SPECIAL REPORT NT - Korn Ferry · can decide and act without having the total picture; isn’t upset 14.3 38.9 46.8 1.67 when things are up in the air; doesn’t have to fi nish things

Results of the 2008

Board Special Survey Report

In Partnership with Patrick O’Callaghan and Associates

What are the Behavioural Competencies of an Effective Board Member ?

Why did we initiate this survey?

For the past 12 years, Korn/Ferry International and Patrick O’Callaghan & Associates have worked successfully together to recruit Board Directors for a broad range of Canadian businesses.

We have served as keen observers of and advisors to Board Chairs, and Human Resources and Nominating Committees in the identifi cation and selection of board members. Today, Canadian boards are paying thoughtful attention to the appropriate skills and experience matrix required at their respective tables. While this has become a very important element in Director selection, we believe most boards pay little attention to how their composition can be enhanced by a better understanding and defi nition of the key behavioural competencies of an ideal Director.

Over the past decade, Korn/Ferry has committed signifi cant research resources to identifying executive and board leadership skills and competencies.1 Korn/Ferry’s acquisition of Lominger International in 2006 provided us with additional research and expertise on executive competencies originally developed by Lominger International’s founders Michael M. Lombardo and Robert W. Eichinger. Th ese competencies were identifi ed following a comprehensive analysis of multiple research sources, including fi ndings from the Centre for Creative Leadership, plus longer-term studies conducted by AT&T and Sears. Th e result was the creation of a library of leadership competencies (67 in all) each with its own behavioural description and developmental tips.

Since the development of this competency library in the 1990’s, research has continued to reinforce its validity, establish norms, and look for emerging leadership competencies. Th is library is now considered the most comprehensive in the fi eld of leadership.

Korn/Ferry experts, in collaboration with Patrick O’Callaghan & Associates, used fi ndings from our proprietary library and modifi ed them appropriately for boards. From this, in order to be a valued and eff ective board member, 21 key behavioural competencies were carefully defi ned. Th ese 21 competencies were presented in a special survey to 204 corporate Directors across Canada. Each survey participant was asked to rank the competencies in groups of 7 ranging from “critical” to “important” to “less important”.

1 Th e Seasoned Executive’s Decision Making Style by Brousseau, Driver, Hourihan & Larsson, Harvard Business Review, 20062 FYI – For your Improvement, A Guide for Development & Coaching, Lombardo & Eichinger, Fourth Edition, January 2006

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1 | 2008 Board Special Survey Report

The Survey Outcome:

Th e Behavioural Competencies – Defi nitions and Directors’ Scoring

Critical Competencies Critical Important Less Important Average Score % % % #


Scoring is based on a numerical attribution of the directors’ ranking of the competencies as follows: critical = 3; important = 2; and less important = 1.

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Integrity and Trust Is widely trusted; is seen as a direct, truthful individual; can present the unvarnished truth in an appropriate and helpful manner; 97.5 2.0 0.5 2.97keeps confi dences; admits mistakes; doesn’t misrepresent him/herself for personal gain.

Ethics and Values Adheres to an appropriate (for the setting) and eff ective set of core values and beliefs during both good and bad times; acts in line with 84.2 12.3 3.5 2.81 those values; rewards the right values and disapproves of others; practises what he/she preaches.

Strategic Agility Sees ahead clearly; can anticipate future consequences and trends accurately; has broad knowledge and perspective; is future oriented; 70.4 23.2 6.4 2.64can articulate, paint credible pictures and visions of possibilities and likelihoods; can create competitive and breakthrough strategies and plans.

Business Acumen Knows how businesses work; knowledgeable in current and possible future policies, practices, trends, technology, and information aff ecting 51.2 35.5 13.3 2.38the business and organization; understands the competitive environment; is aware of how strategies and tactics work in the marketplace.

Courage Doesn’t hold back anything that needs to be said; lets people know where they stand; is not afraid to take negative action when necessary; 49.3 32.5 18.2 2.31will stand up and be counted; doesn’t shirk personal responsibility; can be counted on when times are tough; willing to be the only champion for an idea or position.

Perspective Looks toward the broadest possible view of an issue/challenge; has broad-ranging personal and business interests and pursuits; can easily 45.8 38.4 15.8 2.30pose future scenarios; can think globally; can discuss multiple aspects and impacts of issues and project them into the future.

Decision Quality Is prepared to make a decision (without considering how much time it takes) based upon a mixture of analysis, wisdom, experience, and 18.7 42.9 38.4 1.80judgment; sought out by others for advice and solutions.

Important Competencies Critical Important Less Important Average Score % % % #

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Listening Practises attentive and active listening; has the patience to hear people out; can accurately restate the opinions of others even 40.9 41.4 17.7 2.23when he/she disagrees.

Intellectual Horsepower Is bright and intelligent; deals with concepts and complexity 38.4 37.4 24.2 2.14comfortably; described as intellectually sharp, capable, and agile.

Problem Solving Uses rigorous logic and methods to solve diffi cult problems with eff ective solutions; probes all fruitful sources for answers; can see 25.1 54.2 20.7 2.04hidden problems; is excellent at honest analysis; looks beyond the obvious and doesn’t stop at the fi rst answers.

Priority Setting Spends his/her time and the time of others on what’s important; 27.6 36.9 35.5 1.92quickly zeros in on the critical few and puts the trivial many aside; can quickly sense what will help or hinder accomplishing a goal; eliminates roadblocks; creates focus.

Interpersonal Savvy Relates well to all kinds of people within the organization; builds appropriate rapport; builds constructive and eff ective relationships; 22.2 39.9 37.9 1.84uses diplomacy and tact; can diff use even high-tension situations comfortably.

