How Long is a Leader a Leader?

There has been so much discussion lately about the merits (or lack thereof) of term limits for board directors. The argument goes as follows; boards become stagnant, colloquial and non-independent after too much time together. On the other hand there is a great value at having experienced directors who understand the company they are involved with and are familiar with the other members they serve with. Thus, the perfect amount of time to serve is a fine balance between familiarity and exposure as compared to being a neophyte.

The same underlying tendencies and dynamics can certainly hold true for CEOs and in fact, leadership of a variety of sorts. How long can any leader be expected to innovate and make astonishing new contributions? I began asking this question in response to the unfolding CEO predicament at Research In Motion (RIM) that finally resulted in the announcement of the resignation of co-CEO’s Jim Balsillie and Mike Lazaridis yesterday. Lazaridis founded the company in 1984 and Balsillie joined him in leading it in 1992. That is a long-time steering a ship trough the turbulent and ever-transforming world of communications and technology.

In the preeminent work on the topic of leadership tenure Donald Hambrick and Gregory Fukotomi of Columbia University described discernable phases, or seasons as they called it, of an executive’s tenure in the job. They describe the following 5 seasons: (a) response to mandate, (b) experimentation, (c) selection of an enduring theme, (d) convergence, and (e) dysfunction.

The convergence phase is characterized by an ingrained strategy largely because what has worked in the past is still assumed to be the way forward. Convergence will lead to dysfunction if drastic changes are not made and this is what is currently transacting at RIM. While the board has replaced the Co-CEO’s the big question in the markets today is whether the replacement, Thorstein Heins, has the breadth of experience to take the company back to the season of experimentation in order to test new ideas and strategies. In general I am a huge proponent of promoting from within but in the case of RIM it might have been wise to inject some new blood into this scenario.

Womenomics: 10 Reasons Why We Need more Women on Boards

1. Your stakeholders, including employees, investors and customers include women. How better to understand these constituencies than by representing them at the top of the organization?

2. Having women in the boardroom sends the message that the company is accessible, inclusive and open to innovation. This is very positive in the marketplace and motivating for employees.

3. Women represent half the population.

4. Goldman Sachs concluded that women’s purchasing power will drive global economic recovery. If your company wants to be included in women’s purchasing behavior then best to understand it.

5. The World Bank has predicted that women’s earning power will reach $18 trillion by 2014.  See number 4 above!

6. The driving force behind the social web is women. Scores of studies have shown that women are the majority of users of social networking sites and spend 30% more time on these sites. According to Nielsen mobile social network usage is 55% female. So, to best comprehend and master this pervasive and growing phenomenon ask a woman.

7. According to the American Psychological Association, a woman’s leadership style is more like mentoring and coaching, while a man’s style is centered around command and control.  Each of these styles has their advantages and may be appropriate at certain times and not at others. The most astute companies will seek to benefit from a variety of approaches.

8. Women tend to be more inclusive and collaborative than men and they ask different types of questions than men. Ram Charan, in his best-selling book “Boards that Deliver” concludes that progressive boards have lively debates and challenge each other directly without breaking the harmony or the group.

9. Women tend to be more comfortable with ambiguity than men, are more holistic in their thinking and tend to be more process oriented than men. Per a 2010 Harvard Business Review blog by Scott Anthony:  “It’s pretty clear that tomorrow’s leaders are going to face the “new normal” of constant change. It is no longer enough to be an operator that can master today’s complexity. You have to be prepared to deal with tomorrow’s complexity, “black swan” events, sudden shifts in the basis of competition in your industry, competitors springing up around the globe, and more.” Never has the ability to deal with uncertainty been more important.

10. Numerous studies have shown that companies that smash the “glass ceiling” increase their profits as a result. Companies with more than three women on their board have a higher return on investment. Simple?!

The Corporate Secretary’s Increasingly Crucial Role

With ever-increasing emphasis on corporate governance practices in light of the financial crisis and the legislative and regulatory response by the SEC and Dodd-Frank, boards of directors are under pressure to quickly adapt to the new business landscape. There is much at stake. Companies having a weak and inadequate framework for corporate governance are more likely to experience anemic profits, higher risk and be held in low regard by investors and industry peers.

