Several boards carry out an annual self-evaluation, or an online quantitative evaluation, every three years based on the need to express and show good and ethical board behaviour. However, this is not the way forward if you ask Richard Leblanc, researcher at York University in the journal "The Corporate Board". He expresses that these simplified methods give an imperfect picture of the Board's work and efforts. Just as no one wants to assess a company simply on the basis of their accounts, one should not assess a Board of Directors based only on a quantified and outdated approach. If this method continues, Board evaluation can end up being a ritual tribal dance that adds no particular value to the company.
Board evaluations must not function as a tick in the compliance form. When basing your evaluation data from members' individual and biased understanding of what good board work is, you are taking the easy way out. One can quickly fall into a trap where the results become bland and the subsequent dialogue ends in a round of self-praise and self-glorification.
At Friisberg & Partners International, we specialize in Board Assessments. We go in-depth with a mix of qualitative and quantitative methods in the form of both online surveys, physical interviews and assessments. The data is used to uncover elements such as the Board's experience, their ability to collaborate & challenge each other and the management, collective knowledge and their professional competences. Bases on this data, the company's activities and the associated risks are analyzed along with the Board's work.
As an extra element in creating a truthful and in-depth evaluation, Friisberg & Partners Denmark recommends that the Management assesses the Board in addition to the Board's own self-assessment. Based on the full evaluation and the subsequent reporting, the Board has the opportunity to uncover the potential to become a better strategic player that matches and supports the Executive Board.
Overall, it is absolutely central to the utilization of the potential in an evaluation that the focus is not only on documenting the results achieved, but is seen as a resource for developing the Board; both in relation to current changes or future routines, structural conditions & long term knowledge building.
At Friisberg & Partners International, there is broad agreement that there is a correlation between external Board assessments and improved management quality. Board evaluations contribute to identifying strengths and weaknesses in the Board's functioning, which makes it possible to improve decision-making processes and strategic management. Furthermore, the evaluations contribute to an objective assessment of the Board's composition, working methods and efficiency. It promotes open dialogue and reflection on the Board's performance, which contributes to higher professional accountability.
As an additions service offering, Friisberg & Partners includes a targeted development and action plan as a part of our final report. This can lead to higher levels of engagement and performance.
Lorraine Wrafter is a Supervisory Board Member and Chair of the Nomination & Remuneration Committee with Ignitis Group.
It is already more than a year since the new Supervisory Board of Ignitis Group, one of the largest energy companies in the Baltic states, was elected. The collegial body of the Group comprises five independent members with international experience and two representatives of the Ministry of Finance, the Group‘s majority shareholder.
Our colleagues in Vilnius talked to Lorraine Wrafter, the independent member of the newly elected Supervisory Board, about the role and value of a collegial body in a listed company with the state as a majority shareholder and what it takes to be successful as a member of such a body.
In the Supervisory Board our role is to look after the strategy, key risks (managed risks), ensure business compliance and performance.
My role as the Chair of NRC is to lead the committee and ensure the company is using the right tools and processes to develop the capabilities through succession planning and building the talent pipeline and to engage and reward people. Our role is also to propose an effective organisation structure for decision making and offer assistance in the hiring for Board positions within the Group companies.
The Supervisory Board's first meeting was online and we continued to work online for six months due to Covid and then start of the war in Ukraine. One of our first meetings was to get to know each other, who we are outside of the board room. We had weekly/ fortnightly meetings for the first few months to get us all up to speed on the business. The Supervisory Board and NCR meet monthly.
I was new to the Energy sector and my colleagues were a great help to get me up to speed quickly. I had one to one online meetings with all the Supervisory members to learn about the industry, state and a publicly listed company. We can also call each other whenever we have questions.
What helped me to prepare for the role was the education I received from the Institute of Directors and two advisory Board positions. In addition, Ignitis Group invited me to attend, on behalf of the Supervisory Board, a programme run by an external company to understand corporate culture and governance in the Baltics. They also invested in Sustainability and the Board‘s role.
It is a Energy business, with a fast growing Renewables business that is competing in global markets. We acknowledge the tensions between being both a local Lithuanian company and growing internationally (in Europe) within a highly competitive market. Ignitis Group is a strictly regulated and listed company that has to manage the demands of the state and private investors. All these factors add to the challenges for the business particularly in finding the right talent to run the business and to reward people.
