April 30th, 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.
Methodology
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
experiences.
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. - Judgment:
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. - Communication:
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?
Find the details about Sense of Ethics and Strategic Thinking following this link to Study 2 Part1.
Judgement
Definition: 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.
The behavior of “Judgment” received many interesting comments. It is interesting to note that when the respondents were asked to prioritize the six behaviors, only the judgment was ranked as the top behavior in100% of cases. For most respondents, judgment is seen as a proof of the quality of a director. A director who has no judgment is an ineffective director.
Respondents believe that judgment is partially innate and may have developed over the years. They observed that a long academic training does not ensure a better judgment. Rather, it is the accumulation of professional experience that fosters better judgment. Directors must deal with facts objectively. That is to say, they filter information through their professional experiences and they provide a constructive
and different opinion. Usually, a director should have demonstrated the ability to have a sound judgment in his prior career as a professional manager or entrepreneur. This is a behavior that allowed them to be successful. Retired CEOs have usually demonstrated good judgment to be successful in their career.
An important factor in the conduct of a director is the fact that they are asked to constantly make business decisions without having all the facts. Their good judgment will guide them in how to take action without assuming unnecessary risks. Those who are too emotional or who are always in a brainstorming mode will have more difficulty to step back and adopt a desired behavior with respect to judgment.
Commitment and Sense of Responsibility
Definition: Honors its commitments. Shows availability and assiduity. Spares no follow-up.
Today, directors are exposed to greater risk and more responsibilities than ever before. Respondents attest that there are few directors nowadays who are not well prepared for meetings. Since the average number of director on a board has decreased in the last 15 years, each must fulfill their duties with diligence. The formal assessment processes of the board helps increase its effectiveness. Also, there has
been an improvement in the transparency regarding the attendance level for each director.
Because the work load has increased, the expectation is that each director must contribute and carry their weight. Inside the boardroom, it is easy to identify who has not thoroughly read all the information provided. Preparing a well-structured question prepared in advance is the most efficient behavior for a director. It increases the meeting effectiveness and discourages the board to fall into a brainstorming mode because questions are asked on the spot without thinking it through. More and more, directors are living in a fishbowl and they can no longer hide their lack of preparation and contribution to the shareholders.
The next part of the results of the study will be published on May, 3rd. Contact Christian Schulte for the complete results, now.
