Tag Archives: management

CEO turnover and succession planning

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HandShake

Selecting a new CEO is one of the board’s most important responsibilities and represents a critical moment in a company’s history. A smooth transition is necessary to maintain the confidence of stakeholders. This is why a well defined succession plan is needed.

The annual study, by Booz & Company, on CEO turnover among the largest 2 500 public companies revealed that in 2012, 15% of CEOs left office. This is the second-highest rate of CEO turnover since 2000. With this rate rising, companies are becoming more proactive about the CEO succession process. The amount of planned successions reached 72% in 2012, the highest in the 13 years history of the study and forced turnovers represented 19%, their second-lowest share ever. This indicates that companies take a more thoughtful approach to transitions and to ensure they put in place new leaders who will best serve the company for years to come. These new CEOs are for the most part familiar faces. Indeed, 71% were people already working in the company when they became CEO. This represents a significant decrease from previous years with an average share of insiders of 80%.

Interestingly, in planned successions, the share of insiders has dropped from an average of 82% between 2009 and 2011 to 70% in 2012. With careful and thoughtful plans, it seems that companies feel stable enough to take a bit of a risk on an unknown leader. Moreover, these risks were reduced since 56% of the outsiders came from the same industry as their new company.

Also, 81% of the new CEOs were from the same country as the company’s headquarters and 95% were men. The proportion of women reaching a CEO position has risen from an average of 3 % over the last 3 years to 5% in 2012, but still remains a tiny share.

Regarding the apprenticeship model, (the outgoing CEO remains or becomes chairman of the board and can “apprentice” the incoming CEO), this happened in 29% of turnovers in 2012. In this case, the share of an insider named CEO reached 92%. Companies in Brazil, Russia, and India had the highest increase in turnover rates between 2007 and 2012 (15.4% to 23.9%) and the highest increase in share of planned turnovers (8.8% to 15.5%). The telecom and utilities industries had the highest turnover rates in 2012 (both at 24%), closely followed by energy (21%). The lowest turnover rate was in the consumer discretionary industry with 9%.

> Read the full study by Booz & Company

Everyday Governance: “in-camera sessions”

When a board decides to discuss private matters like management, employee negotiations, law enforcement matters, reviewing the functioning of the Board… They have an “in-camera session”, this refers to a closed meeting of the board where only board members and possibly specifically chosen others may attend. All non board members and management such as the CEO, are “recused”, this means removed from participation in a decision on a matter because of a conflict of interest or a position.

This allows the board to discuss freely about some topics which could be difficult if the people concerned were present, especially when it concerns their performance. This provides an opportunity for the board to share their views, discuss results and develop recommendations for the future of the company. Except for the absence of some individuals, the session unfolds like an open session. There is an agenda and the same decision making process.

Note that in-camera sessions should be held regularly, for instance 15 minutes at the end of each board meeting; otherwise it may put a lot of stress on the management since they will suspect that a special request for a private session is to talk about them.

Drag your corporate boards into the digital age

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The Globe And Mail published the Monday, Feb. 25 2013 a new article about Leading Boards !!! By Ivor Tossell.

ipad-user

When corporate directors need to read up on company affairs in the run up to a board meeting, they can find themselves sitting on telephone books’ worth of paperwork. Never mind reading it – it also needs to be delivered and securely disposed of afterwards. Enter Leading Boards – content management software tailored to help boards of directors and built for the age of the iPad.

The goal is better governance, says Jean-Marc Félio, the company’s president: A more-informed board will make better decisions, and the sooner new directors can be brought up to speed on a board’s decision-making history, the sooner they’ll step up and offer effective guidance.

“Directors don’t have access to information. You have a new director coming in, it will take three to six months before they’re up to date,” he says. “Giving them access to their archives is already a big change.”

Leading Boards acts as both a security-minded information repository and a decision-making hub. Many of its features, which include access to old minutes and files, the ability to search documents by content and collaborative document-editing, are available through its regular web interface. But Mr. Félio puts his firm’s emphasis on its iPad app, which takes advantage of the touch interface to offer document-management tricks such as highlights and annotations. (In the interests of security, annotations are purged after a meeting has run its course, and documents returned to their original state.)

In addition to offering full access for board members, the software can act as a venue to create a virtual meeting space that puts specific users together with just the documents they need to see; anxious stakeholders, for instance, can be invited to a session with two or three directors, and just the relevant documents from the archives. Alternately, a suitor interested in buying a stake in the company could be given an account on the system allowing access for due diligence.

It also tackles the decision-making process itself, letting boards create structured debates, in which a question is mooted and members can add arguments into ‘pro’ and ‘con’ lists. After the meeting, the decision-making process is expunged, leaving only its result for the record.

The six-person startup’s software is used by about 60 companies in Canada and beyond. Mr. Félio says its touch-based capabilities are important in speeding adoption among board members – not always the youngest members of an organization, nor the most eager to embrace technology. The company experimented with buying small computers for clients, but found that, regardless of the training Leading Boards offers, the iPad was far more intuitive.