The complexity of the Group structure and decision making processes was one of the first areas the Supervisory Board identified that needed to change. Ignitis Group is now introducing a new structure to help them make faster decisions across the group while ensuring accountability and controls are in place.
We, in the Supervisory Board, were happy to see the resilience and proactiveness of the Group Management team / Executive Board when facing the challenges related to the war in Ukraine – ensuring the energy supply to customers and at the same time moving forward with the agreed strategy, not stopping with growth, especially in renewables (the company "Ignitis Renewables" which expanded quickly in terms of people during the last year).
Challenges were more for the Management Board – our concern was for the Management Board and employees' well being. It has been a very tense year for the business with the war, energy challenges, growing the business and meeting their financial commitments to the state and private investors. During this period employee engagement remained high confirmed by the recent eNPS results.
The role of the Supervisory Board is evolving and the area of focus is the growth of Renewables from reviewing Renewable Projects, preparation for bids, sourcing talent around the world and paying competitive market rates.
Firstly we are a diverse team. There are seven members with seven different skills sets and six nationalities. This gives a great balance of perspectives. We all have an expertise and at the same time we can contribute and challenge each other in their area of expertise.
We are functioning very well as a team.
Being new in the Supervisory Board and also in the Energy market I think it is very useful to get an overview/ knowledge both about the specifics of business, corporate governance and culture at the early stage.
We talk, ask questions, and are open to being challenged and are of course supportive of each other.
Another important area is setting clear accountabilities and boundaries with the Boards of the Group companies so that each collegial body feels accountable, acts within the boundaries and decisions are made on time.
At the end of our meetings we have roundtable time just with the Supervisory Board or Committee members. At these sessions we reviewed what went well and what could be improved and share this feedback with the Management Board. There is no defensiveness.
We have an annual self-assessment of the Board and committees done by external company – another opportunity to reflect and improve the effectiveness of the Board.
Our interactions with the Boards of the Group companies are limited – mainly strategy meetings and business updates. Each of the Group companies has its own board to manage the business and controls. The Group Supervisory Board does not need to get involved with them. They have the controls in place. Our goal is to ensure the Group organisation structure and decision making processes are in place for transparency and in line with anticorruption policies while supporting a fast changing and growing business.
Another important thing in ensuring effective governance is implementation of the principle "Nose in, Fingers out". We, as the Supervisory Board, are responsible for hiring the right people for the Boards and making them accountable, for guiding them based on overall business perspective ("business lenses") and support in decision making – but not making decisions for them. It is a challenge for all of us – especially in a fast growing business, i.e. Renewables, where we say "We are flying the plane while building it".
The Group Organisational Development Director, Executive Board member, and I have a good working relationship; we are open and direct and we learn from each other. It is a two-way process. Before each NRC meeting we have a pre-meeting to review the agenda items and the materials. We discuss areas on which to focus, what could be contentious topics and how to manage the discussions. I play "devil‘s advocate" to pre-empt what questions could be asked by the Board members so that the presenters are prepared.
NRC has varied activities such as agreeing a new Expat Policy, Succession Planning, Female Talent Pipeline, Engagement and Reward programmes. One of the biggest challenges is around Reward where we try and balance the needs and concerns of a state-owned company that is operating in European/Global markets and is publicly listed.
During the last year we did a lot of hiring for the Boards, currently we are also looking for the members of the Committee for Risk Management and Business Ethics Supervision, with the focus on Safety and Health.
I am glad to work with a management team which is very motivated.
I am excited to work in such a team and I am excited to talk about it.
We work very well together. We talk very openly, have discussions and debates, looking at things very objectively from the business perspective – actually we do not have many disagreements, and when we do, we manage to find solutions. Always looking through business lenses, and never with any emotional load when discussing the questions – maybe this is why we are working well.
The independent Supervisory Board members are from 5 different countries/ different nationalities, we all worked for private businesses where the things are done differently than in state owned companies (less bureaucracy and faster decision making).
