Private Board Directors Need to Address the “Soft” Issues
Private Board Directors Need to Address the “Soft” Issues
Successful boards are focused on culture and relationships.
Directors today are asked to bring a lot more to the board table then the ability to read balance sheet.
Culture is the keystone of a successful company and it’s clear, “tone at the top” includes board leadership.
“Private company boards report a strong understanding of tone at the top and have strengthened their understanding of the health of the culture at all levels of the organization,” according to the National Association of Corporate Directors’ 2018-2019 Private Company Governance.
This year’s class of directors to watch bring the “soft skills” necessary in the age of ESG (environmental, social and governance) issues. With their experience in various industry, these independent directors approach private companies with introspection and the trust of shareholders and management to take the enterprise to the next level, whether it is family- or private equity-owned.
Their passions include a good relationship with their respective CEOs and using strong governance for sustained value creation. They recognize the need for diversity and diversity of thought at the board table.
Director, Recology, Sasser Family Holdings, OFG Bancorp, Pacific Coast Banking School
Christa Steele became the youngest CEO in the United States to lead a $3.5 billion bank located in the San Francisco Bay Area. As a former public company CEO with $500 million in market capitalization, she improved core earnings 43% in a single calendar year, doubled the bank’s value in less than two years, and successfully led the bank’s sale for a premium in 2015.
Steele was also a partner and board member of FIG Partners. Steele is a Board Leadership Fellow with the NACD, holds an MBA from University of Southern California Marshall School of Business and an undergraduate degree from Sacramento State University.
She was honored by the San Francisco Business Times as a most influential leader in Bay Area business and by Crowe Horwath for driving significant financial performance improvement. She is a financial and audit expert, a professionally trained speaker and thought leader, and has an in-depth understanding of how to manage market growth, expansion, divestiture, recession, corporate litigation, shareholder lawsuit, legacy ownership, conflict resolution and human capital.
No immunity from disruption: The “Amazon Effect” is real. There is no industry immune to disruption. Boardrooms and the C-suite must assimilate to change and disrupt themselves before becoming disrupted. This requires a pivot in mindset, away from just looking back over the last 90 days, to looking ahead and around the corner. Only then will you be able to establish the right KPIs and KRIs for your boardroom.
MARY S. JOSEPHS
Director, Hisco Inc., Manson Construction, Performance Contracting Inc.
Mary Josephs is a recognized authority on family and private company finance and governance and employee stock ownership plans. She has 30-plus years of experience assisting 300 ownership transitions for middle market companies, many of which supported ESOPs. Josephs is a director of Hisco, Manson Construction and Performance Contracting and served as a Spinnaker Coating director. She is a past director and a lifetime member of the ESOP Association and past chair of its finance and advisory committees, a two-term board member and 40-year member of the National Center for Employee Ownership and a board member of Chicago’s Big Shoulders Fund.
Before starting Verit Advisors in 2009, she founded LaSalle National Bank’s ESOP group and later led Bank of America-Merrill Lynch’s ESOP Solutions Group. A frequent conference speaker and author, Josephs received a B.A. degree from Marquette University and an MBA from the University of Chicago.
Strong governance is the secret to managing risk: Family business owners often take a casual attitude toward governance, but strong governance and risk controls generate operational and competitive benefits. Family businesses can sour when governance is weak. Consequently, formalize a good governance philosophy and structure with annual governance/risk checkups. Establish a well-functioning board including independent members, especially to fill talent and skill gaps. Create risk/audit and compensation committees. A strong board helps private companies navigate conflicts of interest, anticipate disruption, evaluate strategy, and address both anticipated and unanticipated risks.
Director, Skytop Strategies
Cindy Burrell is the founder and president of Diversity in Boardrooms, which consults with corporate and advisory boards. With more than 20 years of executive search expertise, Burrell focuses on recruiting and referring diverse director candidates who enhance a company’s growth, profitability, and social responsibility reputation.
