In a time of rapid change it is clear that boards need diverse skills and profiles in order to maintain a competitive advantage. The same is true at executive committee level. The speed of change has made access to talent imperative; it has also made the onboarding process significantly more challenging.
In our work of building boards and leadership teams, Fidelio is seeing a number of our clients and other leading organisations sharpen their focus on the onboarding process. Indeed, without an effective and thorough onboarding mechanism, ambitious diversity targets will be nigh on impossible to achieve.
Today’s business leaders face unprecedented disruption with a Pandora’s Box of digitalisation, geopolitical instability, the rise of populism, anti-business sentiment, climate change and regulatory burden. To weather the turbulence ahead, companies will need to prove themselves to be innovative and adaptable, able to pivot and be open to change. As such, the ability to attract new skills and experience, and to bring a fresh perspective to the top table, is critical to ensuring the survival of the company.
Setting up the board search to succeed
The first step of the onboarding programme does not begin when the new board member joins the company, but at the very outset of the search process. This is due to a number of factors, including a robust process which supports onboarding and kicks in at the start of the search:
i. Defining the role.
It is critical for businesses to define where the role fits in to the business strategy. The benefits of this are threefold: (1) Candidates gain clarity on what the role entails; (2) Employer and employee have a transparent framework for reviewing success; and (3) By focusing on the role rather than the individual, companies achieve diverse outcomes.
ii. Aligning the nomination committee.
Companies that have clear, disciplined and timely decision-making, including a lean and aligned nomination or hiring committee, will be the winners in hiring talent, and critically in retaining talent. Search firms must contribute to this process if they are to add value.
iii. Creating a compelling brief.
Businesses need a proposition which stands out from the crowd if they are to attract the highest-calibre candidates. There is significant value in a strongly crafted, forward-looking candidate brief, communicating clearly the deliverables of the role and how these link to corporate objectives, as well the culture and values of the business.
iv. The feedback loop.
It is imperative that feedback is collected and relayed from both clients and candidates throughout, in order to align expectations and avoid miscommunication.
The pace of change and disruption challenges management, requires a fresh perspective and demands the successful onboarding of new hires. Upheaval and change also challenges the board. This has led to sharp scrutiny of the board, its behaviour and its composition.
Induction is increasingly recognised as a critical step toward greater board effectiveness. This is underpinned by:
i. The induction pack—including a board overview of composition and processes as well as the governance and regulatory framework. Best-practice packs are personalised for each director’s role and include a cultural and data organogram.
ii. Building the network—this will include board members, the company secretariat and key members of the executive team, but also includes functional heads, including IR, HR and corporate affairs, as well as broader access to employees. A well-structured stakeholder map and overview of board- level engagement with these key stakeholders is critical.
iii. The feedback loop—smart boards ensure that there is opportunity for induction programmes to feed into continuous learning for the board as a whole, based on the perspective of the new member.
“In a context of increased board accountability and mounting complexity, boards run the risk of presiding very effectively over yesterday’s business while failing to meet the challenges of tomorrow,” says Gillian Karran-Cumberlege, co-founder of Fidelio. “It is the role of the board and executive leadership team to ensure a healthy future for the company.”
Board oversight of executive onboarding
Similarly, at executive committee level, best-in-class onboarding consists of more than practical administrative processes, tailored induction meetings with key internal and external stakeholders and site visits, which are normal practice. In order to rapidly build the executive’s familiarity with the new organisation, a deeper understanding of the inner workings of the business is required.
Increasingly, onboarding will include coaching to support the executive’s transition as they learn how to operate successfully in their new environment.
Common challenges facing new executives (and board members) include:
• Complex organisational structures
• Differing appetite for change
• Adapting their methods of influence to new organisations
• Rapid political, financial and technological changes
Proposed revisions to the UK Corporate Governance Code, published by the Financial Reporting Council (FRC) in December 2017, have further emphasised the importance of board accountability for executive succession-planning.
Board oversight of the executive talent pipeline and effective onboarding is a critical element in ensuring the organisation is fit for the future. In its proposed revisions, the FRC reported: “[The] nomination committee should lead the process for appointments, ensure plans are in place for orderly succession to both the board and senior management positions, and oversee the development of a diverse pipeline for succession.”
Onboarding is a critical tool available to chairmen as they bring board and executive committee members into the organisation. In the context of diverse boards, onboarding is all the more important. Fresh perspective adds tremendous value at the top table but can also cause “organ rejection”. Onboarding is the practical response to this risk.
To recap, successful onboarding involves:
1) Setting up board search to succeed. It starts at the beginning of the search process with clarity of the role description and objectives of the role.
2) Board induction. At board level, the company secretariat will be alert to building that first initial understanding, contact and network so that the new director has every opportunity to succeed and contribute to board effectiveness.
3) Board oversight of executive onboarding.
Executive succession-planning and the executive pipeline are also critical issues on the board agenda.
Effective onboarding has a clear, systemic contribution to the success of the company. The ability to successfully bring on board different types of talent is the hallmark of a vibrant organisation that is capable of change.
Gillian Karran-Cumberlege and Luke Main are founding partner and senior researcher at Fidelio Partners.
This article has been prepared in collaboration with Fidelio Partners, a supporter of Board Agenda.