Redefining Private Company Board Service
A 15-month shakeup changed the rules of engagement. There is no doubt that directors had to be deeply engaged and ready to pivot in order to handle all that was thrown at them in 2020. As some of those problems recede, the lessons learned will affect private company board service into the future.
“The word I like to think about when I’m asked about lessons learned from 2020 is ‘redefinition,’” says Lynn Clarke, chairman of Nielsen-Massey Flavorings and director of A. Duie Pyle Transportation & Logistics and Vollrath Manufacturing. “And that’s a redefinition of not just where we work — which we all learned about the last year — but how we work and how we think about work.
“But there’s also a redefinition of board governance practices. We are all very anxious to get back to in-person meetings because the consensus from the majority of directors that I speak with is the meetings are so much more effective in person. The majority of my boards have gone back or will very shortly be going back in the in-person meetings, but what has changed is that the committee meetings are going to essentially remain remote. It’s a lot more efficient, and that allows boards to meet in a shorter period of time, but still have robust discussions.”
Margaret Pederson, chairwoman, CEO and president of Xamax, says one of the qualities directors learned during the COVID pandemic was a sense of urgency.
“You know, 15 months ago, no one knew how long the pandemic would last or how severe it would be,” Pederson says. “The switching to digital has come up several times, but this happened overnight. You didn’t have a long time to prepare for it.”
Now the board needs to be more mindful — but not delay — in handling disruption in order to not be caught off guard again.
“Both public and private boards, in today’s world, should reflect the changing needs of human capital,” Pederson says. “We’re now dealing with multiple generations who each have different cultures, and they may not be in the same places and not working in the same world.
“We’re also seeing changes in the supply chain and changes in global infrastructure. I think the point is urgency and that you have to have flexibility. Things are happening at a very fast pace, and the board needs to be able to respond to that.”
Clarke agrees that human capital is a top priority and suggests even more perspectives on the issue.
“What I’ve seen over the last year and more falls in two areas. One is the definition of diversity. There’s the traditional definition that we all know about. And some of us who are diverse candidates have benefited from that. But it’s also a geographic diversity. I’m on the board of a U.S.-based company which operates only in one state. But we have a director who’s from Canada, and she adds an incredible level of totally different perspective.
“The other area for redefinition is board refreshment,” she says. “Refreshment is absolutely critical. It’s especially critical when some of the world around you is being redefined so quickly.”
And filling those seats must be a thoughtful process.
“If you just evaluate the board overall, all of the challenges and opportunities may not be identified, so I think that having the skills matrix is really important.” The skills needed in boardrooms are likely to change, Pederson adds.“There are some skill needs that are going to remain the same. But there are new ones coming up, for instance digital, in a post-COVID world.”