In the Chicago area, Burrell is a recognized leader in the business community as well as a strong diversity advocate nationally. She is a founder and director of the Private Directors Association, which promotes private company board formation. She is a board leader for 2020 Women on Boards and a member of 30% Coalition, both national organizations that advocate increasing the number of women corporate board directors. Burrell is an advisory board member for Skytop Strategies, which delivers high-content programs worldwide on topics such as gender equality in boards, ESG, CSR, and impact investing. Burrell has a master’s degree from Boston University and a bachelor’s degree from DePauw University.
An effective board is strategic and intentional: Many case studies prove that in solving problems, diverse perspectives and areas of expertise create better solutions that positively impact a company’s profitability. With purpose, a board can select board candidates outside of the CEO level, and focus on executives with deep knowledge in finance, technology, human capital, cybersecurity or other areas of importance. Diversity of gender and ethnicity are also essential to create a dynamic of thoughtful discussion, perspective and analysis to substantiate good decision.
Director, Wintrust Bank
Dee Robinson-Evans serves as a board director for Wintrust Bank on the risk management and audit committees, as a PGA REACH national trustee, and recently completed a four-year term as a gaming industry regulator for the Illinois Gaming Board. She served on LaRabida Children’s Hospital board and advisory boards for Meridian Healthcare and Kendall College.
The founder of Robinson Hill, Inc., a concessions management firm specializing in airports and other non-traditional U.S. venues, Robinson-Evans is an entrepreneurial leader who combines vision with the ability to execute on strategies, achieving a track record of success in operations, scaling companies, and driving transformational change.
Robinson-Evans earned her MBA from Northwestern University’s J.L. Kellogg School of Management and B.A. in Economics from the University of Pennsylvania. She also completed the Tuck School of Business at Dartmouth College’s Executive Education program.
Adding value: Our presence must add value, bridge governance, performance and community, and guide strategy and growth. We need to manage risk and optimize shareholder value. At the same time, we must be brave in holding leadership accountable, having those difficult conversations, and doing our due diligence to truly understand challenges. Whether dealing with industry change, business disruption, reputational risk or cybersecurity, deliberately embracing diverse views is crucial. Diversifying a variety of top positions, specifically executive roles, is more than a movement to level the corporate playing field — it's about using the best resources to maximize every organization's potential. Successful boards embrace and implement this belief.
Vice Chairman, American Public Education, Inc., Vertex, Inc.
Ric Andersen is a partner at Peak Equity, a private equity firm investing exclusively in enterprise software companies. He was previously a managing director at Silver Lake Partners after an extensive career as senior partner and senior executive at PwC Consulting and IBM. He has served on the boards of many of the companies in which his firms have invested. He also serves as an independent director outside of his private equity work.
Andersen’s experience as an independent director began in 2001 at Princeton SoftTech, a private technology company which was sold to IBM in 2004. He then joined the board of Vertex in 2005, a family-owned technology company where he continues to serve as an independent director (compensation chair, nomination/governance committee member). Andersen is also vice chairman and comp chair for American Public Education, Inc., a public company operating in the higher education market.
Directors as critical assets: The role of an independent director, particularly in private companies, requires acute self-awareness and a healthy dose of servant mentality with senior management. While directors have significant expertise and experience, often well beyond that of CEOs and management, they must always be aware that their impact is highest when they are available to management without crossing the line into directing management. That balance is struck properly when CEO and management view the board and individual directors as critical assets for them and for the company, availing themselves of the expertise and experience when and if needed.
Director, Carlson, Inc., Columbia Acorn Trust, Driehaus Capital Management
Laura Born is a seasoned board member built on nearly 20 years of Wall Street experience, primarily as an investment banker at JP Morgan Chase & Co. She has taken those skills and applied them to both the boardroom and the classroom.
Born currently serves on three boards: Carlson Inc. as audit committee chair, chairman of the board of Columbia Acorn Trust (an SEC-registered mutual fund), and Driehaus Capital Management where she serves on the advisory board. In addition, she has introduced and leads data security oversight initiatives in each of her board assignments.
Her finance, transaction and strategy experience gained from Wall Street, coupled with her focus on the travel, consumer and financial services industries bolster her efforts to serve as an effective board member. Along with her board work, she has leveraged her Wall Street experience as an adjunct professor of finance at the University of Chicago Booth School of Business.
