The Good Coach Wins The Game – The Chairman And Their Team

By Kolja A. Rafferty, MBA, IDP-C and IDN Switzerland Ambassador

In professional sports, mental readiness is key for champions.  This is highlighting the importance of being mentally balanced also for senior executives. The Non-Executive Board must observe and nurture the mental health of the firm’s top executives in addition to overseeing the firm and acting as the interface between shareholders and executive management, to create resilient and sustainable organizations.

Executives are skilled, able, and well-meaning! Yet, in situations of rapid change, they are observed to act dysfunctional.

Research has shown, executives are skilled, able, well-meaning, and well informed about the firm and its surroundings. In general, they are motivated to pursue the best interest of the shareholders. However, in economic turmoil, executive teams have been observed, to fall into a cycle of dysfunctional communication. This is starting with a state of secrecy and denial, further escalating to blame and scornavoidance and turf protection and finally passivity and helplessness.

“Some pressure is good. It makes them run faster!”

A myth in management claims: A level of stress enhances the task performance of the employees. This belief is based on research results conducted in 1908 by the two animal behaviorists Yerkes and Dodson at the animal behavior faculty of Harvard on Japanese dancing mice and has been challenged by various scholars in the past years. Unless the executive team has been recruited from Japanese dancing mice, an increased stress level is diminishing executive performance.

Global sports management is ahead of bespoke management practice

Across different disciplines the global market for professional sports achieved 2019 a total revenue of $ 1.8 billion, leaving an average sports team with a revenue of $ 39.5 mil., in the same spot, as many SMEs. The sports industry is in reality a subbranch of the media and entertainment sector, where task-performance objectives are only on semblance reduced to scoring goals, similarities to business are stronger than one may think.

Muscles and brains cannot be separated from each other. For professional athletes, peak performance is the result of rigorous training regimes and a state of mental readiness. Yet, other than in economics, mental preparation is not left at private discretion but is nurtured by mental coached, preparing athletes for the match. Mental readiness is understood as a critical factor, which is attended with thorough attention.

When it really matters, the framework for top executive performance is at its worst 

Stress factors, related to situations of rapid change, where the dynamics of the transformation keep accelerating and exceed the level of control of the management, are identified and can be categorized. Excess executive stress under distress and turmoil conditions is driven by four aspects.

  • Rapid and drastic changes in the work environment, including increased workload, changes in processes, style, and communication
  • Financial and legal concerns, caused by reduced payouts, fear of job loss, potential personal liabilities (et al.).
  • Emotional disruption, through continuous and repeatedly non-appreciating communication with various stakeholders, but also including disharmony in the intimate relationship.
  • Future worries, for reputational consequences, the continuation of the own career path etc…

Clustering the drivers for executive stress, most stress drivers are triggered by immediate and internal processes. The Board-of-Directors holds the authority, to establish a culture, voiding the most notorious stress drivers, to protect and retain executive performance in situations of rapid change. This can be a foundation for growth and sustainability.

A coach, allowing his team to be mentally distracted before the championship, will be fired on the spot! For a reason!

In situations of rapid change, higher levels of emotional stress and turmoil are suspected to be the differentiating element between the executive teams of firms in distress that must be liquidated and those, that manage to recover.

Capital markets are sensitive to the emotional well-being of the CEO already on a much lower level. Research has proven correlations between the emotional distraction of the experience of a recent divorce and the reactions of the capital markets.

In the 21st century, we are applying executive (self-)leadership of the 1800s

For once, let’s be honest: We all «kind of» know about the risks of Burn-out and the importance of mental health in the Executive world, yet, a stressful workday, permanent connectivity and late hours in the office are treated by many executives as “scares of honor“. Regrettable yet excusable liabilities to the family, the intimate relationship or the own, personal balance and well-being. For career frontlines, this is accepted as the price for success.

In parallel, Executive incentive systems are set up to foster the short term profitability of a firm, yet often fail to include mental balance of the executives in the considerations. It is fair to argue, high paid executives must observe their capabilities to perform themselves, yet, ignoring the relevance of mental balance for executive performance and focus on short term outcomes exclusively, can diminish the resilience of the organization.

In sports this would be equal to send the best player of the team to the match, whilst ignoring recent, previous injuries. Chances are: Small problems will cause bigger problems and end in negative outcomes when it really matters.

A small injury, left unattended, can prove being fatal in the final match.

The Good Coach

For the coach it is key to understand, performance levels vary even for top players. This can be due to daily performance variance, subject to dealing with legacy issues, or emotional burdens. In either case, the result of today’s match may be depending on high performance to be delivered to the point. To win the match the coach must exercise the right assessment of the status of the team and its key players.