As never before, boards of directors are tasked with multiple responsibilities, including oversight of the CEO, succession planning, advancing the strategic mission of the organization, fiduciary duty to stakeholders and finally of course, corporate governance.

With so much on their plates, how can directors adequately focus on corporate governance best practices? Regular director training and education is part of the answer, as well as support from an experienced and diverse group of professional advisors. But increasingly, one of the most important officers in the boardroom, when it comes to overseeing responsible board practices is the corporate secretary. In fact, many organizations, recognizing the broadened role of the corporate secretary, have expanded the title of corporate secretary to include chief governance officer.

How Does the Corporate Secretary Ensure Sound Governance?

A corporate secretary must wear many hats. Elemental to the role is ensuring  accurate and sufficient documentation exists to meet legal requirements. This means, amongst other things, the accurate recording of minutes of board meetings. He or she is also responsible for preparation and distribution of proxy statements and other documentation associated with the annual shareholders meeting. The corporate secretary also responds to shareholder inquiries, acts as a bridge between directors and senior management, maintains corporate records, ensures the organization and the board are in compliance with best governance practices and a tangled web of rules, laws and regulations. The corporate secretary also advises the CEO and is designated as the go-to officer for corporate governance matters. Negotiations with
shareholders (much more common these days) can also be part of the corporate secretary’s purview.

Corporate secretaries must advance sound corporate governance principles within the framework of all of their duties. Every document, every record and every interaction with directors, stakeholders and management must be prepared and undertaken with impeccable governance in mind. If the corporate governance and compliance functions of a corporate secretary seem overly board and complex, that’s because they are. So, how can a corporate secretary in the post-financial crisis environment of Dodd-Frank adequately adapt and offer the support and knowledge a board of directors needs to make sound and ethical business decisions?

Corporate Governance Gatekeeper

During an interview with the Metropolitan Corporate Counsel publication last year, David W. Smith, former President of the Society of Corporate Secretaries and Governance Professionals described corporate secretaries as “gatekeepers and filters of governance and other challenges facing corporations.” Indeed, corporate secretaries must keep abreast of important developments in corporate governance and compliance issues, inform and advise directors of these developments before, and during and after board meetings. Directors rely on the corporate secretary during
meetings to provide expert counsel on governance issues before making decisions. If a corporate secretary fails to properly provide the appropriate information, costly mistakes can be made. Providing the right information, at the right time and in the right amount is often a balancing act. It comes down to proper filtering. However, too much filtering can leave directors uninformed or misinformed.

A Larger Seat at the Table

How can we help the corporate secretary with their increasingly demanding and complex role? One way is to simply provide them with a “larger seat at the table.” The corporate secretary is not the technical record keeper but rather a partner and trusted advisor to the board. More time should be allotted for and devoted to governance and his/her expertise should be fully utilized. On the other hand the corporate secretary must be sensitive to and cognizant of the underlying workings, dynamics and culture of the board. To be fully effective he/she must gain the trust of this high-powered group of individuals.

The corporate secretary must be given the authority and freedom with which to perform and serve the corporation. This starts with who he/she reports into and definitely influences the parameters and perception of the role. In most cases the corporate secretary reports into the general counsel however given the increasing responsibility to the board there is oftentimes a dotted line to the chairman or when the role of corporate secretary is combined with general counsel the position reports into the CEO.

In this perilous regulatory environment, corporate secretaries are more important
than ever before. Dr John Carver, one of the most published thinkers on governance worldwide says that, “it seems to me that corporate secretaries have more opportunity to influence corporate governance in a modernizing direction than academics and lone voices.” Let us give heed to this comment and fully utilize the expertise available to us!

Celebrity Advisors Provide Visibility and Cache in the Right Doses

Before the implementation of what will one day undoubtedly be referred to as “modern governance practices”, it was accepted for public companies to add a little star power to their boards of directors. Business experience was not necessarily required. Actor Sidney Poitier served as a director on Disney’s board. Boxer Evander Holyfield once served on the board of directors for the Coca-Cola Bottling Company. Before O.J. Simpson was charged with murder, he served on a number of boards, including the audit committee at Infinity Broadcasting Corp! And actress Priscilla Presley was elected to the MGM board in 2000, where she remained until the company filed for bankruptcy in 2010.

