High Performance Boards
Improving and Energizing your Governance
1. Auflage Mai 2020
344 Seiten, Hardcover
Praktikerbuch
A comprehensive guide to transforming boards and achieving best-practice governance in any organisation.
When practising good governance, the board is the vital driver of organizational success, while fostering positive social impact and economic value creation. At all levels, executives around the world are faced with complexities rising from disruptive business models, new technologies, socio-economic changes, shifting political circumstances, and an array of other sources. High Performance Boards is the comprehensive manual for attaining best-in-class governance, offering pragmatic guidance on improving board quality, accountability, and performance.
This authoritative volume identifies the four dimensions, or pillars, which are crucial for establishing and maintaining best-practice boards: the people involved, the information architecture, the structures and processes, and the group dynamics and culture of governance. This methodology can be applied to any board in the world, corporate or non-profit organization, regardless of size, sector, industry, or context. Readers are introduced to a fictitious senior board member - an amalgamation of board members from well-known organisations - and follow her as she successfully handles real-life challenges with effective governance. Drawn from the author's 20 years of practice and confidential work with boards across the world, this book:
* Demonstrates how high-performance boards innovate and refine their practices
* Discusses examples of board failures and challenges, including case studies from both for-profit and non-profit organisations including international organizations and state-owned agencies or even ministries
* Provides a proven framework to create best-in-class governance
* Includes a companion website featuring tools for board assessment and board practice
High Performance Boards has inspired more than 3000 board members around the world. This book is essential reading for professionals and managers interested in governance and board members, senior managers, investors, lawyers, and students of governance.
Acknowledgements xix
Preface xxi
Part I: The Four Pillars of Board Effectiveness 1
Joanne Marker and Board Service 3
Chapter 1 The Four Pillars of Board Effectiveness 9
The First Pillar: People Quality, Focus, and Dedication 11
The Second Pillar: Information Architecture 14
The Third Pillar: Structures and Processes 15
The Fourth Pillar: Group Dynamics and Board Culture 17
Chapter 2 Governance Challenges around the World 20
Scientific Lessons from Natural Selection 22
What is Transformational Leadership? 23
Should We Trust Leaders? 24
The Governance DNA 26
Chapter 3 The Successful Director: Values and Character 28
Duty of Care 30
Duty of Loyalty 32
Integrity: A Key Characteristic of Board Directors 32
Chapter 4 The First Pillar: People Quality, Focus, and Dedication 35
Quality 35
Focus 38
Dedication 41
Chapter 5 The Second Pillar: Information Architecture 45
How Complete is Your Information? 46
Chapter 6 Board Structures and Processes 50
Processes 51
Committee Structure 52
Board Secretary 53
Lead Director or Vice Chair 55
Chapter 7 Group Dynamics and Board Culture 56
Understanding Group Dynamics 57
Coalitions Within a Board Are Inevitable - and they Feed into Politics 60
Boards Fall into Traps 63
Drawing Strength from the Board's Potential 66
Developing Self-Awareness 67
Board Culture 69
Part II: Board Failures and Challenges 77
Chapter 8 Four Areas of Board Failure 79
Chapter 9 Risks and Ensuring the Right Board Risk-Philosophy 82
Chapter 10 A Board Member's Practical Guide to Risk Thinking 85
The Physical Health Check: Technical Risks 86
The Mental Health Check: Behaviours 89
The Strategic Risk Check 93
The Governance Risk Check 94
Chapter 11 Elements of Advanced Risk Techniques for Board Members: From Quants to Cyber 97
The Why and How of Quantitative Risk Assessment for Boards 98
Integration of Risks 101
The Outcome of Risk Assessment 102
Cyber Risk 104
Chapter 12 Crisis Management 107
Crisis as a Turning Point 110
There is Work to Be Done In Peaceful Times 111
Communication Principles 111
Another Powerful Weapon: Gathering Information 113
A Crisis Will Shed Light On Boardroom Fissures 115
Procedure vs. Authenticity 117
Communicate Your Way to Rebuilding Trust 118
Chapter 13 The Four Tiers of Conflicts of Interest 120
Tier-I Conflicts: Individual Directors vs. Company 122
Tier-II Conflicts: Directors vs. Stakeholders 124
Tier-III Conflicts: Stakeholders vs. Other Stakeholders 131
Conflicts of Interest within a Group of Stakeholders 135