For the Chairman, the ongoing monitoring of the capabilities of the executive team is at the core of her responsibilities in order to facilitate long term and sustainable growth and success and foster the resilience of the firm.

Executives are on top of the daily challenges and routines. Even on a “bad day“ they will perform on a sufficient level. Things can turn critical, if the tides are rising. It has been observed, companies, heading for growth and, firms exposed to disruption in the external environment, carry high risk of failure. Resilience is key for the executive team, to deal with situations of rapid change, where the dynamics of transformation keep accelerating and the level of control is diminishing. Here, executives need excess capabilities to control the situation and quickly adapt to a new reality.

For the chairman it is key to understand, if she has the right team in the game. Cheering and motivating, directing from the sideline, bringing in expert players for special situations but also making sure exhausted players rest, and bringing in fresh blood to the match are part of orchestrating a match.

Rigorous training leads to the championship

Success is not born on match day, but build up over the season.  Resilience and engagement on the executive level is the result of a process.

To the good, a healthy and well facilitated culture, regular executive education can build up a strong and capable team, able to take on turmoil and situations of rapid change; yet, to the bad, toxic work environments, unhealthy relationships, exhausting periods at work without rest etc. can deplete the resources of the executives and bring individuals close to a point, where breaking sooner or later is inevitable. A little increase in pressure, and the capabilities of the team can be exceeded.

Take away – game changer or playmaker?!

Understanding skills and current capabilities of the executive is at the heart of the chairman’s responsibilities.

Selection, succession planning, challenging, re-training, of the executive team – these are disciplines, easily agreeable to be mastered by the Non-Executive Board. Yet, there is more to it. Identifying and mentoring key players on different levels of the organization, assessing temporary downturns of individual performance and understanding trends vs. events is key to be able to facilitate sustainable success and build resilience throughout the organization. Also, creating a culture, which is aware and hedging for systematic stress drivers, the executive team is facing, specifically in situations of rapid change and moments of turmoil, is key to create value from the board and prepare an organization for rough times ahead.

Kolja A. Rafferty, MBA, IDP-C is an author, consultant and executive.  Kolja focuses on situations of rapid change, turmoil and economic distress. He is operating for Private Equity investors and Banks in Europe and the Middle East, helping to resolve distress situations in companies of different sizes and sectors.

First published here.

 

What makes an Effective Chair?

by Mary Francia, INSEAD IDN’s ambassador for the Americas and host of the referenced Chairmen event. 

I was thrilled to join fellow alumni last month in San Francisco for the opening of the INSEAD San Francisco Hub for Business Innovation. We had the privilege to inaugurate the Hub with the first Masterclass, featuring Professor Stanislav Shekshnia, co-director of the program ‘Leading from the Chair’ and author of  Leading the Board, followed by the panel ‘How to Be a Good Board Chair’, presented to an audience of directors, shareholders, CEOs, chairs and executives.

The discussion examined a variety of board practices, comparing European and American boards in the public and private sectors, in family firms, technology companies and startups, and looking at how types of board structures and duties can vary due to cultural differences. Below you’ll find highlights of our fantastic exchange between Stanislav Shekshnia, Dominique Trempont and Tommaso Trionfi – each of them experienced chairpeople of public and private companies – on what board chairs do, how they do it and what makes an effective chair.

What is the No. 1 challenge of board chairs?

Managing a “difficult” board member, where a problematic board member is seen as domineering, makes too much noise, too much room or does not listen. The interesting finding, however, was that a silent board member is actually the hardest challenge: how do you get a silent board member to contribute?

Who does the chair work for?

A chair leads the board and represents it in its relationship with shareholders and the CEO. But who does the chair work for? The company? Shareholders? Interestingly, we heard that – with few differences – the overwhelming response in Europe today is that the company is the principal – much as we’ve seen in the trend for stakeholders vs. shareholders.

What defines culture in a board?

Interestingly enough, it is not nationality or the country! Instead, in Europe it’s the ownership structure, the company lifecycle and the size of the board that defines cultural differences in boards.

The concept of ‘Empty Head’.

“Not knowing much about the industry of the board you chair” is a theme we carried from the class to the panel with Dominic Trempont and Tomasso Trionfi, and even beyond it via a e-mail discussion. If we agreed on the role of the chair, would it be better not to have an opinion?  Should we pursue a chair position in an industry that we do not belong to? Would it free us to focus more on our role?

So, what is the role of the chair?

It’s about enablement, and the board is not a team! Enable leadership. A chair must enable a board to work effectively as a team and make the collective decisions required – but that doesn’t mean a chair is there to make a team out of the board.

