Thursday, July 8, 2021

Balance Practices In Boardroom

Highly effective digital boards can practice effective governance disciplines via balancing and harmony, navigate the business toward the uncharted water and drive change more confidently.

Organizations across industrial boundaries are on the journey of digital transformation, change can flow on the surface whereas digital transformation needs to permeate into business vision, strategy, culture, communication, or process, etc. 

Corporate governance has a direct link to each core business and its processes. As one of the significant governance bodies, corporate boards have abilities to influence peers or the management team as they undertake a broad range of crucial decisions and initiating a set of balanced practices involving issues such as strategy oversight, policy-setting, and performance monitoring, etc.

To balance a company’s long term vision and short-term demands of investors: Due to continuous disruptions and ever-changing business dynamics, companies today have huge pressures to survive and thrive in today’s hypercompetitive economic dynamic. Vision is critical for corporate board leaders because organizations have to step into the uncharted waters and blurred business territories. They should be self-aware of their role in problems and show professional maturity to understand their intention, capability, and capacity for the strategic problems they intend to solve. 

Yes, businesses have to achieve certain financial targets quickly but they are, in many instances, unsustainable. There will be several short-term changes in direction that could slow the long-term direction. Thus, corporate board leaders should understand any pressure to change course or make decisions to satisfy the short-term demands of investors must be countered with a clear articulation of the company’s long-term vision.

Corporate board oversees business strategies. The greater that conditions of uncertainty prevail, the more likely it is that the strategy will be a product of emergent thinking rather than the original formulation. To provide invaluable feedback when overseeing the strategy, BoDs must become information-savvy, be sensitive to emergent trends and keep balanced views, not via stillness, but through the state of the flow and information dynamic. They should have a clear vision of what they need to know, and how the information provided pertains to the strategic plan, as well as what they are going to do with that information. It is important to stress the importance of establishing a relevant frequency of challenging the strategy and especially the resource distribution between different strategic themes and initiatives, or make a distinction between operational review and strategy change.

To balance the increasingly diverse perspectives in the boardroom: Corporate workforce is diverse today, for many, many reasons, such as innovation, collective intelligence, effective communication and seamless collaboration, the business leaders must create an inclusive organization with every dip in the business lifecycle, encouraging different voices. appreciate the diversity of diversity such as cognitive differences, unique capabilities, variety of experiences, the spectrum of skills, complementary perspectives and personalities to generate creative results regularly and frequently. A holistic perspective can fix the misperception by exploring multiple thought processes; willing to listen to the diverse viewpoint. BoDs as top strategic decision makers require multidimensional thinking and bring different viewpoints to improve decision effectiveness.

Therefore, the corporate board as one of the top leadership pillars needs to become information-savvy and decision-smart. There is much to be done in terms of having appropriate competencies such as information savvy around the board table to deal with all aspects of governance responsibility. Discover how and where to find valuable information, not just the information being fed by the management, but to pull out the information they need and also learn what to ignore. The best you can do for improving objectivity and gaining impartial perspective is to be consciously aware that information could be filtered and fix the misperception by embracing diverse viewpoints and exploring different ways to improve decision maturity. Even though people have different intent, personality traits, working styles, effective inclusion efforts and empathetic communication can bridge leadership gaps and build a complementary board leadership team to enforce governance effectiveness.

To shape & balance a set of adaptive board culture defined by change principle for facilitating constructive interactions between board members, managements, and varying stakeholders: Culture is something a company does; it's the collective mindsets & character that are closer or further from an ideal. Corporate boards set cultural tones for their organization, they also need to pay more attention to the boardroom culture as well. Culture assessment is tough, but it is worth the effort at the boardroom because innovative and adaptive cultures tend to catalyze higher business performance. For boards striving to be more dynamic, performance oriented, and shareholder focused, getting culture right is key. The board composition needs to ensure that an appropriate mix of thought processes, capabilities, skills, knowledge, and experience are present or available for it to fulfill its function and facilitate constructive interactions between board members, managements, and varying stakeholders.

Culture is like a "tide," even leaders are swimming with or against much of it. Strategy, role-model, systems thinking, trust, relationship management, balance, etc. are all important culture change principles. Leadership is an influence. BoD’s cultural influence is based on how they can follow change principles to advocate holism, inclusiveness; and inclusiveness enforces learning, communication, and collaboration. It’s important to make an objective assessment of boardroom culture by understanding the varying issues such as: the cognitive skills and decision-making biases; behavioral styles and patterns; motivational drivers and passions, communication effectiveness and decision maturity. To change "culture" is to change the persistent emotional experience of the people, there is friction and change inertia. Thus, board directors themselves need to become change agents, overcome silo thinking, show the high abilities to understand and handle changes from different angles, encourage cross-disciplinary collaboration, and enable change continuum.

To provide excellent feedback for management to improve its effectiveness and set good policies to help the business move forward: In an era in which every tweet has the potential to plunge a company into fatal failures and reputational crises, the demands for business foresight and corporate transparency are unprecedented. Insightful board leaders have to bridge both industrial silos and digital divide today. If it is really unpredictable, that means the future cannot be, in any way, deduced from the past. As such, it becomes far more about influencing others to choose to allow/enable the success of your strategic goals. The corporate board directors often present an in-depth knowledge about the business and expertise in multiple domains. They are insightful business critics who can provide excellent feedback which gives the top management invaluable advice to broaden their vision and deepen their understanding of interdisciplinary management approaches.

Board directors are policy makers to guide the business through digital transformation, shifting decision rights down and across the levels of recursion closer to the populace and forming richly connected people-centricity. You can update a strategic plan based on the improvement of the real situation by analyzing the mandate and extracting policies that enable you to make the vision and missions; then to make the smart objectives, policies and programs that solve your development problems. By setting the right policies, providing invaluable feedback for management to improve, and monitoring performance, corporate boards are on the right track of practicing their judiciary functions effectively.

Under today’s “VUCA” business dynamic, corporate board directors must gain an in-depth understanding of the organization and its eco-environment in order to steer their company in the right direction. Timing is always important, change is inevitable. Highly effective digital boards can practice effective governance disciplines via balancing and harmony, navigate the business toward the uncharted water and drive change more confidently.


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