Posts Tagged 'Boardroom'

From boardroom to boss – the rising tide of directors becoming CEO

by Simon Evans for Financial Review

A growing number of non-executive directors sitting inside Australia’s corporate boardrooms are being tapped to run the entire operations as a chief executive. Sometimes it’s out of necessity because of a sudden event, and sometimes it’s because boards want someone who “knows where the bodies are buried”.

Having a broad knowledge of the inner workings of a company through sitting around the boardroom table seems to count more and more. And corporate governance experts say the pressures on companies to deliver strong returns quickly means the six-month time frame it can take for an extended global search for the right person can be a deterrent to recruiting a complete outsider.

But does poring through monthly board reports and overseeing broad strategy around a boardroom table equip a director to actually run the company?

Explosives group Orica, theme park and fitness centre operator Ardent Leisure, copper and gold group Rex Minerals and insurer Suncorp have in the past six weeks hired chief executives from their boardrooms, joining pastoral company Elders Australia which installed Mark Allison into the chief executive role in April, 2014, swapping his previous duties as chairman. Read more here.

Keys to success: Nurturing effective boardroom culture

by Chris Bart and Mark Fuller for Forbes India

With the corporate governance crisis at the turn of the century that shattered firms like Enron and WorldCom, academics and consultants turned their attention to enhancing corporate governance. What the 2008 financial crisis revealed is that the post-Enron governance advice has been insufficient in helping develop successful boards of directors: more work is needed to help us understand what makes a board effective or not. Nine factors are the difference between an effective and an ineffective boardroom, which can impact the strategic success of the organization. Readers, including current and prospective directors, will benefit from the shared experiences of nearly 200 of their peers.

The existing corporate governance regime consists largely of checklists, guidelines and so-called best practices. We find, however, four liabilities with the use of these tools and techniques. Read more here.

Lufthansa Board Stares Down Investors in Chairman Dispute

Richard Weiss, May 7 2013, Bloomberg

The decision by Deutsche Lufthansa AG (LHA)’s supervisory board to back Wolfgang Mayrhuber’s aspirations to become chairman against investor opposition shows the hurdles in dismantling the chief executive-to-chairman German model.

Mayrhuber, the German airline’s chief executive officer until 2010, renewed his candidacy yesterday to join the board, less than 12 hours after saying he’d back out following criticism from some shareholders. Mayrhuber, 66, changed his mind after the board voiced its “repeated wish” for him to run and key shareholders gave their blessing, the airline said.

The back and forth in the Lufthansa boardroom laid bare the growing tensions between investors no longer willing to accept the previously common transition of executives to the supervisory panel, and a board that had to offset Mayrhuber’s years of expertise against a code of conduct demanding a clearer demarcation line between the two management spheres. Continue reading…

Case Study: Culture Clash in the Boardroom

by Katherine Xin and Heather Wang for Harvard Business Review, June 20th, 2011.

Editors’ Note: This fictionalized case study will appear in a forthcoming issue of Harvard Business Review, along with commentary from experts and readers. If you’d like your comment to be considered for publication, please be sure to include your full name, company or university affiliation and email address.

The room was already packed when Liu Peijin walked in. His flight from Shanghai to Chongqing had been delayed, and he’d fretted about missing the training. But fortunately he’d gotten there in time. Liu knew his presence was important. As the president of Almond China, he wanted to show his Chongqing colleagues how much he cared about the topic under discussion: ethical business practices.

Taking his seat, Liu nodded at the head of HR, who was running the training. The two went way back: Both had been with their German parent company, Almond Chemical, since 1999, when it first established operations in China. Since then Almond China had set up two joint ventures with local partners — the only way foreigners could do chemical business in the country. One was a majority ownership — Almond controlled 70% of the stock. The other was the Chongqing business, in which Almond had a 51% stake and the Chinese directors, representing Chongqing No. 2 Chemical Company, were very active.

Liu sat next to Wang Zhibao, the vice president in charge of sales for the joint venture. Wang had a skeptical look on his face. He was good at his job, having closed several key deals that had kept the business afloat during its early years. But he was also at the center of a conflict between the joint-venture partners: The Chongqing executives were increasingly vocal about how difficult it was to operate according to European standards, particularly the rules against gifts and commissions. Such incentives were commonly accepted in China and routinely employed by Almond’s competitors. Trying to do business without them, Wang argued, was foolhardy. “This is China, not Europe,” was his refrain.