Who owns the materials and the concept of the ‘0 – 30 – 50 – 20 Rule’.

Listening to presentations in a board meeting takes up a lot of time – sometimes as much as 70% of a meeting. How does this encourage directors to prepare on a subject that they will listen to repeatedly or often in a meeting? In a useful board meeting the chair owns the materials and drives the 0-30-50-20 Rule – in which there are zero presentations! Guess what the other percentages are that drive aproductive conversation?  This is a critical insight as usually, material presented to a board is structured to get it to approve a proposal. This approach should incorporate the most valuable information for decision making.

What is the right way of working with the chair on a board?

The type of relationship with a CEO – and what defines it – is important. Should it be collaborative? One based on mentoring? An advisory capacity? We discussed how the chair role in a private board might differ from other institutions, and the outcome identified the role being driven by two scenarios:

1) The chair is the major shareholder and decision reside with that person.

2) The mix of shareholder ownership is dispersed and decisions are made by the board. The chair, in this case, enables conversations and effectiveness is vital, regardless of their percentage of ownership representation in the board.

The value of the chair in a technology company

The role of the chair is often fundamental to the core of the company DNA.  The Chair is the institutional memory of the company,safeguardingits mission and its culture. He or she can not be an “empty head.”

The challenges of the board chair at a startup

Very common or systematic, the role of the chair and CEO is often combined in startups. The recommendation is that when a board is created, the roles are split. The duties and legal exposure of a CEO and chair are different in the early stages of the company, and impact the thresholds from growth to failures – who the company serves, who it needs to protect and what it is liable for?

What makes a board effective?

Having a clear understanding of the board’s needs and a plan towards achieving them. For example:

  • What critical competencies the board should have and a process to measure against them.
  • The right diversity in the boardroom to enable fruitful discussions and capture a 360-degree view when evaluating opportunities and risk.

 

Diversity is not the only gender: an effective chair provides a nomination committee with a clear understanding of what kind of diversity they want to bring to a board.

In our conversation about the challenges of rebuilding a board towards gender diversity, a key challenge is the recruitment of female candidates, especially in California, where regulations exist that drive quotas for female participation. Our panel delivered a key message to nomination committees: change their view that a female CEO needs to be a qualified candidate, and be open to candidates in other C-level roles as well as partners in consulting firms. They see the business and have larger exposure. And to the corporations: build a larger pool of qualified female leaders with succession planning.

The critical attribute of an effective chair

What makes an effective CEO does not help as a chair. It was interesting that on American corporate boards with ‘one-tier’ structures in which the CEO/chair role is combined, there is often a lead director with a strong preference towards independent directors.

To conclude, this was such a vibrant discussion and everyone taking part learned so much from the lessons shared by the panel. Clearly, there are many more insights on this subject to unearth! Our next piece of research, capturing the practices of chairs across the Americas, commenced last month, and I’m excited to be involved in the program, looking forward to sharing and capturing its insights on this crucial topic with our clients.

by Mary Francia

Mary Francia she is INSEAD IDN’s ambassador for the Americas, and she engages the alumni on subjects of governance.  Mary was the host for the above referenced Chairman event.  She is a Partner in the Board Practice of Odgers Berndtson based in their Atlanta office helping boards with composition strategy and succession planning.

Ski weekend with IDN Network

Welcome to a a unique ski weekend in Chamonix, France, on March 9/10

The event will include
  • Skiing and networking in ski capability adjusted groups, with mountain guide if needed. Famous Vallée Blanche outing if weather permits. Climbers welcome.
  • Joint meeting and networking with IDN members- board directors and corporate governance experts
  • Presentation on Mountaineering,
  • After ski discussions; “From mountain disciplin to boardroom”
  • Joint evening dinners with full group

Some inspiration from the Black Crow Team in Chamonix.

IDN participants currently joining from France, UK and Switzerland.

If you are interested in joining, pls contact IDN Member Francoise Call, IDP-C, IDP19

 francoisecall (at) yahoo.co.uk

31 New International Board appointments of INSEAD Directors’ Network members

31 additional International Board appointments of INSEAD Directors’ Network members, totalling 126 with previously announced

Members Board & Corporate Governance Positions Announcement 3Q – 2018 

INSEADs Director Network, IDN,  proudly share the recent appointments of board and corporate governance positions of our members, underlining the recognition of our members and the strength of our IDN network.

IDN members were appointed to 31 new board positions in 15 countries, summing up to 126 position announcements since 2017.