“There is one old board member who called and said ‘I don’t need your training any more. My five-year old granddaughter taught me.’”

See the article: Montreal startup drags corporate boards into the digital age

Major Differences Between Roles of Direction and Management

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In this article, we will remind the principal differences between the boards of directors and the management of the company.

Source: Guide Pratique de Médiatisation du Gouvernement D’Entreprise

DIRECTORS

MANAGERS
Decision-Making Required to determine the future of the organization and protect its assets and reputation. They also need to consider how their decisions relate to stakeholders and the regulatory framework. More concerned with implementing board decisions and policies.
Duties,Responsibilities They have the ultimate responsibility for the company’s long-term prosperity. Directors are normally required by law to apply skill and care in exercising their duty to the company and are subject to fiduciary duties. They can be personally liable if they are in breach of their duties or act improperly. They can be held responsible sometimes for the company’s acts. Not usually bound by directional responsibilities.
Relationship withShareholders Shareholders can remove them from office. In addition, a company’s directors are accountable to the shareholders. Appointed and dismissed usually by directors or management; they seldom have any legal requirement to be held to account.
Leadership Provide the intrinsic leadership and direction at the top of the organization. Day-to-day leadership is in the hands of the CEO; managers act on the director’s behalf.
Ethics, Values Play a key role in determing the company’s values and ethical positions. Must carry out the ethos, taking direction from the board.
CompanyAdministration Responsible for the company’s administration. Related duties associated with the company’s administration can be delegated to management, but this does not relieve the directors of their ultimate responsibility.
Statutory Provisions In many countries, there are numerous statutory provisions that can create offenses of strict liability under which directors may face penalties if the company fails to comply. These statutory provisions do not usually affect managers.

Senior Management Has No Idea where their Company Data Resides

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According to a recent article on our blog “Confidentialité: du papier au sans papier…“ and the issues of Data’s storage in companies, some societies by their Board of Director hesitate to transmit Data’s company at their IT services. Confidentiality is the key of the Data management and many directors indicate that their senior management has little or no idea where their company data resides.

 

The Agile IT Governance website by one of these author CJ wrote an article about this issue. 

“ The majority of companies surveyed also indicate they have no systems in place to account for which corporate files reside in systems managed by third-party service providers. Companies reported they have no way to track what data is being stored in the cloud and no process to manage access to that data.

In short, the survey reveals that:

- Only 9% of the companies surveyed have procedures in place to control access to data stored in the cloud;

- 23% of organizations are still developing their data access policies;

- 74% of respondents reported that they do not have a process for tracking which files have been placed on third party services;

- 68% either have no plans in place that they are aware of, or live without formal processes for granting and reviewing access

These survey results should be a wake-up call for all companies. CIOs should start developing and implementing strategies to ensure data security as quickly as possible.

Here are some questions that senior managers and the board of directors should be able to answer:

- Do managers know who is responsible for security?

- Does the head of security frequently meet the board of directors?

- When was the last time top managers got involved in security-related decisions?

- Would people recognize a security issue? Would they know who to call?

- Is the company clear on its position relative to IT and security risks?

- What percentage of staff had security trainings?

- Are managers convinced that security is being appropriately addressed in the company?

- Are managers aware of the latest information security issues and best practices?

- What can be done to successfully implement information security governance?

Protecting the interests of the stakeholders is a fundamental responsibility of senior management. This includes understanding the IT risks and ensuring that they are adequately addressed from a governance perspective. To do so effectively you need to manage information security risks, by integrating an information security governance framework into your overall enterprise governance framework. “

Read more on Agile IT Governance website

More articles: Confidentialité: Du papier au sans papier…
Caution – PATRIOT Act …
Les irréductibles du sans papier…

 


First Key to Agile IT Governance: Stakeholder Satisfaction

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By Chiranjeev Bordoloi

The website CIO started a serie called The 12 Principles of Agile IT Governance.
The series is designed to help board members and senior managers leverage technology excellence as a competitive advantage for their organization. Each article discusses a key principle of agile IT governance and presents tactical measures that allow for deployment of that principle.

This interesting series accurate that 4 steps are necessary to focus on Stakeholders  satisfaction :

1- Manage shareholder satisfaction with ROI on technology investments.

2- Improve management’s technology quotient.

3- Ensure that employees feel like they work for a tech-savvy company.

4- Actively contribute to open source projects and organizing hackathons to improve   the company’s brand perception in the community.

 

Read More: CIO website 

 

In CAMERA Board Session… Why?

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One of the most delicate topics in governance is the ability to discuss freely any contentious agenda items. As the Board and committees are intended to oversee the management and the executive team in place, it may be difficult in their presence to address openly certain subjects during a meeting. This may be even more difficult when discussing and evaluating their performance.

