Shifting the board’s focus from compliance to engagement

Posted in Board work / Styrelsearbete on March 4th, 2019 by admin

Board members today must grapple with increasingly complex matters of strategy and risk. In response, many companies are rethinking board meetings to enhance alignment, energize the board and elevate its performance.

In a conversation with a board chair and a CEO following a successful board search, we asked if their recently completed board review had surfaced any issues regarding the chair of the governance committee. The board chair was a bit surprised and asked what prompted our question. We then discussed what “good” looked like for a governance committee chair, and compared that benchmark of behaviors with the experience and inclinations of the incumbent. It quickly became evident that the board review they had undergone had relied too heavily on a simple questionnaire, which, to make matters worse, was analyzed in a cursory way by an outside firm. This “check the box” compliance-oriented exercise rarely leads to a meaningful improvement of board effectiveness and engagement.

Given that today’s investors scrutinize a company’s board of directors as closely as its financial results, boards increasingly are seeking more thorough board reviews to help ensure that their team interactions and processes are aligned. A proper board effectiveness review goes beyond the standard questionnaire and is centered on individual behaviors and team dynamics and interactions.

Each board has its own set of issues, depending on the history, structure and personalities involved. Even so, in the more than 550 board effectiveness reviews that Egon Zehnder has conducted, we have seen a common challenge emerge: The ongoing struggle to stay focused on strategy and not get bogged down with administrative and procedural matters. And it is a struggle: As more and more topics, from digitalization to diversity, are added to the board’s agenda, it becomes increasingly difficult even to track the various issues that directors must monitor, let alone for directors to step back and consider those issues in a larger context. The reality is that the board’s processes and information flow can unwittingly be at cross purposes with a strategic perspective. These are the sorts of derailers that a thorough board effectiveness review can uncover, while also putting in place mechanisms for ongoing, rather than periodic, feedback.

The board meeting today: Documentation and the agenda

Consider how the typical two-day board meeting unfolds. Approximately two weeks before the meeting, members receive the agenda and supporting materials to review. In the hard-copy era, the thickness of the board book was limited by the size of the FedEx box it was shipped in. Today, however, most companies use digital board books accessed through tablets. These applications are rightly heralded for their convenience, but they also remove any physical constraints on the amount of material distributed to the board. As a result, we have found that board members are inundated with reports, presentation decks and miscellaneous analyses on everything from investor relations to cybersecurity to safety compliance. Board members are sometimes surprised to learn that they contribute to this problem by their own requests for additional information. This is why some governance experts have sounded an alarm on a “boardroom information crisis”; it becomes harder and harder for even the most diligent board members to absorb, digest and reflect on all the material they are given. Managing the deluge of data crowds out the time needed to ask important questions. The board book material, instead of supporting the agenda, can detract from the agenda items truly needing attention.

We see this when we examine how typical board meetings unfold. The first day is frequently devoted to committee meetings. The board then gathers for dinner and then convenes the next day to work through the board agenda. At some point in the afternoon the meeting adjourns and everyone departs.

On its face, there is nothing objectionable about this structure, but a better approach is to recognize that significant amounts of committee work today can be conducted by teleconference, allowing the committee to work through many issues before the board meeting. This is not to say that the entire committee agenda can be dealt by phone, but that there are many ways of being more effective in filtering what requires the attention of the full board.

The board meeting reconsidered: Deep dives and discussion

What would a board meeting look like if the meeting were designed to maximize meaningful strategic discussion? Two to three weeks before the board meeting, a much thinner board book would be distributed. It would start with a one- or two-page letter from the CEO and board chair. The CEO would summarize the state of the company and frame key issues, and the chairman would outline the agenda for the upcoming board meeting, The agenda would include more time for discussion and debate, and be centered on a select number of strategic issues, sizable operating issues and major risk items. The supporting material in the board book would provide background on those topics. Of course, other administrative matters will still need to be discussed, but the majority of time would center on priorities that could unlock value.

For example, instead of reviewing in detail an investor relations presentation that has already been vetted and approved by the CFO and CEO, the board might be asked to consider the key issues and concerns that shareholders and analysts have most recently surfaced and flagged. Instead of the company’s latest 100-page sustainability report, the quarterly board book might include a summary of metrics and performance indicators while reserving a full-board “deep dive” discussion for once a year.

Committee chairs would conduct many agenda items by conference call. When the directors arrive on the first day, instead of breaking into committees, the entire board would meet for a detailed briefing by the CEO on the most pressing matters. A working dinner would follow, during which directors would discuss specific topics and could begin to identify points of agreement and divergence. The next day, the board would meet for a frank discussion to stretch and challenge assumptions and to work toward decisions. While some of the board meeting will have to be devoted to procedural matters, the board’s major focus is kept on a higher, strategic plane. The board chair of one of the world’s largest public companies recently shared with us his realization that when he was CEO and chairman of a prior company, he didn’t devote sufficient time to the board agenda. Only later did he realize that getting the agenda right has a sizable impact on board performance.

In an earlier day, it was sufficient for boards to monitor management’s performance, approve major decisions and ensure conformity with a much smaller set of regulations. But in today’s much more complex environment, it is not enough for boards to be stewards; they, like management, need to create value. The board does this when it focuses on its role as advisor and resource to management, rather than its mere overseer. Rethinking board meetings, considering team dynamics and providing open feedback to board members can align the board with this goal. That, in turn, will energize the board and elevate its performance.

Source: Egon Zehnder, June 2017

Ge styrelserna mer betalt

Posted in Aktuellt, Board work / Styrelsearbete on January 14th, 2019 by admin

Styrelseledamöterna i börsbolag behöver få högre ersättningar och generellt bättre villkor, anser börsens fjärde största svenska ägare AMF.

”Vi är i behov av bra personer som ställer upp och bidrar med sin kompetens i styrelser. Därför måste vi göra det mer attraktivt”, säger Anders Oscarsson, aktiechef på AMF.

Valberedningsarbetet inför vårens stämmosäsong är inne i ett avgörande skede. I en intervju med Di slår nu AMF-chefen Anders Oscarsson, som sitter i åtta tunga valberedningar, fast att trenden är att det blir svårare att hitta kompetenta styrelseledamöter.

För att bredda rekryteringsbasen måste villkoren för dem som väljer att ingå i börsbolagsstyrelser förbättras, enligt AMF-chefen som i mer än ett decennium har suttit i storbolags valberedningar.

”Mitt mål är att det ska bli attraktivare att sitta i styrelser. Då kan flera se styrelsearbete som en alternativ karriär eller vara beredda att lägga sin fritid på ett styrelseuppdrag för att det är roligt och ersättningen är bra”, säger Anders Oscarsson.

Han pekar på tre orsaker till att det har blivit svårare att rekrytera styrelseledamöter.

Den första är att mer omfattande regelverk och att ett större personligt ansvar har gjort det mindre lockande att sitta i styrelser.

Den andra är att högre krav i styrelsearbetet har medfört att styrelseproffs har färre uppdrag än tidigare.

”Den tredje orsaken är att valberedningarna har blivit mer professionaliserade på så sätt att en person som inte levererar får lämna styrelsen. För några år sedan gav valberedningen en styrelsemedlem som inte levererade chansen några år till”, säger Anders Oscarsson.

Varför har valberedningarna blivit hårdare?

”En styrelse blir allt viktigare som kravställare mot vd och verkställande ledning. Därför blir det också mer betydelsefullt för oss som förvaltar andra människors pengar att hitta bra styrelseledamöter som har rätt kompetenser, tid, kraft och engagemang”, säger Anders Oscarsson.

Han slår fast att en större höjning, jämfört med tidigare år, av arvodena är en viktig del för att göra det mer attraktivt att sitta styrelser. Men han poängterar att även andra förändringar bör genomföras.