IDN is a network of International Board Directors, where full membership is automatic for Certified Directors (IDP-C) from INSEADs International Directors Program (IDP) and is open to all INSEAD Alumni with appropriate directorship experience. The aim of the IDN network is to facilitate contacts, share insights and experiences on international board topics and promote excellence in corporate governance. 

To date, IDP has been completed by972 participants, with639 certified IDP-C/ IDBP-C directors.

IDN works closely with INSEAD Corporate Governance Centre,which undertakes cutting-edge research and teachingtailored to the needs of boards and international directors. It fosters a global dialogue on the challenges of corporate governance and leadership in an international context.

INSEAD Directors’ Network – Members New Board & Corporate Governance Positions 

IDN members – Certified IDP-C Board Directors

Livia Amidani Aliberti . October 2018 – Board Member at Credito Valtellinese Bank (Public, HQ Italy) 

Clea Bauch – March & April 2018 – Board Director at Plastocor-International SAand Member of the Board of Trustees at Ökozentrum (Centre for Appropriate Technology and Ecology)(both Private – HQ Switzerland)

William Blomme – October 2018 – Chairman and NED at SMEG Belgium S.A. (Private, HQ Belgium/Italy)

Margaret Clandillon – May & July 2018 – Director at Supervisory Board of Chorus Aviation Inc. (Public, HQ Canada) and of K2 Aircraft Leasing Limited (Private, HQ Ireland)  

Liselotte Engstam – September 2018 – Chairman at Financial Compliance Group, FCG Holding (Private, HQ Sweden)

Philippe Moschetta – July 2018 – Advisory Board Member, Vietnam Institute of Directors (Private, HQ Vietnam)

Denise NORTH – August 2018 –(Inaugural) Chair of Finance, Audit & Risk Committee at Australian Society of Orthodontists & ASO Research & Education Foundation(Public Non-Profit, HQ Australia)

Luigi Passamonti – April 2018 – Vice Chairman of the Supervisory Board at Ground Truth Solutions (private, HQ Austria)

Helen Pitcher OBE – November 2018 – Chairman of the Criminal Cases Review Commission (Government, UK)  

Jeff Scott – August 2018 – Chairman at NatWest Trustee & Depositary Services, part of the RBS Banking group (Public, HQ UK)

Thomas Seale – January – October 2018 – member of Supervisory Body of Oddo BHF Asset Management SAS (Private, HQ France) and Board Member at Alpha Intelligence Capital GP, Oddo BHF SICAV, BL SICAV, BL Fund Selection SICAV (All Private, HQ Luxembourg)

Mark Shuttleworth – October 2018 – Independent Non-Executive Director at Countrywide plc (Private, HQ UK)

Luc Sterckx _ April – October 2018 – Supervisory Board President at June Energy NV, Arcadiz NV and Turbulent NV (all Private, HQ Belgium)

Henri Thijssen – October 2018 – Board Director at IRIS Group – (Private, HQ Belgium)

Jakob Thomasen – May 2017- September 2018 – Board Director at Lundin Petroleum AB (Public listed in Sweden, HQ Switzerland), Chairman at Falck Safety Services and at ESVAGT AS  (Both Private, HQ Denmark)

Jose R. Villalon – May 2018 – Supervisory Board Director at Aquaculture Stewardship Council, ASC (Foundation, HQ in Netherlands & UK)  

Kimberly Wiehl – November 2018 – NON-Executive Advisor at UK Export Finance (Government Agency, UK)

IDN Members – Board Directors

Thomas Burkhalter – August 2018 – INED at A-Champs Ltd. Hong Kong (Private, HQ Hong Kong)

Suzanne Jones – May 2018 – Chair of Landcom (State Owned Corporation, HQ Australia)   

Pascal Ravery – October 2018 – Board Director at Louis Dreyfus Holding B.V. (LDH) – (Private, HQ Netherlands)

Previous board positions announcement by IDN:
October 2017 // January 2018 // April 2018 // July 2018

For more information about: 

INSEAD Directors’ Network: https://blogs.insead.edu/idpn-globalclub

INSEADs Corporate Governance Programmes: https://www.insead.edu/executive-education/corporate-governance

 

For members of IDN, please ensure that you share your new appointments via idp.network@insead.edu or l.engstam@insead.edu

For head hunters interested in finding international board members focused on staying up to date with latest board and governance insights, please contact Mary Francia via mary.francia@insead.edu

For organisations interested in partnering with IDN, please contact IDN President, Helen Pitcher OBE, at helen.pitcher@insead.edu

 

On behalf of the INSEAD Directors’ Network Board,

Liselotte Engstam,
IDN Board Member, Chair Communication Committee
l.enstam@insead.edu