Advocating for shareholders’ interests: When a company is privately held, directors must be particularly focused on the specific goals set by the private owner(s), family and/or founders. In the boardroom, it’s critical to work to build shareholder value, in accordance with the particular owner’s goals in mind, by holding management accountable and providing supportive, engaged oversight over the business. This is particularly important in a private company setting where there is no public independent “proxy” of how management is performing such as a stock price or large institutional investors.
Director, Frontier Airlines
Patricia Pineda has served on boards since graduating law school and is on the boards of Levi Strauss & Co. and Frontier Airlines. Pineda has served as chair of an audit committee and an HR/ compensation committee. She currently sits on two compensation committees and a nominating, governance and corporate citizenship committee. Pineda also serves on nonprofit boards. She is a board member of EarthJustice and a founder, former board chair, and current member of the Latino Corporate Directors Association.
Pineda brings to her board work 30 years of experience as a senior executive at Toyota, first at the startup joint venture between General Motors and Toyota, New United Motor Manufacturing, Inc. and then at Toyota Motor North America, Inc. from which she retired in 2016. Pineda supervised legal, board governance, corporate communications, human resources, government and environmental affairs, philanthropy, corporate advertising, and Hispanic engagement strategies.
Effective board governance requires a diverse board: Effective board governance is crucial in this age of corporate scandals and companies quickly becoming irrelevant. Underlying effective governance is a board that represents diversity of thought, careers, ethnicity, race, and gender. In today’s rapidly changing world with shifting demographics in the workplace and marketplace, homogeneous boards will be challenged to serve the interests of shareholders, employees, and customers. Diverse boards are more likely to identify opportunities that promote long-term growth and add to the bottom line and less likely to miss potential threats to a company’s business or reputation.
Director, Muse, Stancil & Co., Mac 5 Energy; Vice Chairman, Backcountry Mills
Ajey Chandra is a vice president and director for Muse, Stancil & Co., a consulting firm in the energy industry. He also serves as a director for Mac 5 energy and the vice chair for Backcountry Mills.
Chandra has almost 35 years of experience in various aspects of the energy industry, having worked at Amoco, Purvin & Gertz, Hess Corporation and NextEra Energy Resources prior to joining Muse. During his time in the industry, he has been involved with large projects and operating facilities in the upstream and midstream portions of the industry. In all of his managerial and board experience, Chandra has tried to bring a strong sense of diversity to his actions. This has been supplemented by his international experience, including time in England, Malaysia, and large projects in Trinidad and Tobago.
Supplementing the skill sets of the owners: In many private companies, the founders control the company and are looking for advice. Often the founder wants to bring the second generation of family into the company, or the family needs to bring outside management in over time. The board is often tasked with helping the founders develop systems as the company grows larger and must supplement the skills of the current owners/managers. In larger companies, each board member is brought in for a specific skill. On smaller company boards, each member needs to be able to deliver business enhancing ideas and actionable items to the team.
Lead Director, Chicago Scenic Studios
Lisa McClung is co-founder and CEO at Lismore Advisors, a privately held firm focused on value creation, innovation and growth for Fortune 1000 public and private companies. She is an accomplished senior executive with over 25 years’ experience, including General Electric and Wrigley where she used data-driven and digital business models to grow legacy global businesses both on and offline.
She is a recognized expert in value generation via market disruption, digital transformation and innovation. McClung has served on seven private company boards in a range of industries. She has chaired several committees including investments, nominations, and governance, and was just named lead director of Chicago Scenic Studios, a $30 million theatrical production and interactive entertainment designer and manufacturer. She also was a board adviser to NuSeed, a biotechnology innovation subsidiary of a $4 billion publicly traded Australian company. McClung holds a B.A. from Smith College, an MBA from the Kellogg School of Management at Northwestern University and was a Harvard University visiting scholar.