Peer Relationships Can quickly fi nd common ground and solve problems for the good of all; can represent his/her own interests and yet be fair to other 20.7 42.9 36.4 1.84groups; can solve problems with peers with a minimum of noise; is seen as a team player and is cooperative; easily gains trust and support of peers; encourages collaboration; can be candid with peers.

Composure Is cool under pressure; does not become defensive or irritated when times are tough; is considered mature; can be counted on to hold 18.7 42.9 38.4 1.80things together during tough times; can handle stress; is not knocked off balance by the unexpected; doesn’t show frustration when resisted or blocked; is a settling infl uence in a crisis.


Less Important Competencies Critical Important Less Important Average Score % % % #


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Sizing Up People Is a good judge of talent; aft er reasonable exposure, can articulate the strengths and limitations of people inside or outside the 15.8 37.9 46.3 1.69organization; can accurately project what people are likely to do across a variety of situations.

Dealing with Ambiguity Can eff ectively cope with change; can shift gears comfortably; can decide and act without having the total picture; isn’t upset 14.3 38.9 46.8 1.67when things are up in the air; doesn’t have to fi nish things before moving on; can comfortably handle risk and uncertainty.

Confl ict Management Steps up to confl icts, seeing them as opportunities; reads situations quickly; good at focused listening; can hammer out tough agreements 10.3 44.3 45.4 1.65 and settle disputes equitably; can fi nd common ground and get cooperation with minimum noise.

Dealing with Paradox Can act in ways that seem contradictory; is very fl exible and adaptable when facing tough calls; can combine seeming opposites 11.8 29.1 59.1 1.53(for example being compassionately tough); stand up for self without trampling others, sets strong but fl exible standards; can act diff erently depending upon the situation; is seen as balanced despite the confl icting demands of the situation.

Political Savvy Can maneuver through complex political situations eff ectively and quietly; is sensitive to how people and organizations function; anticipates 8.4 34.5 57.1 1.51where the land mines are and plans his/her approach accordingly; views corporate politics as a necessary part of organizational life and works to adjust to that reality; is a maze-bright person.

Negotiating Can negotiate skillfully in tough situations with both internal and external groups; can settle diff erences with minimum noise; can win 8.4 22.6 69.0 1.39concessions without damaging relationships; can be both direct and forceful as well as diplomatic; gains trust quickly of other parties to the negotiations; has a good sense of timing.

Understanding Others (Groups) Understands why groups do what they do; picks up the sense of the group in terms of positions, intentions, and needs; understands what 6.4 23.2 70.4 1.36they value and how to motivate them; can predict what groups will do across diff erent situations.


So What Does This Mean?

Th e most interesting and valuable aspect of the survey results was their overwhelming homogeneity, regardless of the respondents’ gender, age, role, industry, company size or type of ownership. Agreement was especially strong for the competencies rated more critical.

Th e three top-rated competencies: 1. Integrity and Trust 2. Ethics and Values3. Strategic Agility

Of the 21 competencies, these three were rated as “critical” by at least 70% of the respondents. Th e highest ranking was “Integrity and Trust”, with 98% of respondents declaring it critical. Comments for this item emphasized its importance as: “a given – a must” and “it goes without saying that this is very important”. 84% of respondents rated “Ethics and Values” as critical while 70% of respondents rated “Strategic Agility” as critical.

Directors who named “Strategic Agility” as critical noted that “being able to think ahead” is what makes a Board successful or unsuccessful and that this competency is a “fundamental responsibility of the Board”. Comments also stated that directors should be “open to the future and able to review break-through strategies”.

Korn/Ferry considers the results of our Board Special Survey Report as a clearly defi ned starting point that boards can use as a foundation in their nomination processes. No one knows what specifi c chal-lenges directors will face in the future, but we now have a strong idea of what the board members who will wrestle with these challenges should look like. To identify, develop and select the men and women who can be eff ective leaders and board members, we have now identifi ed, and can rely on, competencies that will remain constant. Th e survey results will greatly assist Boards in director recruitment:

i. Th e results underscore the belief that certain behavioural competencies are as important, if not more so, than the skills and experience directors bring. ii. Th is knowledge then clarifi es for the board what to look for and assess in potential nominees. iii. We now have a shared lexicon or common language of competency defi nitions that boards can allude to and rank as they seek more eff ective “chemistry” at the board table.

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“Th ere are no doubt “grey” areas in arriving at competency segregation, and particular business circumstances could easily move a “less important competency” into a crucial skill requirement for that call. I don’t necessarily want all directors to have the same competencies. I would ask – what should be the priority factors in Board selection? And then aim for a combination of these.” – Survey Participant

Summary

Th e survey results, which refl ect the views of some of Canada’s most experienced Directors, reveal that Directors are strongly unifi ed about the specifi c behavioural competencies they wish to see evident among their peers. What constitutes a strong and eff ective board is not just a carefully considered mix of backgrounds and experience, but also the personal and behavioural characteristics essential in the makeup of every man and woman at the table.

Th e next step, is to determine how Korn/Ferry International will assist boards to assess the behavioural competencies of potential board candidates to ensure that the critical competencies identifi ed in this groundbreaking survey are present. Our challenge now is to produce an intelligent tool to measure these competencies during the director search process. We believe this is time critical and possible, and we will be rolling this initiative out in the immediate future.

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Documents

SPECIAL REPORT NT - Korn Ferry · can decide and act without having the total picture; isn’t upset 14.3 38.9 46.8 1.67 when things are up in the air; doesn’t have to fi nish things