Indispensable.
By: Beeson, John, Rowe, John W., Reilly, Edward, Conger, Jay A., Ready, Douglas A., Jordan, Michael,
Harvard Business Review,
September 2006, Vol. 84, Issue 9
HBR CASE STUDY
Edward Bennett is a talented CEO with a lot on his plate. But he's not getting any younger, and his board can't get him engaged in succession planning
Showing posts with label Board level issues. Show all posts
Showing posts with label Board level issues. Show all posts
Wednesday, July 16, 2008
Monday, July 14, 2008
How Well-Run Boards Make Decisions
BEST PRACTICES
How Well-Run Boards Make Decisions.
By: Useem, Michael,
Harvard Business Review,
November 2006, Vol. 84, Issue 11
To ensure sufficient board and committee involvement in key decisions, some companies are creating fixed calendars of topics for review.
Some corporations spell out the types of decisions that the board, not management, should make.
Michael Useem (useem@wharton.upenn.edu) is the William and Jacalyn Egan Professor at the University of Pennsylvania's Wharton School in Philadelphia and the director of its Center for Leadership and Change Management. He is also the author of The Go Point: When It's Time to Decide (Crown Business, 2006).
How Well-Run Boards Make Decisions.
By: Useem, Michael,
Harvard Business Review,
November 2006, Vol. 84, Issue 11
To ensure sufficient board and committee involvement in key decisions, some companies are creating fixed calendars of topics for review.
Some corporations spell out the types of decisions that the board, not management, should make.
Michael Useem (useem@wharton.upenn.edu) is the William and Jacalyn Egan Professor at the University of Pennsylvania's Wharton School in Philadelphia and the director of its Center for Leadership and Change Management. He is also the author of The Go Point: When It's Time to Decide (Crown Business, 2006).
Wednesday, July 9, 2008
CEO Troubles Down the Road
The CEO's 2ND Act.
By: Nadler, David A.,
Harvard Business Review,
Jan 2007, Vol. 85, Issue 1
Facing a familiar problem, the CEO can be expected to do what he was hired to do. Indeed, research presented in "Are Leaders Portable?" by Boris Groysberg, Andrew N. McLean, and Nitin Nohria (HBR May 2006), indicates that leaders succeed when the skills demanded in their new positions directly draw upon the executives' professional backgrounds and experiences. But familiar problems are inevitably succeeded by less familiar ones, for which the specially selected CEO is not quite so qualified. More often than not, the experiences, skills, and temperament that yielded triumph in Act I turn out to be unequal to Act II's difficulties. In fact, the approaches that worked so brilliantly in Act I may be the very opposite of what is needed to bring Act II to a happy resolution.
Leadership style is a function of years of development and experiences, and it is an outgrowth of personality and character. Achieving a dramatic change in leadership style is difficult for anyone, but it's particularly hard for people in their fifth or sixth decade who have been responsible for a long string of successes. Personality and character aside, such people have developed systems for leading, so to speak, that they can't bring themselves to jettison. In fact, when faced with resistance during Act II to their customary modes of acting, some leaders hang on more tightly than ever to the devices that have long kept them afloat.
Recognize that the board has a role to play in mentoring and coaching the CEO. Too often, the board takes a hands-off approach until it becomes apparent that the CEO is faltering.
• When faced with a crisis, recognize that you may need to think about a two-stage succession process. Consider bringing in a CEO specifically to handle the immediate problems. Make clear that once the crisis has been resolved, you may look for another CEO, one who is better suited to dealing with the next round of issues.
David A. Nadler (david.nadler@mercerdelta.com) is the chairman of New York-based Mercer Delta Consulting, a global management consulting firm that specializes in executive leadership, organizational change, and corporate governance.