It is good and useful that we can share our different experiences/ ways of working in different cultures. Two of us in the Supervisory Board are not from the Energy sector (myself and Tim Brooks) – so we have all the opportunities to learn about the Energy sector from other team members.
It is also very useful that we have very open minded members representing the state – through them we 'educate‘ the Finance Ministry on international business best practices.
I really enjoy being a member of a Supervisory Board. I 'have got' everything: state owned, publicly listed, changing and growing business with a truly diverse Supervisory Board. It is a business that can have a big impact on the planet too. I am passionate about the Company and my role in terms of how I can contribute to the business
Be proactive, use all the opportunities to network and let people know you are interested in obtaining a Board position. Take on advisory Board roles to gain experience. I would recommend attendance at a Board/Director Programme for collegial body members – to better understand the role and responsibilities of Board members and understand the governance issues. It also shows potential Boards you are serious about joining them.
The success of the Board is 100% dependent on the success of the CEO the Board has hired.
Hiring is an extensive effort and is only worthwhile if the Board makes the right decision. Interviews, resumés and references give important information, however to avoid subjectivity and unconscious bias, cooperation with an Executive Search Partner is often the solution.
Using an experienced Executive Search Partner will bring additional benefits.
The Board‘s Chair should conduct individual discussions with each Board member regarding the organization‘s strengths and weaknesses, internal as well as market-driven challenges, and leadership needs for the future.
As a result a profile of the leadership attributes and behaviours necessary to successfully fulfil the CEO role can be developed and reviewed with the entire Board of Directors.
The Executive Search Partner will ensure the profile is both comprehensive and well tailored to the situation.
The most successful CEO appointments include consideration of both internal and external candidates.
It is important to remember that succession is rarely a neat process and the Board needs to have realistic expectations.
We recommend benchmarking to gain an objective perspective on the internal candidates and to assess the quality of CEO talent externally — particularly when the context, competitive landscape and company‘s strategy is changing.
An experienced Executive Search Partner will deliver job market insights in a short period of time.
An external Search should be led by the Chair of the Board together with the trusted Executive Search Partner to ensure that the very best candidates are considered.
The Partner that has trusting relationships with candidates, information sources and referees can help the Board to develop a long-list of prospects based on candidates' previous roles and industry experience.
Once a long-list is settled, all candidates, internal and external, should be ranked against the core competencies and attributes agreed in the CEO Profile. Those that best meet the profile should be included into the short-list.
The Nomination & Remuneration Committee and/or the Executive Search Partner will typically conduct interviews to reduce the list to a small group of 2 or 3.
The Board can get excited about a candidate‘s resume without fully understanding whether the executive’s views about strategic direction and leadership style are fully compatible with the Board’s own view, and within the framework of the organization’s desired culture.
Therefore the final candidates are typically given an opportunity to present to the Board, followed by Q&As. The presentation is useful to understand differences in the candidate's vision of the company‘s strategic direction, approach to leadership, personal motivations and aspirations.
All Board members should be involved in the interviews of the final candidates and use an interview guide that the Executive Search Partner can provide. The guide outlines critical competencies for the position and the key organizational culture attributes for rating the candidates in these areas. This eliminates subjectivity, helps to focus on concrete skills and performance, and allow agreement on a single candidate.
The Executive Search Partner is in position to arrange thorough reference checks. Ideally, the checks should be done in person with members of the Board present, so critical non-verbal communication is not lost.
We know that the most successful hiring processes are those in which the right people are brought to the table, the specification is designed with the future strategy in mind and the candidates are assessed holistically.
While there can be immense pressure to make a decision quickly, the Board must resist that urge and take the time necessary to make a fully informed decision.
As diversity gradually increases in many boardrooms (still too slowly, in my opinion) we are seeing more women take on the role of:
Now, I know some would argue that Chairman is not necessarily a masculine term in much the same way as we use hu(man), wo(man) or fe(male).
I disagree.
If it doesn’t matter, then why don’t more men call themselves Chairwoman?
Well, I asked a couple of Chairmen and they felt to call themselves a Chairwoman would just be daft. Yes, perhaps, but no more daft than the other way around – surely?
We still live and work in what is irrefutably a man’s world, and historical semantics dictates Chairman literally means a Chair who is also a MAN.
However, I know plenty of women who refer to themselves as Chairman.