Star Power and Stock Prices

Like many others in our celebrity-obsessed society, organizations and investors can be impressed with and influenced by fame. And to be fair, from a business perspective, celebrity associations often translate into increased profit. A glamorous celebrity serving on a board or providing an endorsement can lend instant visibility and pizzazz to a corporate brand. The cache and hip star power of a celebrity board member or advisor can help young organizations attract investors. In fact, a 2010 study conducted by a group of university researchers, “Reaching for the Stars: The
Appointment of Celebrities to Corporate Boards,” found that the appointment of
a celebrity to a board of directors can produce an immediate jump in stock
prices. The study pointed to the case of former professional golfer Nancy Lopez
Knight, who has served successfully as a J.M. Smucker director since 2006. The
researchers directly attributed, as much as a 2.1 percent hike in stock prices, to Knight’s celebrity status.

The Lance Armstrong Rule

But with more emphasis than ever before on adhering to best practices for responsible corporate governance and the increased focus on risk management, public companies need to take exceptional care in choosing qualified directors who bring much more to the boardroom besides a famous name.

In the wake of the recent recession, the SEC has adopted changes to various reporting requirements. Included in this was an amendment to Item 401(e). The amended rule now requires that public companies to disclose the “specific experience, qualifications, attributes or skills” of a director or a director nominee” and show how such expertise relates to their role as a director. This, of course will serve to limit the number of directors who are appointed by virtue of their celebrity status only. Perhaps the SEC was influenced in part by Lance Armstrong’s disastrous turn as a director for Morgans Hotel Group. The Tour de France champion missed 11 board meetings in 2007 and quit the following year.

Nevertheless, there are a number of celebrities with varied backgrounds, currently serving quite successfully on public boards possessing additional expertise in business, finance or academia, whose specific skill sets fill a needed role in the boardroom. For example, Deepak Chopra M.D., famed spiritual author, public speaker and Adjunct Professor at the Kellogg School of Management, serves as a director for Men’s Wearhouse. And Wayne M. Rogers, the actor who played Dr. Trapper John McIntyre in the iconic series M.A.S.H., made another name for himself in the financial world and now serves as a member of the board of directors for Vishay Intertechnology Inc.

Celebrity Advisors

However, these types of elite celebrity directors are the exception and not the rule. Organizations seeking to gain from the “visibility effect” of celebrity to boost stock value and attract the attention of investors would be better served to appoint a celebrity to a non-voting advisory board. Having a diverse board of advisors is especially important for a young startup, not only as a means to attract investors, but to assist with risk management, networking, public relations and to obtain valuable feedback as well.

“Square” the potentially disruptive mobile payments startup launched just two-years ago by Twitter founder Jack Dorsey, added television actress Alyssa Milano to its growing board of advisors. In addition to her star status, Milano was added due to her “direct and relevant experience in contracts, promotion, distribution, manufacturing, licensing issues, retail, philanthropy, and a deep insight into present and future technologies and social movements around them.” The star is also recognized as a power Twitter user, philanthropist and a successful entrepreneur. Dorsey credits her with bringing “a clarifying presence to everything we do.”

In a similar vein, SportsBlog Nation recently added actor and avid technology investor Ashton Kutcher to its board of advisors. Besides his celebrity status, Kutcher was chosen for his networking connections, business development and recruitment skills.

The board of directors is responsible for corporate governance, oversight of senior management, supporting the strategic mission of the company and of course, protecting shareholders’ investments. Advisory boards on the other hand are less formal and can thereby be filled with a talented, diverse group of advisors, carefully and strategically selected. This group can greatly assist directors in the ever-changing competitive environment. Dedicated celebrity advisors, properly managed, possessing appropriate skill sets, sharing the organization’s goals and vision can successfully fulfill a role and add immense value to an organization.

Essential Consideration when Evaluating a Board: the Life Cycle Stage of the Organization

In the wake of the boardroom deficiencies uncovered during the 2008 Wall Street crisis, more attention than ever before is placed on sound responsible corporate government practices.

It’s true that boards of directors come in all shapes and sizes. And it’s true that there is no magic one-size-fits-all formula that can provide organizations and shareholders with all of the tools they need to avoid the many pitfalls inherent in the modern corporate governance environment. But conducting an annual evaluation of your board of directors, preferably by an outside independent firm, can help pinpoint shortcomings in corporate governance practices, director training, risk management, the makeup and size of the board, standing committees, as well as board independence. However, one vital criterion that’s often overlooked when making a board assessment is the life cycle of the company to which the board serves.