By: Nadler, David A.,
Harvard Business Review,
Jan 2007, Vol. 85, Issue 1
Facing a familiar problem, the CEO can be expected to do what he was hired to do. Indeed, research presented in "Are Leaders Portable?" by Boris Groysberg, Andrew N. McLean, and Nitin Nohria (HBR May 2006), indicates that leaders succeed when the skills demanded in their new positions directly draw upon the executives' professional backgrounds and experiences. But familiar problems are inevitably succeeded by less familiar ones, for which the specially selected CEO is not quite so qualified. More often than not, the experiences, skills, and temperament that yielded triumph in Act I turn out to be unequal to Act II's difficulties. In fact, the approaches that worked so brilliantly in Act I may be the very opposite of what is needed to bring Act II to a happy resolution.
Leadership style is a function of years of development and experiences, and it is an outgrowth of personality and character. Achieving a dramatic change in leadership style is difficult for anyone, but it's particularly hard for people in their fifth or sixth decade who have been responsible for a long string of successes. Personality and character aside, such people have developed systems for leading, so to speak, that they can't bring themselves to jettison. In fact, when faced with resistance during Act II to their customary modes of acting, some leaders hang on more tightly than ever to the devices that have long kept them afloat.
Recognize that the board has a role to play in mentoring and coaching the CEO. Too often, the board takes a hands-off approach until it becomes apparent that the CEO is faltering.
• When faced with a crisis, recognize that you may need to think about a two-stage succession process. Consider bringing in a CEO specifically to handle the immediate problems. Make clear that once the crisis has been resolved, you may look for another CEO, one who is better suited to dealing with the next round of issues.
David A. Nadler (david.nadler@mercerdelta.com) is the chairman of New York-based Mercer Delta Consulting, a global management consulting firm that specializes in executive leadership, organizational change, and corporate governance.
Wednesday, July 2, 2008
Listen to Employees in Board Rooms
Productivity Is Killing American Enterprise.
By: Mintzberg, Henry,
Harvard Business Review,
July/August 2007, Vol. 85, Issue 7/8
Corporate boards need to be opened up to the voices of people who care about the long-term health of the enterprise, most notably the employees.
Treat the enterprise as a community of engaged members, not a collection of free agents.
We can start, for example, with compensation systems that encourage cooperative effort. Corporations are social institutions, which function best when committed human beings (not human "resources") collaborate in relationships based on trust and respect. Destroy this and the whole institution of business collapses.
Henry Mintzberg is the Cleghorn Professor of Management Studies at McGill University and the faculty director of its International Masters for Health Leadership.
You can access his views on managemengt at www.mintzberg.org.
By: Mintzberg, Henry,
Harvard Business Review,
July/August 2007, Vol. 85, Issue 7/8
Corporate boards need to be opened up to the voices of people who care about the long-term health of the enterprise, most notably the employees.
Treat the enterprise as a community of engaged members, not a collection of free agents.
We can start, for example, with compensation systems that encourage cooperative effort. Corporations are social institutions, which function best when committed human beings (not human "resources") collaborate in relationships based on trust and respect. Destroy this and the whole institution of business collapses.
Henry Mintzberg is the Cleghorn Professor of Management Studies at McGill University and the faculty director of its International Masters for Health Leadership.
You can access his views on managemengt at www.mintzberg.org.
Sunday, June 29, 2008
Run Your Company like a PrivateEquity Firm Board
If Private Equity Sized Up Your Business.
By: Pozen, Robert C.,
Harvard Business Review,
Nov 2007, Vol. 85, Issue 11
A broad review of what happens at companies in the aftermath of private equity buyouts reveals five major thrusts of reform. These translate into five key questions that directors should pose to senior management and impress upon them to come out with a thoughtful response and action.
• Have we left too much cash on our balance sheet instead of raising our cash dividends or buying back our own shares?
• Do we have the optimal capital structure with the lowest weighted after-tax cost of total capital, including debt and equity?
• Do we have an operating plan that will significantly increase shareholder value, with specific metrics to monitor performance?
• Are the compensation rewards for our top executives tied closely enough to increases in shareholder value, with real penalties for nonperformance?
• Have our board members dedicated enough time and do they have sufficient industry expertise and financial incentive to maximize shareholder value?
Robert C. Pozen (bpozen@mfs.com) is the chairman of MFS Investment Management, a global money management firm. He is based in Boston.