Rapidly assess opportunities and take action: Board leadership, particularly for private companies, is the key to uncovering market opportunities and unlocking measurable value in both established and innovative new businesses. Utilizing experience and leveraging knowledge from leaders who have been tried and tested allows companies to drive success with organic growth, M&A, strategic alliances, new innovations and technologies. A strong and strategically diverse board helps organizations uncover and implement effective future growth structures, drive profitability and enable sustainable, successful business that meet short and long term goals as well as shareholder expectations.
CHRISTINE COADY NARAYAN
Director, Federal Home Loan Bank of Indianapolis
Christine Narayanan is an experienced C-suite executive and board director, serving as an independent director for the Federal Home Loan Bank of Indianapolis. She chairs the human resources committee focusing on compensation, diversity and inclusion, and on the bank’s audit and executive committees. Narayanan has served on advisory boards of multiple financial institutions, nonprofit and coalition boards and is a former elected official and mayor pro tem of a small city.
Serving as the president/CEO of Opportunity Resource Fund, a statewide community development financial institution, Narayanan focuses on developing and delivering nontraditional financial products in underserved markets. She has worked with various entities affiliated with OppFund to optimize organizational effectiveness. She is a dynamic guest speaker on leadership, diversity and inclusive governance. Narayanan earned a B.A. from Spring Arbor University, is a graduate of the Development Training Institute, Indiana University School of Philanthropy, and the Elected Officials Academy.
Always lead with inclusive governance: When carefully delivered, this exemplifies the powerful combination of art and science necessary to enhance shareholders’ value, protect stakeholders’ interests, and ensure a culture of absolute integrity. Inclusive governance begins with the board and executive management and is enforced throughout the entity. It leads a corporate culture which embraces excellence, inspires best practices knowledge-sharing, and rewards honest and ethical behavior. This culture inherently prizes principled actions toward profitability — perhaps the best and most valuable stakeholder deliverable possible — and ultimately the responsibility of a great board.
HAJARA AL AMODI
Hajara Al Amodi is the founder and CEO of Al Amodi Avenues, an investment and advisory firm, with a footprint in India and United States. She is a value investor and skilled at identifying the underlying value in a business and enhancing it. Admired for her global perspective, she is an international director who sits on the board of a real estate development company in India, an ecommerce business in Africa and a technology and cybersecurity firm here.
Al Amodi recently was appointed to the board of RedPerit, a business helping resolve the student debt crisis in the United States. She is also the cofounder and a board member of The StartUp Council, a U.S.-based minority-focused business incubator. She has led companies through numerous challenges, such as the demonetization crisis in India and the financial crisis in the United States and helped them scale globally.
The right mix fosters a collaborative atmosphere: It critical to have the right environment in the boardroom, to induce effective brainstorming and decision making, which can determine the success or failure of a business. It starts with gathering the right mix of skills, experience and age as well and then producing an open, collaborative atmosphere, where critical questions are encouraged, and individuality is appreciated. Members shouldn’t be trying to agree with each other or play the buddy role but rather encourage one another to ask the difficult questions, which can lead to right decisions being made. It is up to the CEO, who holds the ownership, to create a productive boardroom for a business.
Director, Blue Cross Blue Shield Association, Symbria, Inc., KnowledgeHound
With 39 years’ experience in marketing, corporate management, business strategy and transformation, corporate and brand reputation, digital transformation, customer experience and client service in a variety of industries, Lisa Cochrane chose to “rewire” (instead of “retire”) from Allstate Insurance Corp. in 2015 to focus on board service and other projects. She is an independent board member of Blue Cross Blue Shield Association, Symbria Inc. (chair, compensation committee; governance & nominating committee), and on the board of advisers of software start-up, KnowledgeHound.
At Allstate, Cochrane was recognized for her leadership of Allstate’s highly effective marketing. Cochrane also held senior positions with advertising agencies (Ogilvy & Mather) and marketing service companies (IMS/Omnicom), and Northwestern University. Personal accolades include U.S. Ad Person of the Year, World’s Most Influential CMOs, Working Mother of the Year, U.S. Marketer of the Year and Allstate Diversity Leadership Award.