Ett generellt problem, enligt AMF, är att villkoren för styrelseledamöter är utformade på ett sätt så de snarast passar ekonomiskt oberoende före detta direktörer och inte personer i karriären som försörjer sig på styrelseuppdrag.

”När man sätter sig i en styrelse i dag får man oftast arvodet ett år i efterskott. Flera bolag bör överväga att göra utbetalningar månadsvis eller kvartalsvis. Personer som inte är ekonomiskt oberoende utan försörjer sig på styrelsearbete behöver löpande ersättningar”, säger Anders Oscarsson.

Han konstaterar att styrelsearvodena inte heller är belåningsbara och framför allt inte pensionsgrundande.

”Det sätter dem som hoppar av sin operationella karriär för att bli styrelseproffs i en dålig position. Redan för tio år sedan när vi skulle öka kvinnoandelen i styrelserna var det flera kvinnor som vi rekryterade som slutade sina operationella jobb och satte sig i fem sex styrelser. Jag tycker man kan säga att många av dem gick i en kvinnofälla”, säger Anders Oscarsson.

”För det första för att man lämnade det operativa och inte var lika intressant tio år senare när man börjat tappa sina affärskontakter. För det andra har man inte tjänat in pension under den här perioden och för det tredje har man inte fått tillräckligt höga arvorden för i många fall mycket välutfört arbete.”

Hur mycket borde styrelsearvodena generellt höjas på vårens stämmor?

”De senaste tre fyra åren har arvodet till styrelseledamöter höjts med cirka 2 procent per år. Jag tror att höjningarna behöver bli högre i år i många fall. Vi talar snarare om 5 än 2 procent.”

”Dessutom ser jag att ersättningen till Revisionsutskottet kommer att stiga då arbetet för denna roll har blivit betydligt mer omfattande.”

AMF:s bedömning är att den procentuella höjningen av styrelsearvoden blir allra högst i mindre bolag.

”I mindre bolag som har haft styrelseledamöter som har fakturerat sitt arvode, vilket inte längre är möjligt sedan i våras, kommer nog ökningen i procent bli hög.”

Är det verkligen bra för det långsiktiga värdeskapandet för era pensionssparare att arvodena höjs mer än de senaste åren?

”Ja. Vi förvaltar andra människors pengar och vi är i behov av att det finns tillgång på bra personer som ställer upp och bidrar med sin kompetens i styrelser. Därför måste vi göra det attraktivt att sitta i styrelser, vilket också innebär att vi måste höja arvoden.”

”Styrelsen är nästan bolagets billigaste del. Styrelserna tillför mycket specialistkunskap och kompetens till bolagen för en kostnad som inte ger många konsulttimmar från de stora amerikanska konsultfirmorna”, säger Anders Oscarsson.

Källa:, 13 januari 2019

Utmaningen handlar om nya krav från kunderna

Posted in Aktuellt, Board work / Styrelsearbete, Customer care / Kundvård, Fact Based Management on January 3rd, 2019 by admin

Tiffani Bova är i Sverige för att lansera sin senaste bok ”Growth IQ: The Ten Paths To Growth”.
Utmaningen med den nya tekniken handlar inte alls om teknik – utan om att omdefiniera sin affär och hålla jämna steg med kundernas förväntningar.
Det menar tidigare Gartneranalytikern och molnstrategen Tiffani Bova.

Digitaliseringen rymmer så många möjligheter att det är svårt att veta var man ska börja. För Tiffani Bova – Innovation Evangelist på världens största mjukvaruföretag inom kundvård – är svaret enkelt:

– Utmaningen i dag handlar inte alls om teknik, utan om kundernas förväntningar och krav. De har förändrats mycket snabbare än de flesta företag inser och det är människorna som är den disruptiva, eller omstörtande, kraften i den tekniktransformation som vi nu genomgår, säger hon.

Ordet disruption finns egentligen inte på svenska, men används desto flitigare för att beteckna den svindlande omstöpning av hela branscher som vi ser. Kreativ förstörelse, menar Tiffani Bova, som jobbade som analytiker vid Gartner Group i tio år innan hon kom till Salesforce. Nu är hon i Sverige för att lansera sin senaste bok ”Growth IQ: The Ten Paths To Growth”.

Nya krav från kunder
AI, molntjänster, Internet of Things… det är lätt att tro att utmaningen handlar om själva tekniken. Det gör den inte, menar Tiffani Bova, utan om att kunderna nu blivit så bekväma med digital teknik att de kräver helt nya saker av företagen.

– Medarbetare och processer behöver förändras, annars kommer vi aldrig att utnyttja potentialen som den nya tekniken rymmer fullt ut. Många är skeptiska inför vad den nya tekniken kan göra, vilket är synd. Tekniken låter oss utföra allt det vi vill att den ska göra, från AI och maskininlärning till säkrare prognoser… Men förändring är bland det tuffaste för många, säger Tiffani Bova.”

Ny digital teknik används ofta till att automatisera och digitalisera befintliga processer. Det ser Tiffani Bova som slöseri med potential, om det är så att processerna i sig borde bytas ut för att spegla en ny tids affärsmodell. Men var ska ett företag börja?

– Reimagine, återskapa eller snarare nyskapa din affär och det sätt på vilket du tillför värde till människor. Skrota alla silos och se till att alla inom företaget har tillgång till all data om kunden. Låt försäljning flytta ihop med kundservice som ett sätt fördjupa kundrelationen och sälja mer.

Hur går det till att nyskapa?

– Det beror helt på kontexten – kunderna och marknaden. Men benchmarka dig inte mot konkurrenterna. Prata istället med kunderna och fråga vad de vill ha.

Men, vet kunderna verkligen vad den nya tekniken kan möjliggöra?

– Nej, men de vet hur de vill att en optimal köpupplevelse ska se ut – och vad de inte vill ha. Sen är det upp till dig att använda tekniken för att leverera den. Och skräddarsy en köpresa som verkligen går hem hos dem. Kanske ser den helt annorlunda ut än innan digitaliseringen. Men om du håller fast vid en leverans som bottnar i att ni sitter fast i system och tänkande som går decennier tillbaka i tiden, då kommer du inte att lyckas.”

Behov av fler säljare
Många hävdar att AI hotar jobben. Rätt använd blir effekten den rakt motsatta, menar Tiffani Bova.

– Vad gäller säljare märker vi på Salesforce hur användningen av AI faktiskt leder till ett ökat behov av fler säljare, inte färre. Ju smartare ett företag blir, desto mer potential finns det att faktiskt sälja mer.

För att styrka vikten av kundupplevelsen citerar hon fakta från Salesforces studier:

”80 procent av dagens kunder är beredda att byta leverantör och två av tre är beredda att betala mer för en bättre köpupplevelse. 51 procent av gångerna möts inte kundernas krav vid köpet.”

Hur skiljer sig kundens upplevelse av ett varumärke, eller ett företag, i dag jämfört med tiden innan digitaliseringen?

– Det handlar om två helt olika saker och har inget med varandra att göra. Förväntningarna är så mycket högre i dag. Även hos en äldre generation, som i dag är helt med på smartphonetåget.

Ny teknik och nytt kundtänk kräver ibland nya kompetenser. Hur ska företagen se till att medarbetarna har rätt kunskap?

– Lista de kompetenser som ni behöver i framtiden och låt medarbetarna veta vilka de är. Identifiera människors styrkor och vad de vill jobba med i framtiden. Dina kunder kommer att vara ungefär lika nöjda som dina medarbetare är. Ditt företag kommer inte att vara mer innovativt än vad dina medarbetare är.

Fortbildning – en del av kulturen
Det är ingen slump, menar Tiffani Bova, att Salesforce utsetts till ett av världens mest uppskattade företag att jobba för och samtidigt en av de mest innovativa.

– Vi pushar för ständig fortbildning, det är en del av kulturen.

Till sist, varför är CRM mer aktuellt än någonsin?