Tier-IV Conflicts: Company vs. Society 136
Chapter 14 High-Level Fraud and Active Board Oversight 141
Why Does High-Level Fraud Happen? 143
Injustice 147
Lax Oversight 148
Problematic Culture 149
Financial Illiteracy 151
How to Create an Effective Oversight Environment 152
Preventing Injustice: Broaden the Notion of Conflict of Interest 152
Preventing Lax Oversight: Build Appropriate Frameworks 153
Preventing Toxic Behaviours: Create a Positive Culture 156
Strengthen Board Oversight Expertise with Special Focus on Legal, Compliance, Risk, Fraud, and Financial Reporting 159
Tools For Anti-Fraud Activities: Assessment, Prevention, Detection, and Investigation 160
Assessment 161
Prevention 161
Detection 161
Investigation 162
Part III: Board Best Practices 165
Chapter 15 The Board as a Strategic Asset 167
Five Definitions of Strategy 168
Clarifying the Board's Role 171
Taking Context into the Mapping Process 174
The Impact of Context on Strategic Views and Roles of the Board 175
The Board's Ultimate Strategic Significance 176
Chapter 16 A Primer on Finance Essentials for Directors 177
Reading Financial Reports 178
Understanding Ratios to Analyse Operating Strategies 179
Interpreting Between the Lines of Financial Statements 181
How to Identify Red Flags in Financial Statements 182
Implementing Desired Capital Structure 184
Understanding Valuation Fundamentals 185
Making Better M&A Decisions 187
Overseeing Risk 189
Joanne Marker and Board Values at Comfre 193
Chapter 17 Board Leadership and Values 197
Quality Boards Live and Breathe Integrity 198
Which and Whose Values? 199
Board Values vs. Organisational Values 202
Family Values in Business 203
Chapter 18 The Intricacies of Subsidiary/Holding Governance 204
Structures 206
Culture 208
Chapter 19 Fostering Entrepreneurship from the Board 210
'Best Practice' Governance vs. Entrepreneurship 211
Boards Should Actively Encourage Entrepreneurship 212
Chapter 20 The Board's Oversight Framework for M&As 217
Creating a Deal-Making Mindset 218
Seeing the Bigger Picture 220
Staging Deals with Maximum Precision 220
Integration 225
Confronting Litigation Involving M&As 226
Joanne Marker Confronts Failing Board Culture 229
Chapter 21 The Chair-CEO Relationship 233
The Role of the Chair 233
Chairs are Increasingly Active 237
Chair-CEO Dynamics - the Hallmarks of a Productive Relationship 238
Tests of the Chair-CEO Relationship 240
The Ideal Attributes of a Chair 242
Chapter 22 The Board-Management Relationship 244
Supervision 244
Support 246
Blurring the Board-Management Relationship 247
Writing Governance Codes is Easier Than Changing Behaviours 248
Chapter 23 Effective Diversity 251
Diversity is Good . . . But Why; and When? 251
Diversity as a Considered Choice 252
Gender 253
Culture 255
Personality 256
Age 257
Social Background 259
We Have Embraced Diversity . . . Now What? 260
The Chair's Role in Building and Nurturing Diversity 262
Chapter 24 The Talent Pipeline 265
The Board's Responsibility for Talent Management 265
The New Talent Dynamic: Culture, Values, Community 268
Chapter 25 Boards and Social Media 272
JP Morgan's Failed Foray into Twitter Q&A 273
Why Boards Should Understand Social Media 274
What Boards Should Do 276
Chapter 26 Boards and Investors 279
The Move toward Increasing Shareholder Engagement 281
Chapter 27 Managing Stakeholders 283
Shareholders vs. Stakeholders: A Definition 284
How to Identify a Company's Key Stakeholders 285
The Board Can Be Instrumental in Shaping the CEO-Stakeholders Conversation 285
Anticipating Stakeholders' Influence and Impact 286
Chapter 28 Stewardship from the Board 289
Building Upon a Rich Cross-Disciplinary Legacy of Thought 291
Psychological, Organisational, and Cultural Influences on Stewardship 291
Steward Leaders Build on their Unique Strengths to Drive Stewardship 292
Steward Leaders Deliver Long-Lasting, Meaningful, and Inclusive Impact 293
Becoming a Steward Leader: What it Takes 295
Stewardship Risks 297
Boards Are Key to Fostering Stewardship 297
Conclusion 299
Index 301
- Paul Bulcke, Chairman of the Board of Directors, Nestlé S.A. (Switzerland); Vice-Chairman, Board of Directors, L'Oréal (France); Member, J.P. Morgan International Council
"Didier Cossin brings huge direct experience to bear in his fascinating analysis of what makes a good board. Integrity, hard work, collegiality and independence of judgment matter greatly as personal attributes of board members as does a collective ability to focus on strategy, management support and risk in all its forms matters at the board level itself. And if that sounds easier said than done, read this book. This board member felt wiser and more daunted by the end."
