Milestones provide a great opportunity to be retrospective. As our firm marks 30 years in the executive search and board advisory arena, I find it hard to fathom how the business has grown and evolved from the early days when it was formed in the second bedroom of our townhouse in downtown Philadelphia.
We’ve seen a lot since then, so I thought that I would share some of the lessons we’ve learned about leadership and governance. Foremost, I have observed that the most-successful organizations over time — regardless of industry — are those whose boards, CEOs and senior leaders place the highest value on human capital across the institution.
Here are five things that bankers and boards should ponder as they plan for the future:
1. Talent Matters: Everyone knows the saying, “people are your most important asset.” Given today’s workforce dynamics, historically low unemployment and demographic challenges, attracting, developing and retaining employees must go to another level. Boards and CEOs should question the chief human resources officer about their plans to tackle these challenges, while CEOs should take the lead on people issues. If your human resources leaders are not bringing strategic thinking to the human capital arena, it may be time to revisit this area — talent management is not going to get any easier. The variable on plan execution always comes down to talent.
2. CEO Succession is Critical: Decisions about organizational leadership are a board’s most-important responsibility. Many boards do not emphasize this enough, often letting a long-tenured and well-liked CEO ignore the question of succession or their own retirement plans. For a firm with viable internal candidates, lacking a planned succession timeline can breed extreme frustration, perhaps causing some contenders to depart for a perceived better opportunity. Many boards have little real-life experience navigating the challenges and dynamics of leadership succession; they may benefit from outside assistance.
3. Board Succession is Equally Important: Many directors are aging, but banks are slowing the pace of refreshment by raising or eliminating mandatory retirement ages. Boards must take a hard look at director longevity and real contributions, especially for long-tenured directors. Recruit younger and diverse directors to elevate the level and scope of the board’s knowledge base. Nearly all boards regularly conduct some kind of general evaluation or self-assessment, but moving towards performance-based assessments for continued board service has become the gold standard. Many directors fear individual peer evaluation because they view it as way to drive non-renewal, but those same fearful directors are often on the weaker end of the spectrum. Proactive board refreshment has proven to be a hallmark of highly effective boards.
4. Board Performance Should Be Visionary: Boards can benefit from taking a closer look at how they operate, what topics they discuss and boardroom behavior. As Bill McNabb, former Vanguard chairman and CEO, has written, most boards acknowledge that they would like to spend more time on key subjects such as talent, strategy and risk. A need for boards to add more strategic thinking, business sophistication, technology savvy and financial acumen remains urgent. Forward-thinking boards enact director education requirements to ensure that board members remain current on key technical, industry and governance trends. It’s difficult to be a high-performing company without a high-performing board.
5. Lead From the Front: People don’t want to be managed as much as they want to be led. Successful leaders lay out a vision for the organization, communicate that vision and create the followership which drives execution. Leaders who are authentic in their approach leave employees feeling that their contributions — however small in the grand scheme — really matter. As Maya Angelou eloquently stated: “People may forget what you said, and people may forget what you did, but they will never forget how you made them feel.” This is a defining characteristic of great leaders
Leading any organization is more complex today than at any moment in history. Leading with authenticity and intentionality is vital. Boards will benefit from redefining their approach to governing, while remembering that they are not the managers of the business. At the end of the day, success in business always comes down to talent — executive leadership, high-quality directors and the people who are trying to bring in business or serve customers every single day. As we’ve learned, maintaining and elevating the focus on human capital across the board is the surest way to long-term success.