– Därför att kunderna kräver så mycket mer i dag, vilket ställer större krav på kundrelationshantering.

Detta är Salesforce
Salesforce är världsledande inom customer relationship management, CRM, tack vare en plattform som utnyttjar den senaste teknologin inom molntjänster, sociala medier, mobil kommunikation, sakernas internet (IoT) och artificiell intelligens (AI). Med den kan företag av alla storlekar i alla branscher kommunicera med sina kunder på ett helt nytt sätt.

Salesforce rankas som nummer ett på Forbes lista över världens bästa arbetsgivare.

Tidningen har också åtta år i rad utsett Salesforce till ett av världens mest innovativa företag.

Källa:, 3 januari 2019

Seeing your way to better strategy

Posted in Aktuellt, Board work / Styrelsearbete, Executive Team / Ledningsgruppsarbete, Leadership / Ledarskap, Strategy implementation / Strategiimplementering on December 6th, 2018 by admin

Viewing strategy choices through four lenses—financial performance, markets, competitive advantage, and operating model—can help companies debias their strategic dialogues and make big, bold changes.

When executives gather in the strategy-planning room, they’re aiming to identify and prioritize the big, bold choices that will shape the future of the company. Many times, however, their choices get watered down and waylaid.

Companies that hold no conviction about priorities too often spread resources evenly across multiple projects rather than targeting a few projects with the potential to win big. Those companies seeking to escape slowing growth in their core businesses sabotage themselves by chasing new markets without critically evaluating if or how they can win.

To avoid this fate, companies should examine their strategic choices through four critical, interdependent lenses—the company’s financial performance, market opportunities, competitive advantage, and operating model (exhibit).

Executives tend to overemphasize the first two—viewing choices strictly in the context of financial and market opportunities—because those lenses represent critical inputs into the business case. But knowing what it will take to meet or beat financial expectations and which markets are profitable won’t do much good if the company doesn’t have the assets or capabilities required to win in those markets. Nor will it do much good if the company lacks the people, processes, and organizational structure to implement the proposed strategy successfully.

By viewing strategy choices through all four lenses, executives can identify and prioritize the big moves that will lead companies to new markets and growth opportunities, or the steps they can take to consolidate the core. When combined, the lenses provide a clear, balanced, holistic view of not just the opportunities in play but also what it will take to capture them. This kind of objective strategy diligence can improve conversations in the strategy room—and, ultimately, kick corporate performance into a higher gear.1

The financial lens
Most companies necessarily initiate their strategy processes with a look at their financial performance. The financial lens can help them incorporate an outside view into these discussions and develop an objective baseline for assessing the feasibility of long-term targets.

A company can use standard valuation methods to estimate what performance levels it must achieve in the long term to justify today’s value. If the company performs at these expectations, shareholder returns would roughly equal the cost of equity, compensating investors for their opportunity cost of capital.2 This, however, is not value creation—it’s simply the lowest threshold by which leaders can say their strategy was successful.

To create value, companies must deliver returns above and beyond the cost of capital, or they must deliver returns that exceed those of peers. Thus, executives should also use benchmarks to figure out how the company must perform to move well beyond that threshold—delivering top-quintile returns to shareholders, for instance. An objective look at peers’ performance will help companies develop a meaningful three- to five-year plan for how to earn excess returns. Companies can learn a lot from this benchmarking exercise: perhaps high returns in the past were the result of a run-up in multiples in the market and, hence, expectations, but not actual performance.

To anchor those perspectives in current company performance and market position, it is critical for teams to develop a market-momentum case (MMC). Using external market data and peer-performance benchmarks, the MMC gives the company a holistic view of how financial performance will be affected if the company follows its current trajectory relative to market growth, cost evolution, and pricing dynamics without taking any countervailing actions. The end result is an objective baseline for performance that allows executives to conduct an unbiased assessment of how to prioritize new initiatives (and big moves) without counting on them in the base plan.

By assessing implied performance, aspirations for performance, and the MMC, strategy and finance professionals can arm themselves with the information required to start meaningful, objective discussions on value creation: How does the company need to perform to achieve superior returns, and how would the company perform if it remained in steady state?

The market lens
Most companies are seeing slow growth in core businesses and wishing they were in higher-growth, higher-margin businesses. In some cases, the slowing core business may even be under attack. For instance, a low-cost entrant might destroy incumbents’ economic profit in a certain segment, as happened in markets as diverse as those for aluminum wheels and children’s electronic toys. In today’s fast-moving business environments, many companies start from a baseline of deteriorating profit, not slightly increasing earnings. This creates urgency to make big moves into new markets or to block attackers.

The market lens provides a means by which companies can identify pockets of growth within existing segments and beyond, and assess them against strategic options. The critical factor here is granularity; executives should quantify and validate shifts in profit pools in relevant markets given trends that are visible now. One consumer-apparel company, for instance, examined absolute dollar growth in the product markets it operated in. It assessed growth by channel and by region. The differences were striking. In some geographies, demand was expected to continue to grow mostly in brick-and-mortar stores for at least five years, with a significant price premium for high-end products. In other geographies, online channels were capturing profits much more rapidly than expected. Using the market lens, the strategy team recognized the need to allocate resources in product development and marketing for high-end products in brick-and-mortar stores in certain regions, as well as more localized, lower-cost production in others. By running the analysis in this granular way, it could capture better profit in all regions, leading to above-average growth.

Additionally, strategy and finance leaders should always examine adjacent markets, which may be not only attractive segments for growth but also breeding grounds for potential future competitors. Many times, the adjacencies are obvious, as in online retailers’ continued push into industrial distribution for small and medium-size businesses, or technology companies’ moves into software-as-a-service businesses. Other times, they are not as obvious—for instance, raw-materials companies selling consumer goods.

After conducting the requisite analyses of markets, strategy teams should be able to address two key questions: In which market segments will we be able to grow profitably over time? What additional attractive markets should be considered?

The competitive-advantage lens
Most companies face a critical strategic choice in the planning room: Are we better off consolidating the core, where growth is slower, or can we realistically enter new high-growth, high-profit markets and win? But given time pressures, innate biases, and other factors, executives typically fall short in their consideration of assets, capabilities, and the investments required to compete more effectively against rivals. As a result, companies end up chasing unattainable growth and underinvesting relative to what it would take to win.

The competitive-advantage lens can help executives identify whether the company has what it will take to win in current markets and those going forward, or whether a big change is required to capture value. An honest assessment of current capabilities should inform how the company chooses to play in its markets, as well as partnerships or acquisitions that may be necessary.

In the wake of new realities such as digitization and the fact that many industries are reaching the limits of consolidation, the competitive-advantage lens is more important than ever. Take as an example the notion of building a digital platform, a goal shared by many executives these days: What competitive advantage will the platform provide? What sort of market share does it need to capture to be considered a “winner” and not just “average”? Is an ecosystem of third-party players required for the digital platform to succeed, or can this be done organically—and will we be able to do it quickly enough to become the preferred platform for our customers?

The analyses and insights here are typically based more on firsthand “case load” expertise than on industry databases or reports. Interviews with sales teams and postmortems on deals that went awry can be very insightful, as can customer and supplier surveys. There is a lot at stake in gaining these perspectives. The apparel company mentioned earlier discovered that competitors still owned brick-and-mortar stores in certain markets in which the apparel company worked only through online partners. The competitors’ sales representatives in these markets had special training and a structured sales approach that allowed them to collect information on customer preferences—for instance, the shapes, colors, and sizes customers wanted to see in the next season’s designs. This gave competitors a leg up in product development that the apparel company no longer had. The essential competitive advantage in these high-growth markets was real-time customer insights fed back into a rapid product-development cycle. The apparel company learned, therefore, that it had to continue to invest in brick-and-mortar stores to recapture this advantage, even in markets driven by online sales.