The governance practice “in-camera session” is designed to help board to manage these delicate situations.  Note that in-camera session if started should be held at every meeting, otherwise it will stress too much the CEO and the management since they will suspect that a request for a private session is to talk about them.

A definition of what constitutes an in-camera session is  when directors meet on their own, without management or any other non-Board member present.

The legal term is “recused,” which means to disqualify someone from participation in a decision on grounds that they cannot, because of a particular interest or position, objectively discuss the matter.

Currently accepted principles of good governance provide that all boards and committees should regularly hold scheduled in camera sessions for board members only.

We find several references to this practice to hold a session of 15 minutes or less at the end of CA with only directors. It’s providing them with the opportunity to talk about more sensitive elements or simply get together as a team. In Camera session provide:

• an opportunity for the board to discuss particularly sensitive matters within the jurisdiction of the board (such as litigation, work relations, management/CEO’s performance )

• an opportunity for the board to discuss sensitive internal board governance matters, attendance, evaluation, leadership

• an opportunity for the board to review the performance and compensation of the president, discuss the attitude of one director, etc.

In conclusion, in–camera sessions are a very valuable tool allowing full and open debate on different topics strictly between board members and without any possible interference.

 

Boards of Directors: Doing Just Half the Job

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 Writing by David Langstaff

 

On Corporate Compliance Insights’ website, David Langstaff  wrote an interesting article on the role of Board Members. It differentiates two principals functions: one is overseeing operations and a second is executing a growth strategy.

Many Boards abandoned the second point, they are focused on the compliance and don’t look at the future. A company must have clear goals: both a long-term vision and shorter-term operating goals.

The author adds the following idea, that if boards have no concern with the longer terms goals, it will be difficult to propose an operating plan. Board members need to know that and what the company is seeking to accomplish and how it proposes to get there.

It is the very synthesis of these two aspects that determines the efficiency of a Board and its activities.

Read More :
Boards of Directors: Doing Just Half the Job 

 

Crisis Management and Board of Directors

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In this article you will find different kinds of crisis management which have more or less failed. At the end of the article there are some advice for board members and CEOs.

“I was working closely with the CEO of a large public company facing a crisis a few years ago. The company was in the news for days and it is fair to say the management team, the board and many employees felt under siege. The company was being hauled onto the carpet for issues related to the disclosure of confidential customer information. Many on the team knew that the issue, while serious, was contained to a small number of cases and could easily be corrected. Unfortunately, their message wasn’t getting through and as such, the CEO and his management team planned a major news conference to apologize and present a forward-looking plan to resolve the issue once and for all.

The day prior to the announcement, I was with the CEO preparing him for the news conference. Late in the afternoon came word that the Board Chair would not be available to participate. This came as a shock to the team. The CEO and Board Chair had a positive relationship. On major issues they always stood together. Given their history, the CEO turned to me and murmured, “Something really important must have come up for him to miss this”. I suspected that there was more to the decision than a scheduling conflict. As it turned out, his decision was an intentional move to distance the Board from the CEO.

It was soon clear that the Board had their own crisis management plan to announce… the termination of the CEO. The Board eventually came to the conclusion that the public would never accept that the very same leader that was in place while the breaches took place, could also be leader responsible for regaining public confidence.

Most Boards tend to stand arm-in-arm with the management team and the CEO during a crisis, saying that management enjoys complete support from the Board of Directors. This approach is correct in many cases. It is the duty of the Board to be informed, to be engaged, to provide counsel to management and to monitor both the effectiveness of the crisis management team and the impact of the crisis on the corporation. It is critical that directors do not try to manage the crisis on their own, over-react or speak to the media.

Where classic crisis management theory is light, as it relates specifically to the Board’s role in more complex situations. The scenarios described below provide different perspectives on Board involvement and obligations. The first is when the crisis relates specifically to the CEO. We have seen this situation play out in recent years where the CEO is accused publically of something illegal or inappropriate. Most recently, this happened at Hewlett Packard. Where, once informed, the Board acted proactively and clearly with regard to what had happened and communicated subsequent decisions taken…”

This is an extract from National, read full article here : National.ca

2011 Board Practices Report – Deloitte

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This report by the Deloitte Center for Corporate Governance and the Society of Corporate Secretaries and Governance Professionals provides results from a survey of over 200 corporate secretaries on topical governance questions, including shareholder engagement, board committees, strategy, and sustainability. New to this eighth edition is an analysis of director qualifications, which includes insight on board composition related to gender, age, and ethnicity…

2011 Board Pracices Report by Deloitte


Boardroom Trends – Is Your Board Prepared?

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Say on pay, director indemnification, the structure of risk committees, Bob Bostrom, partner, SNR Denton, talks to Corporate Board Member about the top issues for corporate boards this year, and what directors should do ahead of time to prepare.

To see the video: Boardroom Trends – Is your Board Prepared ?