Evolving Corporate Stages

Organizations evolve and mature over time just like people do. For example, a young technology startup in the pre-IPO stage may focus its board activities within the framework of luring investors, networking, public relations and marketing and obtaining legal advice. But as the upstart tech company goes public, the priorities of the board and the organization may need to shift gears to properly implement more thorough governance and accountability. As a company matures, grows in size and becomes more diversified with perhaps multiple global outposts, the makeup and focus of the board of directors should evolve as well. A more mature company may require additional independent directors, more diversity of a variety of sorts and even less time from its directors as circumstances become more structured and predictable.

It is thereby important to consider the evolution and stage of the company when evaluating or structuring its board of directors. Just like the company executives, the board should transform (albeit slowly) over time. An example can perhaps better illustrate this point.

Amazon.com went public in 1997 and by 2002 it had revenues of $3.9 billion. The company’s board consisted of 6 directors including Jeff Bezos, the company founder and two venture capitalists. There were two CEOs on the board, one with strong consumer products experience and the other with a blue-chip retail background. Patricia Stonesifer, at the time Co-Chair of the Bill and Melinda Gates Foundation rounded out the group.

Today Amazon.com is a diversified online retailer that has grown steadily both organically and through a number of successful acquisitions including Zappos.com. Forty-five percent of its $34 billion in revenues come from outside North America and accordingly its board of directors looks quite different. The board today has eight directors, only three of which are the same as in 2002. This slightly larger board is both more appropriate for the current size of Amazon and allows the company to benefit from more varied experience with the two additional members. There are still two VCs on the board, one from the original group. One director is based in Singapore and has significant international experience, quite important given where its revenues are coming from. Interestingly, another director on the current Amazon board  has Palm Inc. and Apple experience and is currently head of Hewlett Packard’s Personal Systems Group. This certainly tells us a great deal about Amazon’s current strategy and corporate priorities. What is important to notice from this illustration is that the board of this very successful company has significantly changed over a mere nine years. One can only assume that these board changes have come about at least partially as a result of regular board evaluation in light of the company’s strategy and a consideration of the stage at which the company is at.

Identifying and paying attention to the relative life cycle of a company allows appropriate adjustments to be made to the structure of the board and the scope of the board’s mission. As the goals and strategic objectives of a company evolve over time, so should the board of directors.

Corporate Governance Life Cycle

There is a large body of research and analysis connecting sound corporate governance to the evolving organizational life cycle of public companies. The dynamic view of corporate governance dictates that corporate governance can’t be practiced in a vacuum. The life cycle bible, “The Life Cycle of Corporate Governance,” authored by Igor Filatotchev and Mike Wright, analyzes governance issues through the prism of financial, industrial and institutional life cycles and the chaotic transitions between these shifts. In a nutshell the conclusion is that the requirements for responsible corporate governance should be continually evaluated to account for the present-day realities of an organization’s structure.

A thorough top down approach to board evaluations that includes a consideration of both the organizational and board life cycle will hopefully result in a finely tuned board of directors that is ready and able to govern responsibly.

Passed Over for a Promotion? The Best Path Forward for Disappointed Employees and Organizations

“Sorry, we decided to hire someone from the outside for this position.” Chances are if you have been in the workforce for a number of years, you have experienced the bitter pill of being passed over for a promotion you thought you had locked up. Once you take the time to cool off and grieve over the career disappointment, what you do next can affect the future trajectory of your career and professional development. Organizations also need to be aware of the repercussions and effectively deal with issues of employee morale after passing over a long-term employee in good standing.

When a passed over employee asks why? Company executives need to be prepared with constructive responses to help employees understand and accept the decision-making that led to an outside hire or choosing a competing internal candidate. The reasoning is best if it is quantifiable and based on objective measures. Explanations like “You are not ready” simply don’t provide the substance and details that can be useful.

If an organization can’t offer an explanation based on company goals, needs, policies and its defined criteria for success, it’s time to beef up its 360-degree feedback mechanisms. A check on how these messages are communicated and the clarity by which employees know what is expected of them is also worthwhile. Otherwise, an organization may experience problems, due to employee resentment, poor morale and the loss of trained team members with valuable institutional knowledge, who jump ship to pursue better opportunities.