The operating-model lens
Companies routinely take for granted the impact of their operating models on their strategy choices. They maintain the status quo rather than asking whether they have the people, processes, technologies, and other critical components required to make big moves. The operating-model lens, then, is essential for understanding whether the company is set up for future success. Indeed, a company’s approach to resource allocation, talent management, organizational design, and performance management can either reinforce or defeat strategic objectives. Consider the following talent- and performance-management-related examples.

A pharmaceutical company estimated that more than one-third of its cash flow would come from Asia within five to seven years. That outcome never materialized, however: senior management had stationed fewer than 10 percent of the company’s sales representatives in Asia—all of whom were focused on maintaining current sales and profit, not on expanding sales according to the strategic plan. An analysis of the growth opportunity at stake (in dollars) versus the number of full-time employees allocated to the regions over the past five years revealed the degree of underinvestment. Senior management decided to hire heavily in Asia.

Rather than prescribe performance metrics from the top down—ordering, for instance, that no one can have more than a 1 percent increase in cost in the next fiscal year—a retail company picks two or three “growth cells” each year that get twice the relative marketing budget (among other investments) compared with other areas of the business. As a result, strategy discussions are now focused solely on which cells should be designated for accelerated growth, rather than minutiae about the budget.

Companies need to look at more than just financial opportunities when embarking on a new strategy or implementing a transformation program. They need to follow a due-diligence process for strategy, in the same way they would dispassionately and holistically vet critical mergers and acquisitions. Such a process can counter innate biases that lead to indecision or incremental rather than bold moves. The four interrelated lenses we’ve described provide a road map for ensuring that a strategy plan is supported by the right investments and change in operating model.

Source:, December 2018
By: Kevin Laczkowski, Werner Rehm, and Blair Warner

Winning with your talent-management strategy

Posted in Aktuellt, Board work / Styrelsearbete, Executive Coaching, Executive Team / Ledningsgruppsarbete, Leadership / Ledarskap, Strategy implementation / Strategiimplementering on August 9th, 2018 by admin

Three best practices for managing and allocating talent support better business performance, according to a new survey.

The allocation of financial capital has long been recognized as a critical driver of an organization’s performance. The value of managing and allocating human capital, however, is less widely known. But the results from a new McKinsey Global Survey confirm the positive effects of talent management on business outcomes.1 According to respondents, organizations with effective talent-management programs2 have a better chance than other companies of outperforming competitors and, among publicly owned companies, are likelier to outpace their peers’ returns to shareholders.

The survey also sought to uncover the specific practices that are most predictive of successful talent-management strategy. While there is no one-size-fits-all approach to the effective management of human capital, the survey results reveal three common practices that have an outsize impact on the overall effectiveness of talent management as well as organizational performance: rapid allocation of talent, the HR function’s involvement in fostering a positive employee experience, and a strategically minded HR team. The survey results also point to underlying actions that organizations of all stripes can take to cultivate these practices and thereby improve their talent-management strategy and organizational performance.

Why effective talent management matters
According to the survey responses, there is a significant relationship between talent management—when done well—and organizational performance. Only 5 percent of respondents say their organizations’ talent management has been very effective at improving company performance. But those that do are much more likely to say they outperform their competitors: 99 percent of respondents reporting very effective talent management say so, compared with 56 percent of all other respondents.3

What is more, the effects of successful talent management seem to be cumulative. Like an overall effective talent-management program, the abilities to attract and retain talent appear to support outperformance. Among public companies, we see a similar effect on total returns to shareholders (TRS). At companies with very effective talent management, respondents are six times more likely than those with very ineffective talent management to report higher TRS than competitors.

Three drivers of successful talent-management strategy
To support these outcomes, the results suggest three practices that most closely link with effective talent management: rapid allocation of talent,4 HR’s involvement in employee experience, and a strategically minded HR team.

Respondents who say all three practices are in place—just 17 percent—are significantly more likely than their peers to rate their organizations’ overall performance, as well as TRS, as better than competitors. They are also 2.5 times more likely than others to rate their organizations’ overall talent-management efforts as effective.

Rapid allocation of talent
Only 39 percent of respondents say their organizations are fast or very fast at reallocating talent as strategic priorities arise and dissolve—a practice that leads to a 1.4-times-greater likelihood of outperformance. And while it is well established that companies with rapid capital allocation are likely to see higher TRS, our findings show that the same holds true for talent allocation. At public companies that quickly allocate talent, respondents are 1.5 times more likely than the slower allocators to report better TRS than competitors.5 The link between rapid allocation and effective talent management is also strong: nearly two-thirds of the fast allocators say their talent-management efforts have improved overall performance, compared with just 29 percent of their slower-moving peers.

To allocate talent more quickly, the survey results point to three specific actions that meaningfully correlate with the practice. The first of these is the effective deployment of talent based on the skills needed, which has a direct impact on the speed of allocation. Respondents are 7.4 times more likely to report rapid talent allocation when their organizations effectively assign talent to a given role based on the skills needed.

Second is executive-team involvement in talent management. Respondents who say their leaders are involved in talent management are 3.4 times more likely to report rapid talent allocation at their organizations. The frequency of leaders’ involvement also makes a difference. At organizations that quickly reallocate talent, executive teams usually review talent allocation at least once per quarter. Finally, the results suggest that organizations where employees work in small, cross-functional teams are more likely than others to allocate talent quickly.

HR’s involvement in employee experience
A second driver of effective talent management relates to employee experience—specifically, the HR function’s role in ensuring a positive experience across the employee life cycle. Only 37 percent of respondents say that their organizations’ HR functions facilitate a positive employee experience. But those who do are 1.3 times more likely than other respondents to report organizational outperformance and 2.7 times more likely to report effective talent management, though our experience suggests that the HR function’s role is just one of the critical factors that support great employee experience.

A couple of key actions underlie the HR function’s ability to ensure better employee experiences. One is quickly assembling teams of HR experts from various parts of the function to address business priorities. Just 24 percent of respondents say their organizations employ this characteristic of an agile HR operating model, and they are three times likelier than other respondents to report a positive employee experience. Second is deploying talent and skills in a way that supports the organization’s overall strategy. One-third of all respondents say their organizations’ HR business partners are effective at linking talent with strategy in this way, and those who do are over three times more likely than other respondents to say the HR team facilitates positive employee experiences.

Strategic HR teams
The third practice of effective talent management is an HR team with a comprehensive understanding of the organization’s strategy and business priorities. When respondents say their organizations have a strategy-minded HR team, they are 1.4 times more likely to report outperforming competitors and 2.5 times more likely to report the effective management of talent.

The factor that most supports this practice, according to the results, is cross-functional experience. When HR leaders have experience in other functions—including experience as line managers—they are 1.8 times more likely to have a comprehensive understanding of strategy and business priorities. Also important is close collaboration among the organization’s chief HR officer, CEO, and CFO.6 Fewer than half of all respondents say those executives work together very closely at their organizations,7 but those who do are 1.7 times likelier to report a strategy-minded HR function. The findings also point to the importance of transparency with all employees about strategy and business objectives. Respondents who say their organizations’ employees understand the overall strategy are twice as likely to say their HR team has a comprehensive understanding of the strategy.

In summary, effective talent management—and the practices that best support it—contributes to a company’s financial performance. No one approach works for every company, but the survey results confirm that rapid allocation of talent, the HR function’s involvement in fostering positive employee experience, and a strategic HR function have the greatest impact on a talent-management program’s effectiveness.

Source:, 8 August 2018
About the authors: The contributors to the development and analysis of this survey include Svetlana Andrianova, a specialist in McKinsey’s Charlotte office; Dana Maor, a senior partner in the Tel Aviv office; and Bill Schaninger, a senior partner in the Philadelphia office.