Why?
In the UK, the Companies Act 2006 actually specifies the term 'Chairman' - which is as astonishing as it is unnecessary - and may be the reason.
But, do women really aspire to holding a masculine title? Are they content that it’s the way it has to be? Do they care nothing for its sexist overtones? Perhaps they are actually afraid to rock the boat in what might be a predominantly male boardroom?
But argue I must and argue I will.
I care deeply about the message it sends. If men want to call themselves Chairman, fine. It’s accurate. If women want to call themselves Chairwoman, well, that’s fine too. However, if women use Chairman, aren’t they saying, “I identify as a woman, but this is a man’s world, and I need to conform to get on."?
It sends the wrong message to women, and it also sends the wrong message to men too, especially younger men who shouldn’t be growing up with the potential for a sense of entitlement - that the seat at the head of the table is reserved for ‘men’ only.
Why not use the simple, non-gender specific term Chair?
It’s short, to the point, offends no one, creates no sense of entitlement, and does not attribute gender to something that is absolutely nothing to do with gender…
If you are reading this article and huffing and puffing or muttering about ‘political correctness gone mad’ – there is no need to ask ‘What’s the problem?’...
Lorri Lowe
Partner, UK
Many résumés for women in top positions read like a handbook to business success. They didn't need a quota, the career steps followed one another seemingly logically, opportunities always presented themselves and women took advantage of them. But there are few - at least in Germany.
The legislature now wants to change that.
The plans for a binding quota of women on executive boards affect almost a third of the 100 largest listed companies in Germany because 29 of them have more than three board members, but no position for a woman, according to an analysis by the Boston Consulting Group.
As a diversity officer, I speak to highly qualified women in management positions every week. Many of them have come along a rocky road, yet not all are in favour of a quota; and have differing opinions on the advancement of women.
But when it comes to the question of what women need above all to make it to the top, they all agree:
Courage to seize opportunities and also to fill uncomfortable roles - even if you do not yet have all the skills.
What do you think?
Do women lack courage?
I look forward to a lively exchange with you!
Meltem Ay
Principal, Germany
The world needs more women leaders – whether that is leading companies or running countries. Why? Because gender equal leadership results in a more inclusive and effective society.
Global talent shortages are at a record high (almost double that of a decade ago) so surely it is critical to harness all potential talent. Did you know that although women enter the workforce in relatively equal numbers as men, but the rise to the top can be slower and more challenging for them?
At Friisberg we constantly challenge the status quo and actively seek to create truly inclusive and supportive environments where women can excel and constantly achieve their full potential.
There are many ways companies themselves can aim to attract and retain more women leaders:
Break the male line of succession
A lack of women leaders at the top cannot always be attributed to a lack of female talent. Many women feel blocked from senior ranks due to all-male lines of succession. Breaking this line of succession requires reversing stereotypes. Companies must clearly articulate and make transparent the specific skills and experiences needed for movement into leadership levels and should identify suitable mechanisms for helping women build exposure to the scenarios they need in order to progress.
Offer workplace benefits beyond pay
For companies to attract women into leadership roles, they need to offer more than just good pay, such as employee training and development opportunities, good work/life balance, and flexibility. Many women still remain the primary caregivers outside of working hours, so it is important that companies understand and respect the wide demands often placed on working women.
Look for employees who are willing to adapt
The world of work is changing thanks to the increasing influence of digital technology and this can mean breadth of skills and not always depth. Yet, many companies still require candidates to have many solid years of experience behind them, something that greatly favours men who have not had career breaks. Some of the biggest barrier to women's progress is an entrenched male culture that is based on merits created by men, shaped by presenteeism and defined largely by male standards.
At Friisberg, we always remove bias and barriers from interviews and ensure our assessment criteria are designed with all candidates in mind.
Encourage leaders to take responsibility for their actions
All leaders have the influence to instigate change, so it is important that the words, actions and decisions of leaders are fair and inclusive in promoting and encouraging women.
Leaders should ensure there are adequate policies and strategies in place to create inclusive workplace cultures where people's differences are valued. Such workplaces ensure everyone - regardless of background or identity - is respected, their voices heard and their actions valued.
Lorri Lowe
Partner UK