Conduct an Honest Self-Evaluation

After taking the time to lick their wounds, passed over employees need to take the time to conduct a thorough and honest self-evaluation of their skills, accomplishments, strengths and weaknesses. Perhaps losing the promotion had absolutely nothing to do with your skills and performance and had everything to do with office politics. If this is the case, and you determine it’s impossible to overcome it’s best to know now and use this professional bump in the road as a career wake up call and an opportunity to pursue different opportunities.

You should also determine if you are as good as you think you are. Have you miscalculated your chances for promotion? Are you too focused on your duties and responsibilities, as opposed to your actual performance and measurable accomplishments? Do you lack the leadership and team-building skills that the higher-level position requires? Do you lack certain technical skills or an advanced degree that the company prefers for the position?

Request a Meeting With Your Supervisor

After conducting a calm and objective post-mortem, request a meeting with your supervisor to determine why you were passed over for the promotion. Oftentimes, managers feeling a sense of guilt are reluctant to deliver a hard, cold assessment after an employee has just experienced a huge disappointment. However, if you request constructive feedback, you just might get it, and it may be the best thing that ever happened to you professionally. Knowing how the higher-ups in an organization view you is invaluable, whether you decide to leave the company or not. If you decide to stay, take charge of your own career and create an individual development plan, and ask your supervisor for help, guidance and support in implementing it. This is the best way to impress your supervisors and set the stage for a future promotion.

Organizations Should Have a Constructive Feedback Structure

Organizations can also learn from the internal conflicts and struggles that can occur after an employee is passed over for a promotion. Regular and constructive feedback is vital for employees’ professional and personal development. If an organization’s current employee evaluation system is contributing towards employees misreading or  miscalculating where they stand, perhaps it’s time to improve it. Both the employee and the organization stand to benefit from clearly defined lines of communications, clear expectations, goal setting, succession planning and the company’s criteria for success. 

Strengthening employee feedback policies will help place organizations and their employees on the path to success. It is a most basic and simple principle of human behavior that unambiguous, explicit feedback leads to the greatest impact on behavior. Don’t we all like to know hear what others think about us? How they see us? Usually it is these simplest of ideas that can be the most challenging to execute!

The Problem or the Symptom?

The topic of women in the boardroom has been discussed over and over. Some European countries have even instituted quotas so that there are more women directors. My recommendation is to back to the source of the problem. There are not enough women operators/general managers or CEOs. The bottom line is that the CEO skill set or having run a business is still the number one  for most board seats. So until there are more women in these roles it will be a challenge to have more women in the board room. So women, step out of the HR and marketing roles and get into operations! Request (even demand) those assignments that lead to P&L responsibility. The board seats will follow.

Corporate Governance Lessons from News Corp.’s Hacking Scandal

In the past few weeks we have been treated to the oftentimes shocking spectacle of News Corp. Chairman and CEO Rupert Murdoch, one of the world’s most powerful media moguls, publicly refusing to accept responsibility for the criminal phone hacking activities of employees of his now-shuttered News of the World British tabloid. The eighty-year old magnate, while testifying before the House of Commons, apologized for the scandal, but he denied knowing until very recently, of the widespread hacking of thousands of private voice mails and the bribery of police officers; a practice that has been ongoing since at least 2005.

Murdoch, appearing somewhat befuddled and “humbled,” told the committee “The people I trusted to run it and maybe the people they trusted” are to blame, adding that he shouldn’t be held responsible for the criminal behavior of a newspaper that represented a tiny fraction of his global empire. His son James Murdoch, chairman of News International, also denied responsibility, while simultaneously admitting to authorizing millions of dollars in payments to settle claims against the company for hacking. The scandal has now reached the United States with the FBI launching an investigation into allegations that News Corp. hacked the phones of the families of 9/11 victims.

What does this scandal say about New Corp.’s commitment, or lack thereof, to corporate governance? Corporations rise and fall based on their organizational strengths and weaknesses. The Board of Directors is tasked with oversight of senior management, setting the tone for the corporate culture of an organization and is responsible for corporate governance. Directors answer to, and are legally obligated to protect the interests of stockholders. News Corp. says it’s “committed to strong corporate governance and sound business practices,” but there is a lack of independence of its Board that makes such a commitment nearly impossible. Although News Corp. is a publicly traded corporation Rupert Murdoch has oftentimes treated it like a private family business.