By: Pozen, Robert C.,
Harvard Business Review,
Nov 2007, Vol. 85, Issue 11
A broad review of what happens at companies in the aftermath of private equity buyouts reveals five major thrusts of reform. These translate into five key questions that directors should pose to senior management and impress upon them to come out with a thoughtful response and action.
• Have we left too much cash on our balance sheet instead of raising our cash dividends or buying back our own shares?
• Do we have the optimal capital structure with the lowest weighted after-tax cost of total capital, including debt and equity?
• Do we have an operating plan that will significantly increase shareholder value, with specific metrics to monitor performance?
• Are the compensation rewards for our top executives tied closely enough to increases in shareholder value, with real penalties for nonperformance?
• Have our board members dedicated enough time and do they have sufficient industry expertise and financial incentive to maximize shareholder value?
Robert C. Pozen (bpozen@mfs.com) is the chairman of MFS Investment Management, a global money management firm. He is based in Boston.
Tuesday, June 24, 2008
Boardroom leadership of the company
Leading from the Boardroom.
By: Lorsch, Jay W., Clark, Robert C.,
Harvard Business Review,
AprIL, 2008, Vol. 86, Issue 4
The basic argument for boards' intense focus on compliance is to prevent the loss of shareholder value that corporate misdeeds create. But the argument for strong leadership from boards is even more compelling. Without it, there may be even greater destruction of shareholder value as companies go into decline.
Boards can and must do better at balancing their function as compliance officers with their function as shapers of the future.
From their places around the table, directors must steer themselves and the company's management team toward farsighted strategic and financial thinking and succession planning. Certainly it is management's responsibility to develop and implement strategy, but the board must use a long-range lens when requesting and vetting senior leaders' proposals – encouraging the top team to raise its game even when things are going well and challenging it to respond creatively when threats or problems emerge.
Last year a board we're familiar with created a strategy committee of the five directors who had the most knowledge about the company's industry. The idea was that the committee would work closely with management to study the likely evolution of the industry and the company's position in it.
The board and management at Philips Electronics hold an annual two- to three-day retreat – uninterrupted time devoted to discussing the company's direction for the next several years.
The board should also hold the CEO and the company's human resources director accountable for at least an annual in-depth review of the company's top management bench: What does the CEO think of these executives? How is this cadre of managers being developed, and are there potential successors for each of them? As they must do with their strategy and finance discussions, boards must carefully protect the time set aside to discuss talent – probably not at every meeting but often enough so that directors have some knowledge about the high potentials on the company roster.
By: Lorsch, Jay W., Clark, Robert C.,
Harvard Business Review,
AprIL, 2008, Vol. 86, Issue 4
The basic argument for boards' intense focus on compliance is to prevent the loss of shareholder value that corporate misdeeds create. But the argument for strong leadership from boards is even more compelling. Without it, there may be even greater destruction of shareholder value as companies go into decline.
Boards can and must do better at balancing their function as compliance officers with their function as shapers of the future.
From their places around the table, directors must steer themselves and the company's management team toward farsighted strategic and financial thinking and succession planning. Certainly it is management's responsibility to develop and implement strategy, but the board must use a long-range lens when requesting and vetting senior leaders' proposals – encouraging the top team to raise its game even when things are going well and challenging it to respond creatively when threats or problems emerge.
Last year a board we're familiar with created a strategy committee of the five directors who had the most knowledge about the company's industry. The idea was that the committee would work closely with management to study the likely evolution of the industry and the company's position in it.
The board and management at Philips Electronics hold an annual two- to three-day retreat – uninterrupted time devoted to discussing the company's direction for the next several years.
The board should also hold the CEO and the company's human resources director accountable for at least an annual in-depth review of the company's top management bench: What does the CEO think of these executives? How is this cadre of managers being developed, and are there potential successors for each of them? As they must do with their strategy and finance discussions, boards must carefully protect the time set aside to discuss talent – probably not at every meeting but often enough so that directors have some knowledge about the high potentials on the company roster.
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