• Categories: Further reading
  • Published: Nov 10, 2023
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Each month we signpost for you some good reading on governance from around the web

Working more effectively with your start-up board (for founders and CEOs)

How To Run Great Board Meetings, by Jean de La Rochebrochard, starts by observing that, for most investors and entrepreneurs, their boards are not useful enough. 

The shortcoming starts with board meetings. These should not be thought of as a kind of routine business get together but as the equivalent of an off-site retreat for the team. The meeting should include an honest assessment of the past and present, address strategic matters and concerns, envision the future, and take decisionsall together. 

To make this work, founders/CEOs should send board meeting packs out a week in advance. The content must tell board members what they are expected to know, to learn, to think aboutbefore the meeting. Getting the most out of a board meeting requires quality prep work from all attendeesboth board and staff. The board pack must be “…an honest and clear view of the past, present and targeted future. If things are ugly, show the blood, if things are running smoothly, address strategic matters.”

What makes this piece particularly interesting is the variation proposed to the widely used 3-level ‘traffic light’ reporting system. This is achieved by adding a 3-stage timeframe (past, now, expected). He suggests that everything the board needs to talk about can fit into that matrix.

The benefit of presenting everything in terms of this 3x3 matrix (demonstrated in the article) is that it sets a pattern of understanding for everyone to follow, even though their opinions will still vary. De La Rochebrochard also sets out a useful sequence for the meeting to follow.

The need for marketing knowledge on the board

According to US analysis by Spencer Stuart, only 79 board members in the Fortune 1000 have a marketing background: fewer than 1% of sitting board members.

This article suggests the solution is to put the chief marketing office on the board, a very American approach and not one we would look to as a first option. But if you agree with Roger Martin that strategy is about compelling customers to make choices in your favour, then an absence of relevant expertise is an obvious problem.

The state of cyber awareness in the boardroom

Cyberattacks are on the rise and boards have a responsibility to shareholders and stakeholders to educate themselves on cyber risk and how it can affect their organisations. Some jurisdictions are considering regulations (like the pending SEC cybersecurity rules) that would compel boards to have cyber expertise or education.

A recent report, State of Cyber Awareness in the Board Room, has highlighted the cost of cyberattacks (more than US$4M on average  in 2022). The report, based on a review of 4,553 directors of S&P 500 organisations, found that 57% of companies lack specialised experience in non-cyber technology categories and 88% do not currently have specialised cybersecurity experience to guide them on risk mitigation efforts. 

Every organisation faces cyber risk. While not every organisation requires a Chief Information Security Officer on the board, directors have a growing responsibility to build their competency around cyber risk so they can implement more effective governance strategies. A recent interview in Directors&Boards contains suggestions on how, in the light of the report, boards might address this shortfall. 

Five easy steps to kill your company

This short teaser post contains some early wisdom from Henry Mintzberg’s imminent (February) new book:  Five easy steps to kill your company — essential reading.

Toxic label syndrome

Readers may not have heard of the death of ESG (environmental, social and governance performance measurement criteria) but many will be aware it has been on life-support for a while now. It originated from a need expressed by investors for company-specific, forward-looking information not included in corporate financial statements. Good intentions seldom result in good outcomes when, like ESG, they are misapplied for all the wrong reasons. Unfortunately, ‘ESG’ was a confused acronym from the start.

Nir Kossovsky, a former coroner, now a CEO, has written in What Killed ESG? that “…the evidence suggests ESG died from toxicity and dysfunctionality. Culpable parties include investors, fund managers, corporate communicators, and politicians”.

As Kossovsky says, the topics within the purview of ESG metrics are legitimate prompts for business operations and will continue to affect performance and future prospects. He laments that ESG could have been a dispassionate measure of corporate factors not addressed in financial statements. Ranking its morality value, however, made it the wrong answer to the right question, precipitating its accidental death from what he calls ‘Toxic Label Syndrome’.

Kossovsky argues that: “We need a dispassionate measure of corporate factors not evidenced by financial statements or biased by competing and changing definitions of morality. That solution is to objectively measure corporate reputation as a metric of resilience in a world in which we expect more from the businesses in which we invest and work, and from which we purchase.”