Murdoch serves as both Chairman of the Board and CEO, a structure that has come under fire in the past few years because it makes genuine oversight problematic. Two of his children, Lachlan Murdoch and James Murdoch, are board members, as well as five company executives. The remaining nine independent directors on the Board have limited power. Why? Primarily because there is no “one share one vote” system in place at News Corp. The controversial dual-class stock structure limits voting rights to class B shares. And Rupert Murdoch and his family control nearly forty percent of the 798 million class B shares. The class A shareholders have no voting power and no say in how the Murdoch family media conglomerate is managed. But they do have the power to sue Murdoch, his company and the directors for breaches of fiduciary duty.

Groups of institutional investors are now forcing Rupert Murdoch’s hand by filing a slew of lawsuits against News Corp. and its directors for shoddy corporate governance. One such lawsuit, spearheaded by the Amalgamated Bank, rails against the Board of Directors that failed in carrying out its oversight duties and permitted Rupert Murdoch to treat News Corp. like a “family candy jar.” The suit points out that despite years of police investigations and arrests of News Corp. employees, Rupert Murdoch didn’t authorize the Board of Directors to launch an internal investigation until July 7, 2011.

The lawsuit alleges the phone hacking crimes “show a culture run amuck within News Corp. and a board that provides no effective review or oversight.” Moreover, because of Murdoch’s opposition to sound corporate governance shareholders suffer from a “Murdoch discount” that weakens the value of their shares.

Institutional shareholders, already troubled over the lack of a transparent succession plan, are also calling for Rupert Murdoch to step down as CEO to make way for a strong independent voice on the Board. News Corp.’s annual general meeting in October should be filled with plenty of fireworks.

We have seen time and again the consequences when the Board does not set effective risk management procedures. Additionally, internal management controls must be established and ethical business practices must come from the top down. Unfortunately, once again it has taken a crisis to illuminate the weaknesses in New Corp.’s corporate governance structure. This will continue to place the company and its directors at risk, unless and until major institutional reforms are implemented. For the rest of us out there take note!

How Has the Job Search Process Changed? (or Has it!)

Two factors have done more to change the job search process in the last few years than all the business and management wisdom of the previous many decades. What I am referring to, of course, is the Internet and somewhat secondarily the recession.

In May 2011 Google welcomed 1 billion unique visitors around the globe. In 2006 this number was 496 million. As a barometer of internet usage this number is very instructive. We have definitely moved on from the days when Amazon was simply an online book store and Facebook didn’t exist!

Today’s job search process undoubtedly uses some facet of the internet. This may be as simple as a company’s own web site where you can view job openings and submit resumes or one of the plethora of employment web sites. Instruction on how to write a resume, cover letter, how to interview, tips, tricks etc. are everywhere online. No longer do you have to go to your local library or bookstore or speculate on the subject.

On the other side of the equation, recruiters and employers have access to far more information on potential employees than ever before. They can (and will) look for Facebook and LinkedIn profiles. They can also easily access references of those that were not suggested by the candidate leading to a far more thorough and authentic understanding of a potential new employee.

The economic downturn has also definitely changed the job search process over the past few years. The recession has meant that there are far more (often extremely qualified) candidates in the market looking for work and far less jobs available.

As a result hiring managers can afford to be highly selective and candidates must be on top of their game unlike ever before. Candidates can expect a very cautious and discriminating interview process that often does not even begin face-to-face. It has become customary for first interviews to take place over the telephone. Unlike the informal prescreen of the past, these telephone calls have become comparable to formal, detailed interviews. This can be efficient and cost effective but there is a fair bit of information lost without the benefits of visual cues. Nevertheless as a first step it is definitely prevalent.

Our economy has also resulted in caution being exhibited throughout the job search process for all parties involved. Candidates go through multiple interviews and with multiple decision makers. The time from start to finish of the process has become longer as everyone is exerting caution and few can afford a bad decision. The recession has also resulted in many more questions that focus on: what is the return on our potential investment in you?” Candidates are expected to provide quantitative and factual details of their accomplishments. Hiring managers want to know what they will tangibly expect to receive in return for the cost of a new employee.