- Lord Mark Malloch-Brown, Chairman, SGO (UK); Board Member of Investec, Seplat Petroleum and Kerogen; former Deputy Secretary-General and Chief of Staff, United Nations; former Minister of State in the Foreign Office
"An important distillation of Didier Cossin's insight and expertise on effective governance. As a long-time follower of his work, I am glad to see Prof Cossin publish this comprehensive guidebook to governance that transcends both geography and sectors. From stewardship of strategic objectives, to managing and structuring risk, the importance of board diversity and more, the lessons are at once practical and essential for any board member."
- Peter Maurer, President of the International Committee of the Red Cross
"What impressed me most is the comprehensive coverage of every aspect of board work in a way that is solidly grounded in every day's practice in boardrooms around the world. As such, the book is a must-read for every aspiring board member, but also has a lot to offer for even the most seasoned board member with a curiosity for learning and continuous improvement."
- Gerard Kleisterlee, Chairman, Vodafone Group Plc; Deputy Chair and Senior Independent Director, Royal Dutch Shell; Chairman, ASML
"This is the bedside book any board member should read and reread. Building on his extensive and deep experience, Didier pragmatically helps us to challenge our ways of interacting around the board table and establish a multi-dimensional frame in order to foster the best decision making. Every page calls into question one's practice and pushes each of us to avoid biases and revisit his/her ways of thinking for the ultimate benefit of the company."
- Barbara Dalibard, Lead Independent and Chair of Compensation and Appointments Committee, Michelin Group
"This book offers a complete and enlightening review of current board governance practices and challenges. The approach and framework it offers are as pertinent in the East as in the West in establishing high performing boards."
- Hsieh Fu Hua, Chairman, ACR Capital Holdings Pte Ltd; Board Member of GIC, Singapore and Grab Holdings, Singapore; Chairman of the National University of Singapore and National Gallery of Singapore
"Professor Cossin has developed the concept of board effectiveness based on his latest research. Intellectually stimulating, this book provides practical guidance to cope with unique challenges associated with governance of institutions. This book is therefore a must-read for board directors of companies, governmental organizations and NGOs."
- Kumiko Matsuura-Mueller, Chairwoman, United Nations Federal Credit Union (USA)
"The book is a comprehensive and practical guide to key issues relevant for all boards aiming to improve their decision-making processes. There are many useful takeaways on how to increase the dynamics in the boardroom."
- Olaug Svarva, Chairwoman, DNB ASA (Norway); Chairwoman, Norfund; Board Member of Investinor and Institute of International Finance (IIF)
"Thank you, Dr Cossin. Board members have needed this book for a long time. This work will assist board members to understand their responsibilities better."
- H.E. Dr. Mohammed bin Hamad bin Saif Al Rumhy, Minister of Oil and Gas, Sultanate of Oman; Chairman, Petroleum Development Oman; Chairman, OQ; Board Member, SGRF
"Didier Cossin's book explains how Governance can be a key factor for companies' success. It's a must-read for all board members!"
- Lorenzo Bini Smaghi, Chairman, Société Générale; Board Member, TAGES Holding
"Professor Cossin has got it spot on. His four-pillared 'temple' of board effectiveness is brought to life with the boardroom adventures of Joanne Marker. Indeed his construct has two outer buttresses that centre around people. Their quality, focus, dedication and also how they interact with each other dynamically to produce a governance culture of excellence. One hopes that right-minded and passionate directors or would-be directors will read this book and say 'I want to be a John or Joanne Marker when I grow up!'"
- Teo Swee Lian, Chairwoman, CapitaLand Mall Trust; Board Member of AIA, Singtel and Dubai Financial Services Authority; former Deputy Managing Director, Monetary Authority of Singapore
Didier works with asset owners, government officials, central bankers, boards and senior leaders to provide the latest thinking on best- in-class governance, board effectiveness, the governance of investments, board dynamics and strategy design. He favors an adaptive and interactive approach to finding distinctive solutions for organisations on a wide range of governance topics. His latest research focuses on stewardship, how we can foster organisations to have long-term positive social impact while creating economic value for all. His past research has dealt with optimising governance in critical decision-making situations (large investments, key personnel changes, M&As, strategic turnarounds and organisational threats). Didier also supports some leading non-profit organisations at fine-tuning their governance for impact.