Hotet mot styrelseproffsen

Posted in Aktuellt, Board work / Styrelsearbete on June 14th, 2018 by admin

Nio av tio styrelseproffs kommer att ta färre styrelseuppdrag på grund av förbudet mot att fakturera arvodet från eget bolag, visar en undersökning. Förbudet har redan lett till att fler bolag har infört rörlig ersättning till styrelseledamöter, hävdar man.

I juni 2017 kom en dom från Högsta förvaltningsdomstolen, HFD, som kastade om skattereglerna för styrelsearvoden, vilket Di har skrivit om tidigare.

Tidigare har styrelseproffs kunnat fakturera från egna bolag och därmed inte bara fått en lägre skatt utan även haft möjlighet att genom bolaget exempelvis teckna tjänstepensionsavtal och sjukförsäkring samt göra avdrag för arbetsrelaterade kostnader.

Men den möjligheten har HFD satt stopp för. Domstolen anser att styrelseledamöters ansvar är personligt och att arvodet därför måste beskattas som inkomst av tjänst.

Det här kan få stora konsekvenser, visar en enkätundersökning som har gjorts av Styrelseakademien, Ersättningsakademin och konsultfirman Novare Pay.

I undersökningen svarade 967 styrelseledamöter på frågan om det är sannolikt att de åtar sig färre styrelseuppdrag när det inte längre finns möjlighet att fakturera arvodet.

Drygt 80 procent svarade ja. Vad gäller styrelseproffs, definierat som personer med minst tre styrelseuppdrag, var motsvarande siffra 90 procent.

39 procent uppger att de kommer att banta uppdragsportföljen “på kort sikt”.

Enligt Andreas Lauritzen, ledamot i Ersättningsakademien och delägare i Novare Pay, handlar det om att de här personerna behöver frigöra tid till andra uppdrag som går att fakturera.

“De tänker alltså minska antalet styrelseuppdrag för att göra plats för konsultjobb av annan karaktär”, säger han.

Andreas Lauritzen ser det här som slutet för yrkeskategorin styrelseproffs i Sverige, som enligt Styrelseakademiens uppskattning består av cirka 1000 personer.

“För att vara det måste man kunna uppbära sina egna levnadskostnader, och den här nya tolkningen gör att man bara får fragment av anställningar”, säger han.

”Det är det som är det praktiska problemet – nu kan du inte stapla de här fakturorna i ett eget bolag där du tar ut en lön, har dina försäkringar och tar dina driftskostnader. Domen har fått effekten att den omöjliggör den här professionen.”

Risken är att framför allt små och medelstora företag dräneras på kompetens och erfarenhet.

“Det är brist på den här typen av erfarenhet, så när de här individerna minskar sina styrelseengagemang blir det en resurs- eller kunskapsförsvagning i företagen och företagens styrelserum. Det är det vi ser som det mest negativa i detta”, säger Andreas Lauritzen.

Dessutom kan det försvaga jämställdheten i styrelserummen.

“Majoriteten av de professionellt arbetande styrelseledamöterna är kvinnor, och det har varit en drivande kraft bakom att Sverige förra året var snubblande nära att nå upp till att 40 procent av ledamöterna är kvinnor”, säger Andreas Lauritzen.

Ett sätt för bolag att behålla kompetensen hos de som väljer att lämna styrelsen är att i stället anlita dem som rådgivande konsulter, eftersom det då är fritt fram att fakturera från eget bolag.

Därmed finns anledning att tro att informella rådgivande organ, så kallade advisory boards, kommer att bli vanligare i svenska företag.

“Vi ser redan nu att den här advisory board-funktionen används i större utsträckning”, säger Andreas Lauritzen.

Risken, enligt honom, är att delar av det strategiska beslutsfattande som traditionellt sköts av styrelse förflyttas till ett oreglerat organ som ligger utanför ramen för traditionell svensk ägarstyrning och saknar styrelsens formella ansvar.

Ytterligare en trolig konsekvens av faktureringsförbudet är att det blir vanligare med rörliga ersättningar till styrelseledamöter, hävdar han. Redan vid årets stämmor ökade antalet bolag på Stockholmsbörsen som ger styrelsen aktier eller optioner som en del av arvodet.

“Vi har anledning att tro att det redan i år var några bolag som införde program som även omfattade styrelsen på grund av den här regeln, och genom de diskussioner som vi har med företagen och individer som påverkas av det här har vi anledning att tro att det kommer att bli ännu vanligare”, säger Andreas Lauritzen.

Rörlig ersättning till styrelsen är samtidigt kontroversiellt eftersom det innebär en intressekonflikt när de som konstruerar och beslutar om bolagens incitamentsprogram samtidigt deltar i dem.

Flera tunga svenska institutionella investerare motsätter sig också rörlig styrelseersättning.

Källa:, 14 juni 2018

How Netflix redesigned board meetings

Posted in Aktuellt, Board work / Styrelsearbete on May 30th, 2018 by admin

The board of directors of a public company has a long list of oversight responsibilities, but it is not always the case that directors receive the information they need to make fully informed decisions on key matters, such as strategy, succession, and performance monitoring. We recently studied a novel approach to information sharing at Netflix that provides a model for overcoming this governance shortfall.

At most companies, directors have a less complete understanding of the company than executives because of their limited exposure to day-to-day activities. The format of the information they receive does little to overcome this information deficit. The typical board book of a large corporation is a dense PowerPoint presentation spanning hundreds of pages in length. Some directors find these presentations heavy on data but light on analysis.

Furthermore, boardroom dynamics impede information flow, particularly in settings where the CEO maintains strict control over the content presented, when presentations are carefully scripted, and when presentations are made by only a limited number of executives.

Netflix takes a radically different approach. It incorporates two unique practices. First, board members periodically attend (in an observing capacity only) monthly and quarterly senior management meetings. What’s more, communication with the board comes in the form of a short, online memo that allows directors to ask questions and comment within the document. Executives can amend the text and answer questions in what is essentially a living document. We believe these two innovations meaningfully contributed to Netflix’s extraordinary performance in recent years.

Governance by Walking About
Unlike the stiff, formalized approach to most director-executive interactions, Netflix encourages its board members to spend time watching the company operate “in the wild.” The company holds three regularly scheduled executive meetings to which board members attend
– Staff meetings (R-Staff) are monthly meetings of the top seven leaders.
– Executive Staff meetings (E-Staff) are quarterly meetings of the top 90 executives.
– Quarterly Business Reviews (QBR) are two-day gatherings of the top 500 employees.

One board member attends R-Staff meetings, one or two attend E-Staff meetings, and between two and four attend Quarterly Business Reviews. Directors who attend these meetings are expected to observe but not influence or participate in the discussion. The purpose of their attendance is primarily educational: By directly observing management, directors gain a greater understanding of the range of issues facing the company, the analytical approach that underpins managerial decisions, and the full scope of the tradeoffs involved. Ultimately, the aspiration is that this will translate to significantly more confidence in management and its choices. While warning that directors must be disciplined and exercise self-restraint about influencing decisions outside the boardroom, Netflix Founder and CEO Reed Hastings told us that providing deep access to management discussion “is an efficient way for the board to understand the company better.”

One director describes the benefit of attending management meetings: “You see a different level of dynamic of the executive team. You really see how different individuals contribute, you see their expertise, you see the voice that they have around the table, and you see the dynamic with the CEO. You see how the topics that have been discussed, resolved, and reported on in a board meeting actually got processed.”

Netflix directors believe that direct exposure to active strategic discussions gives them substantially deeper knowledge of the company than orchestrated visits to company offices or facilities. They also believe that frequent interaction with the senior executive team positions the board well for an eventual CEO succession. One small hazard: Hastings cautions that directors granted this level of access to management discussion and documentation need to exercise self-restraint about influencing decisions outside the boardroom.

