve on boards. Nobody is putting a gun to anyone’s head to ask them to serve on a board.
What keeps people discussing the burden of compliance is slightly more complicated.
Compliance burden is growing; in practice this means the amount of work required of board directors is growing. This work demands full engagement, vigilance and alertness because the risks arising from failure are real and very public. People, including but not only those who had entertained the idea of board seats being like leisurely walks in the park, find the workload challenging.
Especially for the relatively small fees that many board directors find themselves earning (some of them after highly remunerative corporate careers).
When we review this set of factors in light of the skills requirements, it is evident that a churn is underway as to who will and will not remain the talent pool, and who will and will not be willing and able to serve on boards.
That is a whole different challenge for governance, talent, risk, and relevance.
***
Boards are in a liminal space.
Transitioning to something the shape of which cannot be predicted firmly yet but is slowly emerging.
It points towards the acknowledgement of the growing complexity of challenges that organisations and boards overseeing them are facing.
And a growing acknowledgement that those challenges require different governance structures and conversations, very different people around the table, and frequent reviews of any functioning board’s own continuing relevance.
The emergent space will look quite different in two or three years’ time. The change is subtle but in evidence.
The question is: is your board keeping up?
And if your board is indeed keeping up, the question becomes: how are you ensuring you continue to keep up?
(Disclaimer: These are my own views and do not reflect the views of the boards of JP Morgan US Smaller Co.s Investment Trust or Temple Bar Investment Trust or London Metropolitan University or Harmony Energy Income Trust, where I serve as a non-exec director, and chair various committees at the time of writing.)