From the candidate’s point of view and particularly for those employed and considering a change there is far more due diligence undertaken on a new potential employer. The last thing someone wants in weak economic times is to leave a job for a new one that doesn’t work out. The options are so limited and everyone is quite risk adverse.

Yes, there are enormous changes in the job search process and certainly in terms of the effect of technology we are still in the infancy stage. Tools and advancements will continue to progress in perpetuity. What will not change however, is the fact that at its core business success (and failure) and employment depends on human behavior, traits, motivations and characteristics. No amount of technology or competition will negate this basic fact!

The Top Ten Take-Aways from the Yale Corporate Governance Forum

On June 16th and 17th Yale University’s Millstein Center for Corporate Governance and Performance hosted its 6th annual Corporate Governance Forum. The theme of this year’s conference was “Governance Fit for the Long Term” and depending on one’s frame of reference this can be taken in any number of ways.

Nevertheless the conference was chock full of dynamic and varied panels and speakers from around the globe. And for the governance consumed it was an opportunity to learn of many new ideas in the field, listen to constructive debates and not surprisingly see that many questions remain and answers are oftentimes elusive!

Of the numerous ideas and hypotheses presented during this event here is what I believe to be the most interesting, provocative or simply important:

1. Corporate leaders and board of directors must focus on the long-term. With the pressure of quarterly earnings announcements, the tendency of course is for public companies to look good on a quarterly basis. This can hinder the long-term strategic focus that is essential to both the growth and survival of the company. One suggestion is for companies to talk to their largest shareholders, those that are investors over the long term. These are, by definition, supporters of the company so communicating the long term strategic vision for the company can go a long way to alleviating the alarm that may result from the occasional dip in stock price.

2. Stock price as a reflection of management performance is inadequate. Investor behavior is as important to stock price as manager behavior. In fact, there are many variables that influence the price of a stock. So the point is that simply looking at a declining stock price and concluding that management is failing is short-sighted.

3. While there are many benefits of the current move towards declassified boards we must be mindful of the fact that this may actually increase the short-termism of the company.

4. Corporate governance is implemented and interpreted very differently around the globe. We have seen many developments and progression in the field of governance both here in the US and abroad. But the divergence of thought and practices is still extreme. For example, in Germany in addition to the two-tiered board structure diversity simply refers to gender and private investors still have little to say per German law. Furthermore, there is in fact no word for corporate governance in German. In the United Arab Emirates it was reported that some Directors sit on as many as 47 boards. They may also employ advisors who are assigned to monitor and report on several of their boards for them.

5. The upsurge in social media has had universal impact. What is the implication for boards and directors? It seems that in this area there are still more questions than answers. Public companies typically have communications policies that predate the current social media environment. Additionally, directors may not have the time nor inclination to explore the world of social media. Nonetheless it is becoming fundamental and we are still only in the infancy stage of this manifestation. Perhaps companies should consider bringing some social media expertise into the boardroom?

6. “Collective intelligence” is defined as “a phenomena in sociology where a shared or group intelligence emerges from the collaboration and competition of many individuals.” This is not a new concept and may have in fact been coined when Aristotle said: the whole is greater than the sum of its parts.” Whenever it originated the concept represents the best of what we would like to see from a board of directors. Board evaluation and coaching would be well-advised to take this intangible into account.

7. Two of the most important criteria for board directors to possess are great (not just good) judgment and the ability to work on a team. These subjective or soft skills need to be assessed as much as the ability to, for example, chair an audit committee.

8. Many failures in the boardroom can be linked to failures in social processes. Some of these are: the emergence of “group think”, obedience to authority and diffusion of responsibility. Each one requires a full discussion on its own.

9. Board evaluations as they are currently executed are oftentimes done on themselves. The results of course will be significantly impacted depending on the nature of the board and the culture it functions under. As in any evaluation it would be preferably executed by an outside, objective party.

10. There is no “one size fits all” as it pertains to the separation of the CEO and Chair roles. It depends on the company, its culture, the operating environment and certainly the personalities of the players involved.

As can be seen from this brief overview, the topics and discussions at the Yale Governance Forum were diverse and oftentimes quite novel and even controversial. The net net is that there is definitely a need to continue to innovate and evolve in the world of corporate governance. An openness to new ideas, methodologies and processes ought to be standard operating procedure in our boardrooms!