A New Way to Write Board Memos
The next innovation is that Netflix’s board communications are structured as approximately 30-page online memos in narrative form that not only include links to supporting analysis but also allow open access to all data and information on the company’s internal shared systems. This includes the ability for directors to ask clarifying questions of the subject authors. This quarterly memo is written by and shared with the top 90 executives as well as the board.

The memo itself consists written text that highlights business performance, industry trends, competitive developments, and other strategic and organizational issues. High-level data is summarized in charts and graphs, but the memo’s emphasis is primarily the written discussion and analysis of issues. Embedded links within each section of the memo connect the reader to supplemental analysis, data, and details that support and expand the written discussion.

Board members receive the memo a few days prior to board meetings and are self-directed in reviewing the material and clicking through to review supplemental analysis on topics or issues they believe are most important, interesting, or require the most attention from a fiduciary standpoint. Directors estimate they spend four to six hours in preparation. They have the ability to pose questions or ask for clarification directly within the digital memo, to which senior management responds prior to the meeting. Directors take active advantage of this capability.

Because directors are extensively prepared, board meetings themselves are significantly more efficient, with a focus on questions and discussion rather than presentation. Meetings are only three to four hours in length (compared to all day or multiple days at many large corporations). Senior executives attend board meetings and answer questions if needed.

The Netflix approach to board governance is rooted in and reflective of the company’s culture and leadership. The Netflix culture emphasizes individual initiative, the sharing of information, and a focus on results rather than processes. In the words of one director, “A lot of CEOs like the notion of transparency. The difference is that Reed has decided to put mechanisms in place … that actually make it happen.”

Netflix directors believe that these processes give them confidence in management, particularly when facing challenges. Examples include its fierce competition with Blockbuster for dominance in the DVD-subscription market, costly decisions to invest in content for its website, international expansion, and the significant cost and risk of producing original content. According to one director, “It’s hard to imagine we could have done it without the intimate knowledge of the operations and the people.”

Directors of major companies take their oversight job seriously—but too often they are handicapped by a lack of transparency and usable information. Netflix provides a model for companies looking to overcome this challenge.

Source:, May 2018

Corporate boards need a facelift

Posted in Aktuellt, Board work / Styrelsearbete on May 17th, 2018 by admin

Nearly every week, I have several conversations with CEOs or corporate directors about their growing frustrations with activist investors and often each other.

Today’s aggressive shareholder activism against companies and their boards target poor performance. But the real aim often is over strategic direction, capital allocation and return of capital, and executive compensation – all really governance issues.

Crusading shareholders spend hundreds of hours and hefty sums to study their targets and prepare their perspectives. They (usually) come with a very informed perspective, grounded in shareholder value and sound economic principles.

In 2017, activists deployed record capital – double the 2016 amount – across 193 campaigns worldwide and secured 100 additional board seats, according to FactSet, Activist Insight, and public filings. In 2016, companies settled 47.5 percent of the proxy fights, indicating that targeted companies may resolve an issue rather than risk a shareholder vote. Activism clearly drives change.

With this growth in activism (and their success rate), it raises a fundamental question:
Does the current board construct work?

Boards often have common drawbacks:

Time spent:
In contrast to the immense amount of time activists spend understanding their targets, boards usually meet only a few times a year and directors acknowledge they often don’t spend sufficient time on their board duties. Directors in 2015 told us they were devoting five more days to board duties than they did in 2013 but still fell five days short of their “ideal” board time, and the new McKinsey survey of 1,100 directors finds that directors in 2017 spent two days less on board duties than in 2015, to 24 days from 26. The limited amount of time makes it difficult to really engage on the critical issues (e.g., strategy) and spend adequate time with customers and investors to really understand the mindsets of key stakeholders required to truly guide the company.
Board makeup: Often boards are looking to fill open seats with other active operating executives. But given the time it takes to really have impact; how can an active operating executive have the time to be a “great” board member and do their day job?
Lack of diversity and key expertise: An absence of diversity continues to be a major deficiency in terms of gender, race, ethnicity and experience – and that defect hinders the ability to obtain diverse perspectives. In the new McKinsey survey, only 43 percent say their board is diverse enough to ensure relevant perspectives are represented in decision-making. Another growing problem is the shortage of board expertise in increasingly critical areas: technology, cyber security, research and analysis, talent acquisition, and customer growth and care, among others.
Knowledge gap: Our 2013 survey of 772 directors revealed a shocking lack of comprehension of their companies. Only 16 percent said directors strongly understood the dynamics of their industries, just 22 percent said directors were aware of how their firms created value, and a mere 34 percent said directors fully comprehended their companies’ strategies. Our latest survey indicates these findings haven’t changed much since 2013. Frankly, these flaws limit the effectiveness in the board and often lead management to limit interactions with their board by trying to manage through meetings, rather than viewing the board as a helpful source of new ideas and expertise and a sanity check on strategy.

All of this begs questions for further debate:
– What should be the role of a director? How can they play more of the internal activist?
– Should we reassess the criteria for directors?
– What are the most critical topics boards need to be educated on? What is the best way to do so?
– How should directors be spending their time to have the greatest impact?
– How can CEOs help directors increase their effectiveness?

Source:, May 2018
Author: Eric Kutcher, Senior Partner based in our Silicon Valley office

Välkommen till en ny tids ledarskap!

Posted in Aktuellt, Board work / Styrelsearbete on May 8th, 2018 by admin

Välkommen till Lagercrantz Associates och femte numret av vårt nyhetsbrev Nya ögon.

Vi arbetar med search och rådgivning. Vår verksamhet bygger på decennier av erfarenhet, ett omfattande nätverk och ett djupt engagemang i våra uppdrag.

I Nya Ögon 5 har vi pratat med några av Sveriges mest erfarna styrelseledamöter om hur styrelsearbetet kan bli mer effektivt.

“Pay peanuts, get monkeys.” Hur organiserar man styrelsearbete anno 2018.

Styrelsearbetet har förändrats på ett omvälvande vis de senaste 15 åren. Framför allt är det ordföranden som har fått mer på sina axlar, men alla i styrelsen har sett hur kraven bli högre på samtliga fronter jämfört med år 2000. Fler möten, snårigare juridik, större ansvar att driva affär och resultat samt digitaliseringsutmaningen med den affärslogik som den ny teknik skapar. Samtidigt kan styrelsen, när ledningssamarbetet fungerar, bidra till att det inte behöver vara så ensamt på toppen för vd.

Nedanstående nio slutsatser är resultat från en serie intervjuer som Lagercrantz Associates har genomfört under våren 2018 med några av Sveriges mest erfarna styrelseproffs.

”Fan ska vara teaterdirektör” skrev August Blanche redan 1848 och faktum är att många duktiga styrelseämnen frågar sig varför de ska överväga styrelsearbete. Det tar mycket tid och den monetära belöningen är blygsam mot alternativen. Då är det mer frestande att lägga sin tid på private equity…

Frågorna vi ställde var dessa:

1. Hur/har styrelsearbetet förändrats de senaste åren?

2. Klarar styrelsen att hålla jämna steg med ledningen när det gäller att vara uppdaterad i en alltmer föränderlig värld?

3. Hur bör styrelsearbetet förändras för att bättre bidra till bolagets utveckling de kommande åren?

4. När de enskilda uppdragen blir mer tidskrävande, hur effektiviserar en styrelseledamot sitt styrelsearbete?

En av de stora frågorna i styrelserummen våren 2018 är naturligtvis digitaliseringen. I den nyligen genomförda utfrågningen av Mark Zuckerberg kom det många intressanta svar från Facebooks grundare, men frågan är om det mest slående kanske var de utfrågande senatorernas bristande kompetens runt internet och digitalisering. På sina håll var kunskapsbristen häpnande. Vår panel menar dock att digitaliseringen visserligen kräver kunskap, men det skiljer den inte från andra frågor. En bra medlem av styrelsen ser till att vara insatt i de ämnen som hanteras.

