A new era of active investment in public companies is transforming the modern corporate board in both makeup and activity. In fact, as more investors of all types assert their ideas about how companies should be run, they are dictating a shift in directors’ roles from passive governors to engaged advocates. Boards are becoming more involved in the business, and corporate managers are stepping up to help them.
As a result, the days of boards reviewing leadership succession plans, evaluating the chief executive, offering sage advice, and moving on are over. Gone too is the ability of a CEO to serve as the sole conduit between board and management, providing a bevy of topical updates to keep them informed and able to provide oversight.
Increasingly, CEOs have to arm directors with more information at a much deeper level than was common in the past. To do this successfully, full executive teams are entering into broader and deeper dialogue directly with directors. Sometimes C-Suite leaders –call them CXOs–are even asked to “coach” directors on how to most effectively enter into direct conversations with shareholders.
This additional responsibility falls primarily to top executives as each establishes his or her own relationships with individual directors, committees and the board as a whole. But, while today’s these executives better prepare and engage directors to ensure optimal governance and strategic alignment, the real burden is falling on senior leaders who aspire to the role—the next generation.
That’s why I’ve called 2016 the year of the “Board-Ready” CXO.
Earlier generations of leaders looking to move into a corporate office needed to be ready to “deliver” a board presentation by the time they got there. The next generation will need to have the business depth, shareholder perspective, and influence skills to bring continuous value to board discussions from day one. Preparing the next generation of leaders for this new era of board/management relations will require existing leadership teams to do three things when selecting and preparing their next crop of CXOs:
1. Look for the right skills: Evaluate leadership and influence skills – in addition to domain expertise – when selecting and grooming successors. In particular, look for the ability to partner across boundaries as a proxy for candidates ability to manage the inevitably varied styles and personalities of individual directors.
2. Introduce them early: Create more frequent and less formal means for board members to engage with next-level talent within the organization, to create and sustain two-way dialogue. This allows you to assess abilities “in the wild” and to condition directors to new working styles.
3. Drive stakeholder focus into internal dialogue: Senior executives should coach rising leaders to incorporate the perspective of multiple stakeholders into evaluation of business ideas and strategies. This may include incorporating the perspectives of customers, teams, shareholders and other key constituent groups like partners or community members into business operations and planning – both to drive better plans and to get rising leaders ready for the boardroom.
The benefits to companies that identify and groom board-ready CXOs will be meaningful. Not only will they be providing more substantial career experiences to grow and retain leaders, but they’ll have a stronger C-suite waiting in the wings and a stronger board at the helm.
Talent Matters is a regular column from CEB, a Rosslyn-based corporate research and technology firm. Tom Monahan is chairman and chief executive.