But the line between these practices and breaking the law was a fine one. As a company headquartered in Munich and listed on both the Frankfurt Stock Exchange and the New York Stock Exchange, Almond was required to adhere to the U.S. government’s Foreign Corrupt Practices Act (FCPA), which specifically forbade the bribing of foreign government officials by U.S.-listed companies. (continue reading… )


The Anthropology of the Boardroom

by Andrea Unterberger for The Harvard Law School Forum, May 28th, 2011.

It would be natural to start this 2011 Foreword with a précis of the many dramatic regulatory developments newly affecting directors of publicly traded corporations beginning in 2011. Those changes, are, in fact, important to review and are summarized below. But with so much attention understandably focused on external requirements and pressures, it might be better to start first with a less highlighted and yet more central topic — namely, you, the director.

At the end of the day, the recent reforms deservedly catch headlines because they shift or channel some of the regulatory tides buffeting governance activity. But at the beginning of each day, the ability of the board to address those issues while running a successful business depends on you and your fellow directors. This suggests that we begin with recent developments concerning how you inform yourself as a director, how you deal with hidden burdens of the directorship, and how, as this Handbook describes in detail, you undertake the collectivity of tasks and human interactions, practices and rituals that together comprise what I call the anthropology of the boardroom.


F.1 Informing Yourself — Getting the Message at the Right Time and in the Right Place

The information that directors receive in preparation for board or committee meetings, at meetings and between meetings is now largely conveyed electronically by e-mail and attachments. Some corporations have gone paperless, transmitting materials solely via e-mail and/or on secure websites, and even issuing directors iPads (or the equivalent) on which to view that content. For inside directors who are members of management, this protocol involves little change and is essentially a seamless transition from part paper/part electronic to all “e.” But for outside directors, there are several risks which should be identified and avoided.

While paper documents can be mailed to a chosen physical address, protected from review by others, and secured from inadvertent or advertent misuse, electronic documents may not offer the same safeguards. (continue reading… )

The Effective Chair-CEO Relationship: Insights from the Boardroom

by Stephen Davis for The Harvard Law School Forum, March 17th, 2011.

The number of U.S. companies that separate the chairman and CEO roles is at a historic high: 40 percent of the S&P 500 now separate the roles, up from 23 percent a decade ago, according to Spencer Stuart. A new report published by Yale’s Millstein Center for Corporate Governance and Performance, The Effective Chair-CEO Relationship: Insight From the Boardroom, examines how this increasingly common relationship works. Based on interviews with CEOs, non-executive Chairs, and stakeholders, the report aims to understand what constitutes a winning relationship between two individuals, each successful in his or her own right. As this leadership structure becomes more prevalent, these insights should be useful to those working together in these interdependent roles.

The report identifies three major areas that describe the characteristics of an effective working relationship: good chemistry, a clear framework, and a supportive context. Most commonly mentioned was good chemistry – the direct interpersonal relationship between the two. Expanding on the chemistry headline, Chairs and CEOs identified effective communications as an underlying factor. Effective communications included frequent contact, open, ongoing dialogue, and a mix of formal and informal venues. Also supporting good chemistry was reciprocity and consideration – keeping each other well informed, avoiding surprises, and assuming good intent. Communications should be purposeful and while the relationship might be close, it should not become a personal friendship. Chairs and CEOs alike felt their own good communications should intentionally facilitate good communications among and between the board and management, creating an environment conducive to sharing, learning, and confidence. Finally, good chemistry included Individual qualities such as competence, authenticity, being willing to learn and listen, and, most frequently mentioned, not a lot of ego (continue reading… )


Future Proofing the Boardroom: Today’s Agendas

by Lucy P. Marcus for The Huffignton Post, February 18th, 2011.

The board room agenda is going through a reformation. To ensure that we are helping organizations future proof themselves, what are some of the essential things that boards and board members need to think about, no matter the size, location, or sector of their organization? Five areas need an update in the way we as board members think about them: infrastructure, technology, internationalization, communication, and balancing continuity and change.

Boards must embrace the political, economic, and social reality of the way the world is operating today and tomorrow. One of the areas that needs a real rethink is building organizations that can operate effectively in a low-carbon economy. The main issues here are about energy consumption, integrating clean tech and sustainability, and they apply to all facets of the business: from facilities, to building stock and rolling stock, from changing work patterns and practices to the ways in which companies engage with their stakeholders and the local communities where they are based. It touches everything an organization does, how it behaves, how it invests, and it means board members need to be asking the questions about how these decisions will impact the business five and ten years down the road. Most importantly, it isn’t about green washing or perception; it is fundamentally about how the organization does business. (continue reading… )


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