”Det lär med all säkerhet komma nya tekniksprång och legala regelverk även efter digitaliseringen som vi har att förhålla oss till.”

Däremot var alla av våra paneldeltagare överens om att styrelsen har större kunskapskrav på sig idag och att det därför är det avgörande att mejsla fram ett effektivt informationsutbyte mellan styrelsemötena och – ansåg flera – att inte dra sig för att byta ut ledamöter oftare, när företaget ändras och behöver ny kompetens.

1. Olönsamt att arbeta i styrelse.

Allt färre är intresserade av att arbeta i styrelse p.g.a. av den låga ersättningsdelen. Slår man ut ersättningen per timme idag så tjänar en ledamot mindre än en undersköterska, menade en av de utfrågade. De flesta var eniga om att arvodena måste upp om man ska attrahera kompetens som klarar det nya och större arbetsområdet.

2. Samspelet mellan vd och styrelseordförande är framgångsfaktor för företag och börskurs.

De två måste ha allt tätare kontakt, många samtalar flera gånger i veckan och tar affärskritiska beslut. Ordförandens jobb har blivit mer ansvarsfullt än tidigare. Rollen som ordningsman med klubba är sedan länge förbi. ”I dag är ordförandens roll viktigare än alla styrelseledamöterna tillsammans och ordföranden borde ha fyra gånger mer i ersättning.”

3. Ansvarsfrågan tudelat svärd.

Ansvar har två sidor, vi måste ta större affärsmässigt och juridiskt ansvar. Det tar dock tid och kan sätta fokus fel på mötets diskussionspunkter. Affärer bygger ju på osäkerhet, jagar vi trygghet – ja då kan hela styrelsen agera som revisorer. När kostnaden för att göra fel är större än att göra rätt, då finns risken att skapa en feg styrelse.

4. Styrelsen är i underläge vs ledningen

Det finns ett naturligt informationsglapp, ledningen arbetar dagligen med frågorna medan styrelsen sammanträffar var sjätte vecka. Detta sätter – än en gång – stor press på ordförande att säkerställa styrelsens uppdatering mellan mötena. En klok vd bjuder in styrelsen till utvecklingsevent och andra viktiga sammankomster. ”Det är inte på styrelsemötet som de stora sakerna sker, det är mellan mötena.”

5. Mer professionell styrning

Kompisklubben är på väg ut. Dagens styrelsemedlemmar väljs in mer på kompetens än på kontakter. Oförberedda före detta vd:ar som inte hänger med i mötet är mer sällsynt idag. Ökad professionalism ställer krav på enskilda styresmedlemmar så de inte fastnar i sina gamla nätverk och värderingar, viktigt att uppdatera sig från andra källor än enbart styrelsematerialet.

6. Hitta en egen rapportstruktur

Informationsglapp uppstår ofta av att ordförande inte fastställt dagordningen och att det finns brister i kommunikationen mellan ordförande och vd. Ha gärna ett eget krypterat forum via internet, ett ”nyhetsbrev” varje vecka, för diskussioner och information mellan mötena.

7. Ifrågasätt affärsidén oftare

Se mer långsiktigt än att göra aktiemarknaden nöjd på kort sikt. I en föränderlig värld bör följande frågor ställas med tätare mellan rum: ”är vi i rätt marknad, har vi rätt produkt, har vi rätt affärsidé”?

8. Bättre styrelseutvärderingar

Inte bara tillbakablickande frågor och sammanställning av utfört arbete, fundera lika mycket över framtiden. Om vi tror oss veta var företaget är om två år, då vet vi också vilken kompetens vi behöver förstärka.

9. Döda oss inte med styrelsematerial

Input behöver inte vara en bibba med 450 sidor papper. Rensa, förtydliga och prioritera! Och – naturligtvis – se till att styrelseunderlag kommer i rätt tid och i en enda omgång. Inte skvättvis och kvällen före mötet.

Kort om oss på Lagercrantz Associates

Nya ögon på ledarskap

Det sägs att världens totala kunskap dubbleras var tredje år.

Att styra ett företag i denna omsättningshastighet ställer onekligen krav på den utvalde.

I takt med förändringarna förändras även kravprofilen på Sveriges företagsstyrelser och ledningar. Hur hanterar dagens ledare de nya omfattande regelverken, det ökade kravet på kundkontakt, digitalisering, förändrade köpbeteenden, media, miljöfrågor?

Förändringens pris läser vi om på näringslivssidorna. VD:ar och styrelseordföranden lever ett kortare liv och felrekryteringar kostar företag och aktieägare stora pengar.

Lagercrantz Associates startades 2012 med nya ögon på ledarskap, hållbara rekryteringar och styrelseutveckling. Vi har många års erfarenhet, bred kompetens, stort kontaktnät, utvärderingsverktyg av ledarskap och en djup förståelse av aktieägarperspektivet.

Lagercrantz Associates erbjuder tre tjänster:
– Rekrytering av ledare.
– Rekrytering av styrelsemedlemmar.
– Utvärdering av styrelsearbete.

Tillsammans har detta byggt Lagercrantz Associates – ett mindre, personligare boutique-företag för ledarrekrytering och styrelseutveckling, med en högre karat av kunskap på våra enskilda medarbetare och en gemensam passion för att finna den nya tidens ledare och styrkraft.

How CFOs can better support board directors—and vice versa

Posted in Aktuellt, Board work / Styrelsearbete on March 27th, 2018 by admin

Governing boards face increasing pressure and greater scrutiny from investors. Here is how CFOs can reinforce their stewardship.

Has there ever been a time when boards of directors were more in need of the sharp, fact-based counsel of a value-savvy CFO? With market forces intensifying, technology creating broad-scale digital disruption, and systemic threats looming in the form of cyber and geopolitical shifts, even the best-positioned board directors can benefit from a strong relationship with the head of finance. That is even truer for directors selected more for their industry, product, or technical expertise, for example, than their financial acumen.

Fortunately, CFOs at most large companies are more than up to the task and go well beyond the traditional role of helping boards ensure regulatory compliance. Yet we still see CFOs—typically those who are new to the role—who are unpracticed at engaging their board directors effectively. While our experience in the United States is the primary basis for this finding, the differences between companies in any given country can be just as substantial as the differences between countries. It all comes down to the individual CFO, CEO, and board.

Understanding the link between board effectiveness and financial performance
Regardless of where they sit, many CFOs should spend more time helping board directors understand a company’s strategy and defining value creation in the context of both the financial outcomes of the past and forecasts of future performance. The lessons go both ways: CFOs can benefit from effective relationships with board directors—particularly with the chair of the audit committee, who can share external perspectives and act as a thought leader and sparring partner. CFOs should be more assertive in anticipating questions from the board and providing the needed information to connect data to strategic and operating decisions. And CFOs should more actively collaborate with the CEO and other executives to present a unified perspective to the board. As our research suggests, improved board effectiveness can also result in better financial performance (see sidebar, “Understanding the link between board effectiveness and financial performance”).

Define value creation in context
The traditional role of the CFO is to go through the results with the board, explain what happened, and look at the variances versus the prior period. It takes a very historical view on what the company just did, which in and of itself does not add a lot of insight with respect to potential future value creation. This inward-looking view focuses on the company and its results without comparisons to the market and how peers and competitors are performing, and it does not help the board understand what is good or bad. A board might celebrate organically growing 8 percent in a given year, for example, and then watch in dismay as the share price drops because the company’s peers all grew at 20 percent.

The biggest opportunity for a CFO’s relationship with the board often hinges on being able to put together an objective view on what a business’s performance has been, how it compares with the market and other businesses in a company’s portfolio, and what the board should expect of future performance. The CFO’s input is especially important for creating clarity on resource allocation to higher-growth businesses within the portfolio, the value potential of increasing the drive toward digital transformation, the value from M&A (and other big-ticket investments), and the impact of broad-based performance transformations.

