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Heidrick & StrugglesDYNAMIC GOVERNANCE
Alexa Bailey & Alain Deniau CEO & Board Practice
October 2014
We Partner across the Talent Cycle – Leadership Advisory
Identifying, Recruiting and Hiring
Succession Planning
Promotion and Rotation
Engaging and RetainingContinuous Learning and Development
Onboarding and Integration
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Talent Cycle
LeadershipConsulting
How we foster and help to lead Board debate and development
The European Corporate Governance Report 2014 sets out a new charter for the boardroom based on:• Detailed analysis of 400 of Europe’s largest listed companies conducted biennially since
1999• A board effectiveness survey completed by 236 European board members • Heidrick’s 60-year track record of working with high performing boardsThe research identifies six key characteristics that define a new spirit of agile and responsive governance rooted in board leadership:1. Deep Business Knowledge2. Diversity of Thought3. Engaged Leadership4. Strategic Alignment & Execution5. Capacity to Adapt6. Leadership Talent When combined these lead to Dynamic Governance
The Next Horizon for High Performing Companies
Any debate is only as good as the quality of the information and knowledge at work. Chairmen and boards must possess deep insights into the business.
Deep Business KnowledgeCuriosity is a prerequisite – inspect don’t expect
Diversity must be rooted in meritocracy and the attainment of business goals. The needs of the business drive diversity.
Diversity of Thought
“The selection of the right people for the board is increasingly critical. Diversity of thought is the key.”
The modern chairman requires an “all-court game”
The job of the chairman is to manage the balance of skills, knowledge and experience on the board, and to constructively challenge management and the non-executive directors to drive outstanding performance.
Engaged Leadership
“If the CEO is the heart of the company pumping vibrancy through its very core, the chairman is the soul of the corporation, its conscience, its moral keeper.”
Organizational nirvana occurs when everyone knows where they are going, the strategy for getting there and then makes that happen.
The theory is alluringly easy; practice, devilishly difficult.
“In the short, they (board members) cannot be uncritical lovers but have to be loving critics to the institutions which they are paid to serve.”
Strategic Alignment & Execution
World class boards try to anticipate the next development – to future proof the company
One of the greatest challenges facing corporate governance is that it is seen and often interpreted and implemented inflexibly. This is out of kilter with organisational reality. In the face of continuous change and relentless competition the capacity to adapt is a key competency. Organisations - and boards - must be able and willing to change direction if and when required. Governance, at its best, is forward looking but fully aware of the lessons of past performance.
Capacity to Adapt
People execute strategyIdentifying and developing leadership talent and planning succession issues among a company’s leaders is often on the to-do list of boards. There it can remain.
Leadership Talent
“In the long run, the systematic development of stars is the most effective strategy to create a sustainable competitive advantage.”
“The best companies do not wait to be governed, they shape the debate and set best practice with agile and responsive leadership that adapts quickly to the changing circumstances of business.” Can the principles of Dynamic Governance be applied to the Public Administrations across Europe to make decision making more effective?
Of course, compliance is necessary and important. But, the route to excellence in corporate governance lies in understanding and acting on the six elements that achieve truly dynamic governance.
How then does this apply to Public Institutions• Deep business knowledge – understanding of the political landscape
• Diversity of thought – ensure diverse experience at all levels of the Administration
• Engaged leadership – Head of the Institution
• Strategic alignment and execution – taking a long-term view
• Capacity to adapt – investment in modern technologies
• Leadership talent – right person for the right role
Dynamic Governance applied to Public Administrations
• Good Governance can help the public administration to make SMEs grow through good legislation
• Legislation may inhibit innovation in the SME• Compliance may not help business to develop• In the SME context, Capacity to adapt – Deep business knowledge –
Diversity of thought are key factors for the Public Administration to ensure the optimal environment for SME development
• Governance is the same for all entities and does not depend upon the size of the revenues or upon the fact that it is listed or not or family owned
• The difference is in the way governance is implemented• The specific case of Family Businesses
Dynamic Governance Applied to SMEs
Actions that should generate a high-quality Public Administration which would lead to business competitiveness and economic growth• Define what is “good governance” for the Public Administration• Understand that each Department is different and will require a different
understanding• Broader engagement• High tech / High touch approach
CALL TO ACTION
EMBRACE DIVERSITY OF THOUGHT
Alexa Bailey - [email protected] Deniau – [email protected]
