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How Next Generation Directors are Impacting Boards and CEOs

It used to be that directors’ skills, history, and reputation provided a career ladder for executive and CEOs to join boards as directors. Boards were often a place for experienced, seasoned leaders and executives to 'retire' to after having earned their entrance through successful careers. Is this still the case?

In its simplest definition, a board of directors is responsible for setting the strategy and direction of the company or organization and providing oversight and guidance to executives and leaders responsible for execution and performance. What is the difference between next-generation directors and those historically filling board seats?

In the article by INSEAD titled, Are Boards Forward-Thinking Enough in the Disruption Era, the authors highlight how quickly global business trends are impacting strategic decision making of boards:

"The nature of boardroom discussions must evolve, encompassing a broader array of issues than ever before. The problem is that board members often feel ill-prepared, both in terms of their skill set and the traditional board agenda." 

The role of directors on boards is indeed evolving to meet the changing landscape and the expectations of the next generation of leaders and stakeholders. Here are some key ways in which this evolution is taking place:

  1. Strategic Leadership: Next-generation directors are increasingly expected to provide strategic leadership rather than just oversight. This involves actively contributing to the organization's vision, mission, and long-term strategy, and ensuring that these are aligned with the organization's values and objectives.

  2. Diversity and Inclusion: There's a growing recognition of the importance of diversity and inclusion within boards. Next-generation directors are expected to actively promote diversity in terms of demographics, expertise, and perspectives to ensure more effective decision-making and better representation of the communities served by the organization.

  3. Tech Savviness: With the increasing importance of technology in every aspect of operations, next-generation directors are expected to be more tech-savvy. This includes understanding emerging technologies, their implications for the organization, and leveraging them to enhance efficiency, communication, and impact.

  4. Innovation and Adaptability: Boards are operating in a rapidly changing environment, marked by technological advancements, shifting demographics, and evolving social and environmental challenges. Next-generation directors are expected to embrace innovation and adaptability, encouraging the organization to be more agile and responsive to change.

  5. Community Engagement: Next-generation directors are often more attuned to the importance of community engagement and stakeholder relations. They recognize the value of building strong relationships with beneficiaries, donors, volunteers, and other stakeholders to foster trust, collaboration, and support for the organization's mission.

  6. Transparency and Accountability: There's an increasing demand for transparency and accountability. Next-generation directors are expected to prioritize transparency in decision-making processes, financial management, and reporting, and uphold high standards of accountability to ensure the organization's credibility and trustworthiness.

  7. Impact Measurement and Evaluation: Next-generation directors are placing greater emphasis on impact measurement and evaluation. They recognize the importance of demonstrating the organization's effectiveness and efficiency in achieving its mission and goals, and they actively support the implementation of robust monitoring and evaluation systems to track outcomes and learn from successes and failures.

Overall, the role of directors on boards is evolving to be more proactive, inclusive, tech-savvy, innovative, and accountable. Next-generation directors are leaders who are driving this evolution as they bring fresh perspectives, skills, and values to governance.

In a fast-changing world, the collaboration between the board of directors and the CEO is crucial for small and medium-sized businesses (SMBs) to navigate challenges and capitalize on opportunities effectively. Here are some strategies for enhancing their collaboration:

  • Clear Communication Channels: Establish clear channels of communication between the board and the CEO. Regular updates, reports, and meetings should be scheduled to ensure alignment on goals, strategies, and performance metrics.

  • Shared Vision and Strategy: The board and CEO should work together to develop a shared vision and long-term strategy for the company. This ensures that everyone is moving in the same direction and makes it easier to adapt to changing market conditions. Who owns strategic planning?

  • Open Dialogue and Transparency: Foster an environment of open dialogue and transparency where both the board and the CEO feel comfortable sharing their perspectives, concerns, and ideas. This allows for constructive feedback and better decision-making. According to The Importance of Board Governance Training: "external activities, such as spending time at governance seminars, workshops, and conventions provide valuable opportunities for boards to connect and form stronger relationships outside the board."

  • Risk Management and Agility: Given the fast-changing nature of the business environment, the board and CEO should collaborate closely on risk management strategies. Next-generation directors should also prioritize agility and the ability to pivot quickly in response to market shifts.

  • Utilize Diverse Expertise: Leverage the diverse expertise of next-generation directors and the CEO to bring different perspectives to problem-solving and decision-making. This can help identify innovative solutions and opportunities that may not be apparent otherwise. As Lori Brotherton from the Rotman School of Management highlights,

"The board of directors can act as a sounding board to help a CEO navigate through tricky times."
  • Empowerment with Accountability: Empower the CEO with the authority to execute the agreed-upon strategy, but also hold them accountable for results. Define clear performance metrics and regularly assess progress towards goals.

  • Continuous Learning and Adaptation: Encourage a culture of continuous learning and adaptation within the organization. Both the board and the CEO should stay informed about industry trends, emerging technologies, and best practices to remain competitive.

"Something many boards fail to recognize is that their responsibilities are important not only for the current time but also for the future. Effective boards are forward thinking."
  • Succession Planning: Plan for CEO succession to ensure smooth transitions in leadership, especially in the face of unexpected changes or crises. This involves identifying and developing internal talent and having a clear process for selecting a new CEO if needed.

  • Regular Evaluation and Feedback: Conduct regular evaluations of board performance, CEO performance, and the effectiveness of their collaboration. Solicit feedback from all stakeholders and use it to make improvements as necessary. "The evaluation process should be rigorous enough to test the board’s composition, dynamics, structure and operations."

  • Ethical Leadership: Emphasize ethical leadership principles and ensure that decisions are aligned with the company's values and long-term sustainability. Ensure organizational values are front and center in every meeting and discussion. Discuss ethical dilemmas are part of board training.

By implementing these strategies, businesses can foster a strong partnership between the board of directors and the CEO, enabling them to navigate the complexities of a fast-changing world more effectively. Next-generation directors have arrived! "The image of the director as a post-retirement position is beginning to fade", according to governance expert, Lori Brotherton.

Jerome Dickey, MA, PCC, CPHR, Q.Med


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