Future Trends: Outside Influences on Corporate Governance

Future Fluency

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3+ y ago 28:09

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FEATURED GUESTS

Ram Charan

Ram Charan is a world-renowned business consultant, author, and speaker who has spent the past 40 years working with many top companies, CEOs, and boards. Charan was first introduced to business while working in the family shoe shop in a small town in northern India, where he was raised. He served on the faculties of Harvard Business School and Northwestern University before pursuing consulting full-time. Charan has won several awards, including the Bell Ringer award at GE’s Crotonville Institute and best teacher award at Northwestern. He was among BusinessWeek‘s top ten resources for in-house executive development programs. Charan has authored more than 30 books since 1998 that have sold over four million copies in more than a dozen languages. He has also written for Harvard Business Review, Fortune, BusinessWeek, Time, Chief Executive, and USA Today. Charan is a Distinguished Fellow of the National Academy of Human Resources

Judy Samuelson

Judy Samuelson is founder and executive director of the Aspen Institute’s Business and Society Program and author of Six New Rules of Business: Creating Real Value in a Changing World (2021). Signature programs under Samuelson’s leadership include a 10-year campaign to disrupt Milton Friedman’s narrative about corporate purpose, the Aspen Principles of Long-Term Value Creation, and a partnership with Korn Ferry to rethink executive pay. She previously worked in legislative affairs in California and banking in New York’s garment center and ran the Ford Foundation’s office of program-related investments. Samuelson blogs for Quartz at Work. She is a Bellagio Fellow and a director of the Financial Health Network.

Stilpon Nestor

Stilpon Nestor is the executive chair of Morrow Sodali EMEA. He is also the executive chair and founder of Nestor Advisors, a company that Morrow Sodali acquired in early 2021. In this latter role, he has advised the boards of some of the largest companies and financial institutions in the European Union and emerging markets in Europe, Latin America, Asia, and the Middle East across a variety of sectors. Until 2002, Stilpon was the head of the Corporate Affairs Division at the OECD, leading the team which produced the OECD Principles of Corporate Governance in 1999. Stilpon is a nonexecutive director of the Arabian Construction Co., one of the largest contractors in the Gulf. He is currently a member of the UK Institute of Directors (IoD) Advisory Board on Corporate Governance and cochairs its working group on governance and technology. He is a regular public speaker on governance.

Mike Lubrano

Mike Lubrano is managing director of Valoris: Stewardship Catalysts, and an adjunct professor of Sustainable Finance and Impact Investment at Johns Hopkins School of Advanced International Studies in Washington, DC. Lubrano also teaches the International Corporate Governance Network’s signature “Governance, Stewardship, and Sustainability” course and served as ICGN’s Education Programme advisor. Lubrano was a cofounder and managing director, Corporate Governance and Sustainability, at Cartica Management LLC. Earlier, Lubrano worked at the International Finance Corporation (IFC), the private sector investment arm of the World Bank Group; served as advisor to the Ministry of Finance of Chile for the development of its corporate governance reforms; and was one of the group of experts that designed Brazil’s Novo Mercado. Lubrano is a cofounder of the Latin America Corporate Governance Roundtable. He is currently a director of FIBRA ECO. He is the coauthor of Governance, Stewardship and Sustainability (2021).

SHOW NOTES

mpact of Technology on the Future of Corporate Governance

Ram Charan: Three factors every board must consider

Need to have a view of the outside world that is not purely driven by management. Need independent view of the outside
Technology: must focus is critical because a company cannot be everything to everyone. Must have the right CEO a
Capital Allocation: balance between short term and long term

Technology will be a critical driver of enabling a board to understand these three critical areas
Effective agenda setting to improve the effective time of board meetings

Stilpon: Royal Post upgraded many of its digital systems. How can boards fully kick the tires on a reporting system that is fully algorithmic? Boards must be more generalist and with access to more information from the outside.

Technology will change employee participation in the boardroom.

Judy Samuelson: Era of hyper transparency. Employees have good sightlines into business decision making and ability to follow the money in a way never previously possible. Authentic leadership is keeping your promises and outsiders and employees are now able to apply a level of scrutiny never previously possible with new technology.

Technology empowers employees to build consensus and communicate with each other in ways previously not available to other generations

Judy Samuelson: Cultural barrier to employees represented on board. Employees have same long-term interest in the companies success. In the knowledge economy ignore them at your own peril. Employees are the centerpiece of the success of the business.

How will the pandemic impact corporate governance moving forward:

Ram Charan: Cycle time is reducing, communicating with competitors. 6 boards meetings for boards usually sometimes 4

Judy Samuelson: the pandemic ushered in a new era of private, public partnership

Total reshaping of executive compensation. Move away from stock in order to incentivize long-term interests and success.
“Cannot have a successful business in a failed society”

Stilpon: Impacts the new “distributed board” era and will impact the agendas and consolidation of the agendas to allow for more deep diving into the issues during meetings, but less consequential stuff can be distributed to be completed outside of meetings.

What knowledge and skills will future board members need?

Stilpon: More well-rounded generalists rather than direct specialists on specific topics.

Ram Charan: Many board members still don’t have the basic finance knowledge (balance sheets)

Judy Samuelson: Need more women on boards and need more diversity

Final Statements

Ram Charan: Broaden focus but cannot focus solely on stakeholders, have the right CEO, focus the agenda every year, employees need to be rewarded in same way as top management to decrease inequality

Stilpon Nestor: Companies will become much more social animals. Boards will be freed from the short-termism and be more strategic. Variable architecture in their composition, more distributed boards and distributed duties

Challenge: going to new social companies is lacking a complete and fulsome accountability structure to replace the shareholder accountability model

Judy Samuelson: Shareholder accountability is not the solution.

How will the culture of boards evolve? Status quo will not get us where we want to go. More diversity and supporting the executive to do some difficult and “unpopular” things.

54 episodes

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