That input need not reflect the most-sophisticated analyses. In some cases, qualitative observations can suffice. Often, CFOs have the best read on what investors care about and should therefore influence how companies frame, measure, and communicate their value-creation plans. CFOs spend more time than most other executives on investor road shows and facing questions from analysts, and they know which issues can complicate or derail an investor story. They have also seen firsthand which metrics resonate best with investors and how investors will react. For example, after meeting with multiple investors, the CFO at one financial-services company realized that the market was demanding a different way of dealing with and reporting on the company’s major investments in growth. As the CFO discussed this dynamic with the board, they all recognized they had communicated up-front investments in growth in a manner that appeared more like separate, one-off restructuring charges. This board-level engagement by the CFO helped push the company to separate its communication of growth investments from cost-focused restructuring charges. More important, the dialogue helped the board better appreciate that the nature of the company’s growth objectives would require material investment in data architecture, analytics, and automation.

In other cases, strategic assessment of a company’s performance relative to peers can be helpful, whether it involves simple metrics such as share-price performance or more-nuanced metrics such as organic growth or margin expansion. Those types of contextual insights—the result of close collaboration with the rest of the executive team—can tee up the questions that the board needs to ask regarding value creation and strategy. They can help board directors understand the areas they should watch to reveal the company’s potential advantages or weak spots. The impact can be striking.

Consider, for example, how the CFO of a natural-resources company helped the board understand its returns relative to peers. The overall benchmarks were all similar-size companies but lacked specifics on the individual businesses with different exposures to energy and commodity cycles. Without that detail, board directors were concerned that the company’s performance had been relatively poor. Coordinating with the CEO, the CFO reminded the board that an underperforming business in the down side of a cycle will also benefit when the market recovers. Instead of presenting a current snapshot of performance, he led board directors in a discussion about what performance in two years might look like—and provided a set of historical financial analyses to gauge how much of the company’s future returns would likely come from a recovery. The dialogue changed the board’s focus from a question of whether the company should restructure or shut down to one defined by performance: given a certain measure of performance, when should they start investing again to make the most of the market’s recovery?

That example is not the CFO presenting a business case for operational restructuring or recommending specific strategic actions. It is a case of the CFO going beyond pure financial reporting to put the company’s performance in the context of its strategic direction and peers with the right level of detail so that board directors could see for themselves what they needed to do.

Proactively engage with the board
The more CFOs engage with boards, the better they can anticipate boards’ questions—and the better they can keep boards informed ahead of potential surprises. CFOs can also expect to receive valuable support and advice in return. These relationships are most effective when CFOs have active roles in making presentations in every board meeting and are present for most of the discussion. Such involvement allows a CFO to understand board dynamics (and therefore engage more productively with board directors), answer follow-up questions, and track the context from prior meetings. This practice, of course, also requires the CEO to be open to the CFO’s more inclusive participation.

When the board of a multi-industrial business was weighing its acquisition priorities, for example, the discussion eventually came back to a question of how the company created the most value. Would the company do better to trade off assets through M&A deals or grow its business organically? Having joined that board meeting, the CFO was better able to follow up in subsequent board meetings by adding several analyses to his reports to the board. Those included an overview of the company’s organic growth relevant to its markets, some pre- and post-acquisition data on some of its businesses, and highlights of the company’s strengths and weaknesses with respect to organic growth.

That input led the board into a more nuanced discussion. Instead of an “either/or” focus on dealmaking or organic growth, it considered the businesses in which it would or would not want to pursue acquisitions, whether the company had established the right assets and capabilities to execute those acquisitions, and whether it should pursue certain operational priorities before jumping into an active set of acquisition choices.

The importance of proactive behavior in a CFO’s board interactions spans industries. The mechanisms for capital reallocation at banks or other financial institutions do look different from those at an industrial company. But a CFO’s role looks nearly identical when it comes to identifying where to shift resources to create more value. In one instance, the CFO of a financial-services company observed that the company had allocated so much capital to high-priority growth areas that it had underinvested in lower-growth businesses with higher, faster returns. That is the same growth-versus-returns dilemma that industrial companies face and leads to the same predictably lower returns. Proactively raising the issue with the board enabled the company to adjust its capital-allocation rules and make relatively small adjustments that would improve returns without sacrificing new growth opportunities.

Manage board interactions as a team
Taking a more proactive role is not something a CFO can do alone; the CEO formally governs the CFO’s relationship with the board. As head of the management team, CEOs are in the best position to judge how—and how often—their senior managers interact with boards. In our experience, reshaping the interaction typically happens only when a new CEO either redefines the current CFO’s role or brings on a new CFO explicitly tasked with developing a refreshed level of engagement with the board.

From there, managing interactions between the senior management team and the board generally is most effective when it is some form of a team effort. The CEO, often in consultation with the board chair, leads the effort. But the CEO’s success comes not just from knowing the facts and sharing perspectives but also from understanding the questions on board directors’ minds, the context in which they are asking those questions, their own personal histories as board directors and executives, and the interactions between board directors. Who among the directors in the room will ask questions? Who will hold back? Who will be the doubters? And who will be open to providing support and advice to the CFO?

As a trusted source of facts and data as well as a strategic advisor, often alongside a chief of strategy or operations, the CFO is usually a lieutenant to the CEO in making successful board interactions happen. The team’s efforts can allow the CEO to focus more mental energy on managing the discussion, understanding the way the board engages, and ensuring that the board is heading to the right outcome.

A time for boards to act

At a very minimum, CFOs should think of their role as improving the way boards and senior management teams work together by identifying, surfacing, and answering questions about different decisions well in advance of the formal meetings during which votes will occur. That effort helps avoid putting board directors on the spot and asking them to vote with limited information. It also helps ensure that if there are points of contention, there are facts on the table when boards engage in a formal setting.

A CFO should be especially mindful of his or her relationship with the audit committee chair. Audit committee chairs are often the board’s biggest advocates for value creation, cash protection, and the board’s fiduciary responsibility. Here, too, the relationship varies from company to company. But the one constant is that the audit committee chair is typically very engaged and often asks questions regarding value creation, the company’s use of cash, payments back to shareholders, and the investors’ perspectives.

The CFO’s relationship with the audit committee chair can also be an important driver of talent development and succession planning. For instance, the CFO and audit committee chair may schedule private sessions to identify strong candidates for senior finance positions. We have seen several instances in which the audit committee chair has offered coaching and mentoring to members of the finance team—particularly those in line for the CFO role. These high-potentials may be invited to audit committee meetings to make presentations on special projects and initiatives, giving them some exposure to board directors. We have also seen CFOs invite audit committee chairs to meetings of the finance function to help inform important discussions—for instance, changes required as a result of new accounting standards.;

The way that CFOs should communicate with audit committee chairs will depend on the governance within a given board. In some situations, it might be most effective to establish a continuous dialogue between the CFO and the audit committee chair so they can jointly prepare for board meetings: the audit committee chair would have ample opportunity to review the issues at hand and provide relevant information ahead of full board discussions. Indeed, the audit committee chair can serve as a powerful ally for the CFO—holding board directors to task on financial discussions, translating complex concepts for the group, and reinforcing points that the CFO had previously been unable to make on his own.

As demands on board directors grow, CFOs will be increasingly important as resources to support them. Our experience suggests that the CFOs who can define value creation in context and proactively anticipate boards’ needs will excel. Those CFOs can also accelerate their own development by working more closely with board directors and taking in their insights and experiences. Defining their relationships with the board in the context of the rest of senior management is critical.

Source:, March 2018
By: Frithjof Lund, Justin Sanders, and Ishaan Seth
About the authors: Frithjof Lund is a partner in McKinsey’s Oslo office; Justin Sanders is a partner in the New York office, where Ishaan Seth is a senior partner. The authors wish to thank Kurt Kuehn and Nina Spielmann for their contributions to this article.