The boards and management of companies often have a choice to make. Do you take the short-term view of immediate profits or do you take a longer-term approach that allows an organization to suffer through a down quarter or two for gains that will become evident one or two years down the line? In her keynote presentation, Kimberly Casiano, director of Ford Motor Company and Mutual of America Financial Group, stated that one of the pleasures of serving on the board of the car giant is that the Ford family is willing to take the latter road.
“One of the benefits of the family at Ford Motor Company is that when tough decisions are made, they are willing to make it safe for the CEO and senior management to take a longer-term view. Most traditional companies live and die by quarterly guidance. And it’s very hard for them to say, ‘We’re going to sacrifice the next three quarters because we want to achieve this goal.’”
However, Casiano says, Ford’s multigenerational viewpoint stemming from its family structure allows the company to see the benefits of a plan that sees into the future.
“Because the family is a part of Ford Motor Company, they make it safe when the board says, ‘We would like to do this. This is our goal. But it’s going to mean we’re not going to look good in the next few quarters or the next year, or maybe the next two years.’ But it’s a decision we made.”
It’s a decision Casiano says the board made in the area of autonomous vehicles. According to Casiano, the car company made a conscious choice to not attempt to lead the way in the development of autonomous vehicles because of concerns about safety, not only of the drivers themselves, but also of their data.
“How many of you get into your car, and what information do you have on your phone? Most people have their entire lives on their phone. So then cybercriminals don’t have to hack into your phone. They can hack into your car to get into your phone. Some automakers brag about how autonomous they are, but we’re much more conscious. Our stock may not go up so quick, but we want to make it safe.”
In keeping with the theme of the conference, Casiano also discussed the board/CEO relationship at Ford, in particular their system for allowing constructive criticism of not only the chief executive, but also of senior management and the board itself. She discussed the contrasts that arise when doling out that constructive feedback on a public board as opposed to a private one.
“Many times, in a private company, you won’t necessarily have the power to hire and fire the CEO, but you should at least be able to have some sort of mechanism where you’re able to give them honest feedback. I don’t recommend anonymous submission because I don’t necessarily think it will remain anonymous. I would much rather have an environment where somebody receives constructive criticism, knows who it’s coming from and can ask for further explanation.”
In her time as a director, one of the most significant developments Casiano has seen is that “The world has become much riskier.” She discussed how that compounding of risks should be handled at the board level.
“The area of looking at risks — seeing if there are any that can be mitigated, seeing how we manage the other ones that we can’t mitigate or can only minimally mitigate — has become a real priority. Most boards have been housing this within the audit committee, giving it part-time importance. And one of the areas that I see evolving over these last years is that more and more boards are putting risk management where it belongs, which is a committee — a standalone committee that can give it the attention that it warrants.”
Casiano’s final piece of advice for private companies was to ensure the strength of the internal audit function. Citing an often-observed fluidity between personal and business expenses at private and family companies, especially on the part of the founder or CEO, and the negative perception it creates among the lower levels of the organization, Casiano suggested the creation of guardrails between funds accessible to the family and those that are necessary to keep the company running smoothly.
Casiano advocates “certain limitations so that you don’t find that you are affecting the morale in your company,” says Casiano. “I think that a delicate balance can be found. It can be very constructive between having an internal audit function with very clear guidelines and still respecting that there has to be fluidity with the well-earned fruit that a family or entrepreneur wants to get from their business.”