Focus on the character of the corporation: Sometimes viewed as secondary to other priorities, today’s boards can’t ignore the influence corporate culture and reputation has on a company’s performance. A solid, positive company culture, tied to business mission and embedded and understood throughout the ranks, can drive innovation and growth, attract and retain customers and employees, and strengthen capacity for weathering disruption. Thanks to viral media, a company’s reputation can be built or broken in a day by the action — or inaction — of employees. It’s crucial for a board to focus proactively on and consistently monitor the health of their company culture.
ABE TOMÁS HUGHES
Director, Hello Tractor; Director, APFG LLC.
Abe Hughes is general manager of the agriculture division of Trimble Inc., a $3 billion high-tech pioneer in global positioning, connectivity, mapping and data analytics. Hughes served as vice president North America for New Holland Agriculture and Construction, a division of CNH Industrial/Fiat Group, responsible for leading the successful turnaround of this company. Under Hughes’ leadership, revenues doubled from $1 billion to $2 billion and the division returned to profitability. He has over 25 years of corporate and entrepreneurial experience in the U.S., Europe, Asia, Africa and Latin America. Hughes began his career in investment banking focused on mergers and acquisitions, and leveraged buyouts.
Hughes presently serves on the boards of Hello Tractor and APFG LLC. His work on private company boards stems from his desire to help middle market and family-run businesses realize their full potential. He received his MBA from the Harvard Business School and his B.A. from Cornell University and is fluent in Spanish, Portuguese and English.
The biggest factor: Technology is at the core of every business today. Every board should strongly consider having top level technology industry representation to guide you into the future.
Director, Air Tractor
Craig Jimenez serves on the boards of Air Tractor, an employee-owned aerospace company, and the North Texas chapter of NACD. At Air Tractor, he serves on the audit, compensation, and nomination/governance committees. Jimenez cofounded EcoCentri (CO2 capture). He was previously president and board member of OGE Energy Resources (energy, financial, and environmental products trading). Other executive and board service includes oversight of engineering, international operations, aviation, logistics, energy storage, energy networks, analytics, software, education, trading, hedge accounting and risk (financial, operational, safety, environmental and climate).
Jimenez holds a B.S. mechanical engineering from Stanford University, a master’s in engineering in offshore engineering from UC Berkeley, and an M.S. computational and applied mathematics from UT Austin. He is coauthor of several papers on risk committees, compensation committees, financial hedging and energy storage. Ongoing coursework includes finance, climate, payments, cryptography and cybersecurity.
The right people do the right things: To be credible in an environment of rising public and regulatory skepticism, time is well spent recruiting and retaining people who do the right thing, and who self-correct. Beyond talking about culture, hiring/coaching/firing CEOs to foster tone at the top, and monitoring “buzz at the bottom,” boards now must concretely affirm and reward persistent value creation at all levels of the company. Employee ownership and independent boards that, without micromanaging, explore the culture below the C-suite and can express long-term and “in this together” work environments that attract and retain outstanding people.
JOANN S. LILEK
Director, Milton’s Distributing, Gordon Logistics
JoAnn Lilek is an advisory board member of Milton’s Distributing and Gordon Logistics, jointly managed family businesses based on the East Coast. Lilek previously served as a director and audit chair for Hinsdale Bank and Trust Company and also as board chair for the Lou Holland Trust Mutual Fund. With her community service, she was board president and treasurer for the YWCA of Metropolitan Chicago and currently is YWCA director emeritus.
From 2010 to 2018, she served as CFO and COO of Accretive Solutions, a national consulting firm, where she was heavily involved with M&A due diligence and the successful sale of the company. Before that, Lilek was CFO of Midwest Bank Holdings and for seven years prior served as CFO for DSC Logistics. Foundational to her career, Lilek held the top positions of group SVP/corporate controller and EVP/CFO for U.S.A. and Canada for ABN Amro North America.
A financial expert can drive profitable growth for a company: A board member with deep financial acumen can meaningfully engage with the CEO and leadership team concerning comprehensive strategies for profitable growth and value creation. For example, when learning about a growth strategy that involves increasing the sales force dramatically, a board director could recommend a tracking system to ensure accountability. On a quarterly basis, the bottom-line contribution of each salesperson would be compared to the projected results of the growth plan. By taking a financial forecasting point of view, reviewing an acquisition proposal, or assisting with the dialogue of “what if” strategies and risk mitigation, a board member can support and positively affect profitable growth.
