Board Governance – Executive Advisory Institute

January 24 2022

Corporate Governance Under the Biden Administration

Fiona Lu Board Governance, Board Structure, Corporate Culture, Corporate Governance, Executive Management, Shareholder Relations

The transition to the Biden administration is expected to have a significant impact on corporate governance. This impact is due in part to specific governance related proposals that will pass through the administration, and in part to how Biden’s policies will influence state legislation, governance best practices, and board conduct. During his campaign, several proposals with a significant impact on corporate governance were brought up by progressive candidates such as the Affordable Capitalism Act, the Ending Too Big to Jail Act, and the Corporate Executive Accountability Act. Looking forward, more specific proposals will likely establish basic goals and requirements for board diversity, gender equality, and worker representation.

Biden set the tone for his approach to board governance during his campaign when he claimed the age of shareholder primacy would come to an end during his presidency: “It’s way past time we put an end to the era of shareholder capitalism. The idea the only responsibility a corporation has is with shareholders: that’s simply not true. It’s an absolute farce. They have a responsibility to their workers, their community, to their country. That isn’t a radical notion”. In accordance with this sentiment, Biden will work towards fair taxation of corporations and ensure that they put their workers and communities before their shareholders.

Biden’s approach aligns with that of Elizabeth Warren, who had the most developed set of corporate governance policies during her campaign. These policies included pledges to place workers on boards, as well as the introduction of “charter companies” which would be dedicated to stakeholder interests rather than shareholder interests.

Kamala Harris has been similarly outspoken about the need for change in corporate America, stating her commitment to restore the corporate taxation level to 35% and augment diversity in the boardroom: “When our country’s corporate leadership looks more like the rest of the country, it ensures that a wider array of perspectives are heard in meetings and board rooms and that the needs and interests of more people are considered. We must do more to hold companies accountable for living up to their own diversity goals and make sure we have reliable data about their progress”.

Kamala Harris similarly proposed a new law that would compel companies of one hundred employees or more the prove that they pay men and women equally or face a fine of one percent profit per one percent of pay disparity. In this way, Kamala looks to take the burden off of the working woman by holding corporations accountable for paying their employees fairly.

While Biden and Harris are not as radical as Bernie Sanders and Elizabeth Warren in their intentions for changes in corporate governance, advisors have begun warning companies to prepare for new regulations. These regulations will likely turn corporate attention away from their shareholders and towards their stakeholders and enforce greater boardroom diversity. Moreover, companies should be prepared for the administration to raise corporate taxes, especially for companies that shift jobs overseas, and to require the disclosure of the racial, gender, and ethnic makeup of their boards.

June 18 2020

Board Organizational Frameworks

Fiona Lu Board Governance, Board Structure, Corporate Governance board composition, board culture, Board Governance, board of directors, board organization, Board Structure, corporate culture, corporate governance

Developing a strong organizational framework for the board of directors is critical to ensuring that company matters are addressed by the correct committees and receive the attention necessary for solving these matters. Issues of importance should be prioritized appropriately and given ample time for review.

Corporate Culture and Board Organization

There are many mechanisms for organizing the board, all of which lead back to the topic of corporate culture. Corporate culture begins with the board; if the board is unable to establish an understanding grasp of what motivates corporate behavior, the rest of the company will follow suit. Failing to give thoughtful attention to employee and executive interactions, behaviors, and language will undoubtedly result in a disorganized board and a company that lacks a clear focus of what defines its team members. Thus, it is important for boards to maintain an environment that fosters engagement and meaningful conversation as a backdrop against accomplishing agenda tasks. This is the first step to spreading a culture of candor and trust within the company and cannot be accomplished through one 40-minute team bonding meeting. It must be consistently worked upon and established over time through healthy discussions of sensitive topics, transparency about company goals, and acknowledgment of personal weaknesses to make room for learning growth.

Corporate culture should also be included in a company’s formal risk assessments as it can very easily influence workforce productivity, company reputation, and law breaches. According to the 2017 Board Leadership of Corporate Culture in Europe Report, approximately 85% of the value of leading businesses come from intangible assets, such as a company’s brand, reputation, and internal relations. These intangibles are all inextricably linked to the board’s ability to set the right organizational culture and are important factors to business success. Thus, investing more time and resources into mindful culture development will bring a company greater returns.

Tailoring the Board to Meet Company Needs

When talking about board organization, it is important to keep in mind that not every board is the same. Board work should be tailored to the specific needs and culture of the company. What makes sense in the context of one board may not work for another. While looking at best practices and board trend reports may be helpful in establishing a general framework for your own practices, it should not be viewed as the golden rulebook of board organization. Such trends come and go; a company should only adopt a policy after considering the specific benefits it will bring in their unique corporate circumstances.

One example of the significance of examining company specifics is the debate over combining or separating the chairman and CEO roles. One generally accepted argument is that the role of the CEO/management is to run the business operations while the role of the board is to oversee this management, thus the leadership of the two roles must be separated to keep each other in check. Conversely, others argue that the role of the CEO and Chairman go hand in hand and can be combined to one position of oversight. This age old debate has no one-size-fits-all answer because it depends on the circumstances of the company. In the U.K., the CEO does not serve the dual role of the chairman, whereas in the U.S., over 50% of CEO’s surveyed also serve as chairman.

