April 26th, 2013 – Vienna, Austria – AIMS International has launched the second issue of the international study about the most efficient competencies for Board Members.
This study was conducted by AIMS International, Leaders & Co, the College of Corporate Directors in Canada and Gauthier Murtada & Partners. The following is a summary of a study which includes remarks and comments from members of the Research Committee as well as their constituents and some professional board directors. We want to foster a discussion on the topic of desired and efficient behaviors of directors, while creating a practical guide for chairmen of boards, directors, members of Governance Committees, CEOs and any other person involved in the recruitment and the evaluation of a board director. The team was headed by Richard Joly, AIMS International and Leaders & Co.
Purpose of the Study
What are the efficient behaviors that positively influence the work of a director?
There is a large inventory of tools to assess the behavior of a president and CEO. There is access to comprehensive databases to determine their future behavior. However, no assessment tools exist to perform a good evaluation of the director. This is the main reason which motivated this study. The involved team sought to better understand and define the elements that lead to efficient behaviors. The research was conducted with the following partners:
AIMS International: provide a wide range of services, including global Executive Search and Talent Management services worldwide to a substantial and diversified client base.
Gauthier Murtada & Partners: offer solutions in assessment, development and executive coaching. It also makes available to companies a wide range of psychometric tests and assessments tools.
The College of Corporate Directors at Université Laval: offer directors a unique, top-quality professional certification program focused on best practices in governance.
Together, the team tried to identify the key behaviors for efficient director and how these behaviors can enable the board to better fulfill its fiduciary duty. The Research Committee consisted of Mr. Jean Bédard Professor at the School of Accounting, Faculty of Sciences from Université Laval and speaker at the College of Corporate Directors; Mr. Jacques Grisé, Ph.D., F.Adm.A, Program Director at the College of
Corporate Directors; Mr. Pierre Gauthier, founder of Gauthier Murtada & Partners and industrial and organizational psychologist; and Richard Joly, AIMS International and Leaders & Co, executive recruitment consultant and trainer and speaker at the College of Corporate Directors/Université Laval.
This article presents the results of a study involving the interviews with 45 seasoned directors in seven countries: Canada, Finland, Germany, Hungary, South Africa, Sweden and United States.
Interviewees are sitting on boards of traded companies with revenues of more than $1 billion. These board members all have over 10 years of experience in different industry sectors. An advisory committee helped the research team to identify the six most desired behaviors from a list of 39 standardized behaviors used in the assessment of CEOs. A questionnaire for each of the six behaviors was developed. Face to face interviews were conducted then using the questionnaire to gather comments from the interviewees based on their professional board
Following are the six behaviors that were the subject of the study:
- Sense of Ethics:
Demonstrates a high sense of integrity and puts forward strong values related to ethics. Places the needs of the company before his own.
- Strategic Thinking:
Has a clear vision, anticipates trends and considers the risks associated with strategic decisions. Analyzes situations in a global perspective. Has good sense for planning and anticipating the long-term impacts.
Knows how to put things in perspective and sets priorities after assessing the facts objectively. Remains objective in analyzing complex and ambiguous situations. Adopts a constructive approach and ensures good balance of the different views.
- Commitment and Sense of Responsibility:
Honors its commitments. Shows availability and assiduity. Spares no follow-up.
Able to share his views with clarity by promoting the adhesion of others. Knows how to use the right words to simplify the complexities of his thought.
- Team Intelligence:
Focuses on common goals, priorities and problems through active listening of the concerns expressed by others by focusing on teamwork. Seeks to establish trusting relationships. Recognizes the importance of complementarities on the Board.
In this study, more than 2,000 pages of interview notes which were the subject of a thorough review were collected. The observations and the information disclosed from the interviews were recorded, compiled and personal identifiers were removed to preserve confidentiality. In this report, the desired and undesired behaviors are listed which we have extracted from the interview transcripts with some of the most relevant comments and opinions.
The goal is to present what directors experienced and lived according to the six behaviors which were aimed to better understand. This study contains six sections, one for each behavior. In each of these sections, you will find the definition for each behavior, a brief summary of the results of the study and the list of desired and undesired behaviors mentioned by respondents.
What are the most efficient competencies of a Board Member in a Board setting?
Sense of Ethics
Definition: Demonstrates a high sense of integrity and puts forward strong values related to ethics. Places the needs of the company before his own.
For ethical values to be firmly rooted in an organisation, it must start from the top. The behaviors must be adopted by each director. Clearly, the chairperson plays a vital role to enforce a sense of ethics in a board setting. It is he who sets the tone hence the term “The Tone at the Top”. It is he who embodies the values that convert into behaviors within the meaning of ethics. It is he who will ensure that these behaviors are respected by everyone, including management.
In this study it was observed that there are two situations that can influence the Sense of Ethics: independence and compensation. The interviewees were clear in stating that if a director wants to remain on the board to help its social status, business contacts or to preserve or needs the income, he may tend to dilute their independence. In those two situations, the director will not disturb the CEO or chairperson in fear of being asked to leave.
Definition: Has a clear vision, anticipates trends and considers the risks associated with strategic decisions. Analyzes situations in a global perspective. Has good sense for planning and anticipating the long-term impacts.
The desired behavior of Strategic Thinking is the ability to filter the facts through past professional and life experiences. It is the ability to analyze the information provided by management and assess what is good, what needs improvement and what is missing.
The diversity of the members is the greatest contribution to the strategic thinking. Everyone will provide opinions that are diverse because they are based on different past experiences and industry background. Respecting each director’s opinions is highly important to raise the level of strategic thinking in a board.
The clash of ideas and diversity of opinions is vital to ensure that strategies are validated. This exchange process contributes to understand and identify the risks of the company. Moreover, according to respondents, strategic planning and risk management are becoming increasingly complex and important in a board. This is one reason why the former CEOs of large corporations are sought to become directors since they have practical experience of executing a strategic plan and to manage risks.
The role of the director regarding the strategic plan is clear. It is not his responsibility to develop the strategy. However, he must ensure that a strategic plan exists, that it is a good one and that it is implemented.
The next part of the results of the study will be published on April, 30th. Contact Christian Schulte for the complete results, now.