The New Normal In Governance: A Paradigm Shift?

As the coronavirus makes its way across the globe, nearly every person and every business on the planet has been impacted. Since 1945, when the Second World War ended and RHR International was founded, the consultants in our firm have worked with our clients to assist them in seizing the opportunities and meeting the challenges inherent in leading their organizations.

What CEOs Are Talking About Right Now

If you wonder what chief executive officers are thinking right now, here is a small window into those conversations. Recently, RHR International facilitated conversations with groups of CEOs from different industries. The purpose was to allow CEOs to share ideas and to calibrate their thoughts about reopening after the COVID-19 shutdown. As the CEOs started sharing, it quickly became obvious not every industry sector is in the same place. Some companies are fighting for survival, others are weathering the storm, and a third group is thriving due to new, unexpected opportunities.

CEO Succession and the COVID-19 Pandemic

As the coronavirus crisis impacts our society, it creates some unique challenges for boards. One of the major issues under consideration is whether the chief executive officer who took you to this point is the same leader who can take your company through this challenge and beyond. Ultimately, leaders are judged by the way they perform during the worst of times, and the current crisis represents a challenge that no current CEO has seen previously in their careers. How CEOs and their teams perform during these moments of truth will be an unforgiving test of their character.

Setting the Foundation: Building a Strong Board-CEO Partnership

Establishing a positive connection between the board and the CEO is never more important than when onboarding a new chief executive officer. Actions taken during the first few weeks and months of a new CEO’s tenure will establish the groundwork for a successful ongoing relationship. Here are some tips for getting off to a fast start.

Retiring Underperforming Directors

The best boards are composed of a diverse group of committed directors who all bring experience, insights and high value relevant to the business of the organization they govern. When nominating and governance committee chairs select new directors to serve on boards, it is usually done after thoughtful consideration, using a skills-matrix approach, of what knowledge and capabilities the board needs to provide proper guidance and oversight.

In Generalists We Trust

RHR International's Paul C. Winum, Senior Partner, Practice Leader Co-Head, Board & CEO Services, was quoted in the Corporate Board Member magazine article, "In Generalists We Trust." Paul explains the benefits of boards hiring a generalist due to their ability to see the multidimensionality of the business.

"Specialists brought on to the board for one specific purpose typically can't contribute much on the other areas of risk that the board is tasked with overseeing, and their presence can also inhibit dialogue on critical topics, says Paul Winum, co-head of board & CEO services for RHR International. “When something comes up in the boardroom that relates to that particular topic area, everyone kind of defers to the resident expert on the board, as opposed to a whole group process of everyone being engaged on topics that are important to the governance of the organization.”"

Building Better Boards

RHR International's David Astorino, Senior Partner, Practice Areas and Research & Development, was quoted in the Corporate Board Member magazine article, “Building Better Boards.” David outlined how compensation can be determined by using specific metrics.

David Astorino, Senior Partner, RHR International: "Compensation can absolutely be aligned to the kinds of things we want to see often with our senior executives… When you start to tell the story with the board together, as you kind of embark on the journey, you're starting to outline, here's where we are today, here's where we're trying to go, here's the strategy… all the innovation, new growth, new product development, there are metrics you can attach to that. And there are a bunch of metrics you can look at around the human capital side. So, I think you can actually get quite concrete about what metrics you want to look at."

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