Thursday, October 8, 2020

Responsibilities and Leadership Impact of Contemporary Corporate Boards

 The hardcore of leadership such as vision, knowledge, insight, and wisdom help BoDs make sound judgments and solid decisions, as well as take their judiciary responsibilities smoothly.

The purpose of the board of directors is to enforce governance disciplines by directing business in the right direction and monitoring the business performance. It needs to be remembered that governance as a discipline is a living breathing entity that continually requires stroking and attention, otherwise, it will stagnate and lose its ability. 

To lead effectively, directorship in any forward-thinking organization must have the ability to guide, inspire, motivate and embrace business trends such as digitalization and globalization, take multiple responsibilities, and make significant impact to drive transformative changes seamlessly.

Confidence: The BoDs set the leadership tone for transformative change. Confident board leaders “listen, respect and respond," open to new knowledge, capture fresh insight, overcome “shadow thinking” in order to be flexible and willing to adapt to changes. Confidence in the process of making a decision leads people to act even though the outcome that is desired may not happen. Corporate boards leverage the right mix of logic and intuition to make effective decisions. As for information providing confidence, it depends on the information quality. Confidence in gut feel is a psychological sense of certainty in the face of unquantified uncertainty. 

Confidence is often a reflection of your innate mentality. Being positive is within yourself, reflects your personality, thought process put into action. Confident people usually are multi-faceted and colorful for a number of roles, not being one dimensional. To improve the BoD’s leadership confidence, the hardcore of leadership such as vision, knowledge, insight, and wisdom help them make sound judgments and solid decisions, as well as take their judiciary responsibilities smoothly.

Competence: It is collegiality, respect, transparency, competence that allow a board to be effective. Contemporary BoDs should be more flexible and less rigidly tied to the top-down, command-and-control style, they can lead via expertise, insight and they are open to change. High-competitive boards should be more representative of stakeholders, look for people who have cognitive differences, diverse backgrounds and experiences, and unique strength to amplify their collective leadership impact.

Courage is important for BoDs because they need to ask tough questions, listen with the courage to what you DON'T want to hear and to have the guts to make hard decisions. Without proper information or collective input, no good decisions can be made. Courage comes with competence which is based on talent and skills. There is a need for both generalists and specialists to be BoDs - the generalists can give an overview while the specialist can "drill down" into specific topics. It's all a matter of teamwork.

Influence: Leadership is about identifying and envisioning a worthy objective, and engaging people to work towards that objective. Top board leaders need to have broader business acumen, deep expertise, transdisciplinary knowledge, cross-functional experience, and overall expert power to make leadership influence. The corporate board leaders demonstrate adaptability, consistency, profundity, and empathy to steer the business in the right directions.

The board leadership effectiveness is based on their leadership substances such as vision and purpose with digital leadership styles such as participation, coaching or delegation. The corporate board’s global leadership influence is based on their world-class leadership competencies such as self-regulation, social judgment skills, empathy in a global environment, cultural cognition, acceptance of complexity and its contradictions, the tolerance of ambiguity, flexibility, and learning agility, etc.

Performance: The corporate board’s role, in large part, is to make good decisions that enhance the value creation for the organization. To identify and break down business performance bottlenecks, they need to help the management understand the whole story behind the scenes and ensure the business as a whole is superior to the sum of pieces. They need to be talented enough to vet strategy, gain an in-depth understanding of what’s blocking business achievements, targets, work together as a group to speak in one voice, delegate and monitor business performance continuously.

To enforce their governance disciplines, they need to focus on the performance of the management team as well as their own performance. The corporate board needs to be able to leverage diverse viewpoints via listening, brainstorming, and questioning; make effective decisions via applying multi-dimensional intelligence. Ultimately, the board takes the praise or the blame depending largely on their ability to influence the business outcomes. The "performance" responsibility of BoDs should be focused on the maximization of the business capital allocation and improvement of the shareholder’s value.

Conformance: The real BoDs dilemma is that driving the business forward is extremely difficult due to “VUCA” new normal. This means you have to look into an unknown future and attempt to define the landscape with its risks and opportunities. Thus, conformance is critical for the business’s survival. Precisely speaking, a forward-looking, proactive approach to governance at the board level can improve the functioning of the corporation and make its long-term survival and profitability more likely.

To some degree, conformance is inherent within the value-driven performance. The BoDs need to ask some tough questions about their compliance efforts such as: What compliance element measures a chairman's effectiveness or the skill level of board members? What compliance measure tests the level of integrity of directors to ensure that they will make full disclosure when conflicts of interest arise? Etc. They need to develop the next set of board governance practices, complying with new established regulations and guidelines, and improve risk control-oriented mechanisms of management and control.

Balance: The challenge facing organizations these days is related to increasing complexity, unprecedented uncertainty & ambiguity, and increasing rate of change. The capability of striking the digital balance can differentiate a digital leader from a follower. Digital boards should have both technical "hard" skills and leadership "soft" skills in the proper ratio, learn how to “balance” well across the business ecosystem perspective by taking the hybrid style to make leadership team's thinking visible and reduce or eliminate the variety of leadership gaps.

Compared to the previous eras, to improve leadership effectiveness, it’s about harmony. To achieve harmony, it’s all about balance. To balance, it’s all about overcoming extreme thinking and silo mentality. A professional board should embrace cognitive differences and complementary capability & expertise. Digital Board of Directors can reflect and offer diversified insight into complex situations, listening and telling are crucial for understanding issues insightfully and provide advice wisely; see things from a different angle and come out with multifaceted perspectives and balanced viewpoints.

Relevance: There are many hot topics in the corporate boardroom’s agenda nowadays, they have to spread their time in many things. To keep the board meeting relevant and efficient, besides laser focusing on strategic topics, and set the right priority for brainstorming transformative changes and innovative ideas. To keep their leadership relevant, they practice coach leadership style, listen a lot, ask, prevent, explore, challenge, seek results, They lead by asking strategy or performance related questions to the management such as: "How would you like to do it"? "Are there any other ways of doing it"? "Can you compare them?", "Which is best”? Also, continue to update their own knowledge, coach and learn at the same time.

BoDs need to keep evaluating their board meeting effectiveness and relevance by making further inquiries such as: Is information distributed fresh, and informative? Does meeting create synergy and lead to action? Can we avoid “Group Thinking” syndrome? Are we critical enough to find strategy defects or potential business risk and provide enough feedback to the management for improvement? What are other alternative communication formats to enforce governance disciplines? Etc.

Statistically, more than half of organizations are experiencing a leadership shortage, it becomes an even more serious problem at the senior leadership level such as the corporate board. To reach the state of knowledge proficiency and spread expertise influence, it is important for the BoD's to identify and close the gap between knowledge and insight in the boardroom. Collectively, the digital board directors with a blend of expertise and capabilities can foster a culture of innovation and improve boardroom decision effectiveness and leadership maturity.


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