A simple yet helpful device for setting the distinction between management and board decision-making is to set up periodical reviews of the specific responsibilities reserved for the board. While this is just one example of how different systems can adopt differing policies, in general, all major questions regarding board and leadership structure require careful consideration of the unique set of company needs and corporate culture that influence these decisions.

Business people looking at a screen during a video conference

April 20 2020

Tips for Virtual Board Meetings

Fiona Lu Board Governance, Board Technology, Corporate Governance, COVID-19 board of directors, Board Technology, Corona Virus Tips, corporate governance, COVID-19, Virtual Board Meetings, Virtual Meeting Best Practices

In the midst of the current COVID-19 pandemic, virtual board meetings have proven to be an invaluable and necessary step to take in preventing the spread of disease. Virtual meetings are an effective way to convene during times of crisis and save valuable time and resources by eliminating the need to set up a physical meeting location. One of the greatest benefits of remote meetings is that they allow members of a team to communicate quickly and efficiently from the comfort of their own offices. This facilitates more frequent meetings and check-ins, added flexibility, and greater convenience in information sharing.

Today’s modern technology has revolutionized the way virtual meetings are conducted, offering a variety of tools and software options to suit any meeting purpose. Advanced digital products are now available to provide greater security, offer cloud sharing options for file exchange, and support larger teams. Over time, video-sharing platforms have evolved to produce a streamlined process for conducting remote meetings and scheduling follow-up video chats.

In the quest to practice social distancing and protect employees from undue health risks, it is imperative for companies to switch to remote meetings and set up the right tools for a fully integrated digital governance framework. With the right preparation and an understanding of the best practices for virtual conferencing, companies can ensure that their teams stay up to date on the latest tasks at hand and operate just as, if not more efficiently, while reducing the time and capital spent on setting up in-person meetings.

We have gathered and summarized below the best tips for creating an optimal virtual conferencing environment.

Setting up the Right Technology

Prior to switching to virtual meetings, the company must standardize what technologies will be used across the board. Selecting the right video conferencing portal that comes with sufficient security and private access is important in making sure that sensitive business intelligence does not get leaked to outsiders. A recommended software is Zoom because it allows users to send out private, password protected video conference links with capabilities of hosting up to 1,000 video participants and 10,000 viewers. Send out an announcement within the company that mandates everyone to download and run a test session with the chosen software to make sure everyone is able to access it before beginning any actual meetings. This also allows users sufficient time to become acquainted with the software’s features so that no time is wasted fumbling around with technology during actual conferences.

Creating an Agenda

Once the software is confirmed to be working for everyone, set up a virtual Google calendar that clearly details the time and agenda of each meeting, with the option for attendees to mark if they are able to attend. This creates transparency on who to expect at each meeting and creates ample time to reschedule if not enough people can make a certain time. In order to ensure that all board members are prepared, the board administrator must notify everyone at least three days in advance of the upcoming meeting with a reminder for speakers to send over their prepared talking points so that a transparent schedule can be outlined for the meeting. This ensures that the meeting does not run significantly overtime or get sidetracked.

Meeting Etiquette

In order to optimize participant engagement, the video host must have a strong grasp on remote conferencing etiquette. This requires the board chair to first determine the right number of attendees to invite. A good rule of thumb is to keep the number of speakers limited to 10 so that there is less cause for talking over one another or inactively listening without contributing to the conversation.

Next, determine what the best time to set up the meeting would be. Remember to be mindful of time zones and choose a schedule that is as convenient as possible for everyone. Sending out a Google poll with multiple meeting options can facilitate the process of picking the best time.

Prepare your speaking points before the meeting and enter the virtual space at least 5 minutes prior to the scheduled start time. Greet participants as they join the space and introduce yourself as the meeting’s host. This will make participants more inclined to engage if they know who is running the show. Clarify any housekeeping rules before the meeting begins pertaining to the order of speakers, the basic features participants can use if they want to send a chat or pose a question, and an overview of what will be covered.

Turn off your notifications to prevent any distractions and instruct participants to do the same. An alternative way to minimize distractions is to mute the participants’ audio and instruct them on how to unmute themselves if they have a point to make or when it is their turn to speak. This reduces the level of background noise and makes it easier to focus on the speaker.

Meeting Follow-Up

After the meeting is over, include extra time for questions and feedback on how the meeting ran. Taking suggestions for improvement is key to making sure future meetings can run smoothly and eliminating repeat issues. Sending out a follow-up email one day after the meeting is a good way to make sure participants benefited fully from the meeting, clarify any sources of confusion, and perform post-meeting progress checks. Virtual meetings should always be recorded with the consent of its participants so that people can refer to the recording if they missed anything or were unable to attend.

With these tips in mind, your virtual meetings will run smoothly and become a powerful tool for holistically maintaining remote productivity across all teams. By leveraging video communications, corporate boards can continue to operate efficiently from home and address key issues without interruption.