Justine Tobin is a board member and an investment banker. She is the founder and CEO of Tobin & Company Investment Banking Group and of Tobin & Company Securities LLC, a licensed broker dealer. Tobin advises clients in mergers and acquisitions, private capital raises, and corporate valuations, including fairness opinions. She manages the operations, business development, compliance and client execution efforts of the firm and its broker dealer. Tobin’s career has included roles at Bank of America, Salomon Brothers Inc and Goldman, Sachs & Company.
Tobin is a board member of Mobilads, an innovator in out-of-home advertising. She serves on the Charlotte area regional advisory board of First Citizens Bank, a subsidiary of First Citizens BancShares, Inc. In these roles, she provides strategic and technical advice regarding capital raising, customer markets and operations. Tobin advises her CEOs and management on financial operations, including cash management, financing, budgets and projections and financial statement preparation and communication.
The ability to see and speak the truth: Directors must deploy their “soft skills” as well as their technical skills, business experience and technical expertise. These attributes are being sought after as private companies strengthen the diversity of their boards. Directors should use intuition, empathy, ability to read a group and individuals as well as the wisdom to see and speak the truth when serving as a director of a private company. Private company dynamics call for this to a greater degree than for public company boards. Interaction with the family or other owners of a private company more often involves unspoken concepts and unarticulated strategies.
Director, Trillium Secure, CoStar Technologies
Sally Washlow is an accomplished board member and former CEO with extensive experience as an operations executive with strong cross-functional expertise. She brings this skill set to boards and is adept at driving product innovation, market expansion, and organizational change. She is a persuasive communicator and is skilled at assembling — and realigning — teams that meet tough demands.
Washlow serves on two boards, Trillium Secure, a privately held automotive cybersecurity company, and CoStar Technologies, a designer, developer, manufacturer and distributor of video surveillance products. She is a former board member and CEO of Cedar Electronics, a privately held maker of automotive and consumer electronics. In 2017 Washlow was awarded the Women in Consumer Technology Legacy Award at the Consumer Electronics Show. Throughout her career she has been worked across the globe and with various teams to build new products and markets through the lens of constant innovation.
Building diverse teams is critical: The ability to build diverse teams is a key attribute that is becoming more important in the private company arena. We are at our best when we serve with a board that brings diverse backgrounds and experiences to provide the right balance and insight to a company’s stakeholders. Being able to listen to the management team but bringing an external perspective to help find solutions and guide strategic decisions are paramount for a high functioning board. Supporting the company so it has the right management team in place to carry out the strategic objectives of the company as well as being a thoughtful partner in succession planning is critical.
Director, Etnyre International
Ganesh Iyer is a director on the boards of Etnyre International, The Etnyre Foundation and Rockford University. He is also a member of Etnyre's compensation and investment committees. Iyer served on Caterpillar corporate boards, including Asia Power Systems and Caterpillar India Private Limited. He is a people-centric leader with a track record of success in developing and growing profitable businesses within uncertain business environments across global markets, and a 20-year progressive career spanning across general management, business strategy, manufacturing operations, research and development, and 6 Sigma.
Prior to his current role of president and CEO of Etnyre International, Iyer had a successful career at Caterpillar Inc. in the United States, India and Singapore. He led a worldwide organization as global director for the company’s power generation business comprising about
700 people and manufacturing plants across the U.S., Europe, Middle East, Africa, India, China, Brazil, and South East Asia.
Working with the CEO: Board leadership is becoming increasingly important in the volatile, uncertain, complex and ambiguous world that we live in. The board of a family-owned company that comprises both family and independent directors should be closely involved in all the strategic aspects of the business. The directors have the responsibility to work with the CEO to ensure that the right culture is in place to deliver the long-term strategic results that positively impact customers and shareholders. The board should also work with the CEO to identify potential successors for all senior executive and other key positions which will enable long-term success.