Board succession planning

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Governance Leadership Succession: Profiling the Board You Need in

2020 and Recruiting Them to Run

© Signature Resources 2015

Les Wallace, Ph.D.Signatureresources.com

© Signature Resources 2015 2

Today’s topics

What is leadership succession?What is governance leadership succession?How do you plan for it?Active recruitment of board members.Selection processes.Board development to enhance

competency.

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Who is this guy? Ideal 21C job: Grandparent! University professor / administrator Hospital administrator—traditional Board International consulting company…

Touch 20,000 people yr. / Coach 28 Execs / 17 Boards a year

50% for-profit / 50% government & not-for-profit clients Served on a regional Bank Board of Directors Served on Counterpart International Board Serving on World Future Society Board



The Vital Few Building blocks of Governance Excellence

Talent: board with experience and competencies to oversee a complex organization.

Does this leave out other member voices?

Strategic focus: envisioning, positioning and re-positioning the Credit Union to remain viable, valuable and vibrant. EVERYTHING FLOWS FROM STRATEGY!

Clarity on organizational performance and risk—the vital few performance and risk domains a board should track.

Clarity on governance process: effective then efficient.


What is leadership succession?Leadership succession is the responsibility of

boards and organizational leaders to assure that a leadership development plan is in place to prepare future key leaders.

An emergency succession policy is commonplace: who will take charge should a key leader suddenly become not available?

Investing in leadership succession in-house does not come with any promise of succession from the board or organization—both entities should always conduct a wide search for replacing key leadership.


What is Governance leadership succession?

Governance leadership succession is the responsibility a board has to assure board makeup and future appointments meet the changing needs of the organization.

Leadership succession implies advanced thinking, recruiting and assessment of board members before they are needed.

Maintaining / improving competencies of current board members is also “competency succession.” Est. average 1 hr./month.

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My Job Today


A look @ high performance governance practices as assembled from BoardSource, National Association of Corporate Directors, CUES, The Conference Board and others.

Candid opinions based on work with 300+ boards:

For-profit, non-profit, international, financial, healthcare, community, national associations. Open dialogue—your question is not an

interruption!


Synthesis of Elements of Governance

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Your Job Today:Final Exam


What might you take back to your board to start the conversation about the board of the

future?

Today’s Governance From the Literature

NACD Public Company Governance Survey, Nat. Association of Corp. Directors (2014)

“What Directors Think” (2014), Spencer Stuart


priorities for Boards from national surveys:

① Strategic planning and oversight.

② Board composition

③ Board refresh.

④ Risk oversight.

⑤ Regular board assessments are considered very effective by 85% of the survey population.

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21st Century Governance Boards as Committees (‘50s-’60s)

CEO Driven

Boards as Managers (’60s-’70s)

Operational / Fiduciary

Boards as Trustees (‘80s-90’s)Policy and Strategy (John Carver)

21st Century Boards Transformational Leaders

“Board of Directors must be a strategic asset.”



Strategy is about Transforming the Organization to Remain…

Viable ValuableVibrant!

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21st Century Governance and Strategy

21st Century Boards

Transformational Leaders

The Board should be a strategic asset to the organization!

What’s the implication for board makeup?

For succession?© Signature Resources 2015


Strategy is about Transforming the Organization to Remain Viable,

Valuable, and Vibrant!

So your board needs to be… Strategic thinkers. Change compatible. Focused on transformation of the enterprise. Effectively navigating changing customer,

regulatory and constituent demands. Strategic planning looking three to five years out. Annually refreshing the strategic plan.

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High Performance Governance: Competence

Board job descriptions identify leadership competencies required. Nominations, interviews, screening confirm competencies.

Term limits (officers and board seats) assures governance refresh and infusion of fresh eyes / new competencies.

Governance Leadership succession program in place develops future leaders from the field early… 1-3 years out:

and future board officers.

No emeritus status board members.

Board members failing the involvement / attendance / conduct standards are removed for cause: bylaws are specific to these expectations.


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Governance Leadership Succession


① Profile the ideal board member for where you’re going

—not where you are.

② Identify a pool of candidates.

③ Engage, Develop, Cultivate the pool.

④ Narrow the pool by giving the most capable and

Committed greater immersion and development.

⑤ Encourage the best to stand for board appointment.

Create a Board Makeup Dashboard: Current and Desired in the Future


Board Profile:Today - Tomorrow

GenderAgeEthnicityLength of board serviceLeadership experience and competenciesSpecial competencies / experience /

networks

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Governance Leadership Succession Timeline?

Board of Directors makes annual commitment to identify and develop potential new board members ahead of vacancies.

A minimum 12 months before a known vacancy, a pool of potential candidates are identified and screened as to interests and qualifications.

Preferable:2-3 years in advance of a board appointment the Board of Directors has identified people with potential and is involving them in some way in governance development and/or volunteer efforts for the enterprise.



Planning for a Future BoardChair and Vice Chair have crucial conversations

with board members who should move on.Term limits assure opportunity for new

appointments without having to have difficult conversations.

Three year terms with one reappointment is typical.Create a “board profile” of what you will need 3-5

years out.Create a pool of potential candidates and actively

screen them for competency and mission alignment.

Actively recruit.


Planning for a Future BoardCrucial conversations regarding legacy

moves:

“Based upon our profile of future board needs we would like to act quickly on refreshing our makeup.”

“You’ve given valuable service however we would like you to consider relinquishing your board seat for a new appointment.”

The CEO should not be involved in these conversations with board members who need to

move on!


Who Guides Board Recruitment?

Governance and Nominating committeeExecutive Committee

What’s the role of the CEO? Involved in conversations about potential

future board needs Involved in end of screening interviews

with potential candidates Heavily involved in new board orientation

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Where / How do you find folks who might fit the ideal profile? Board & past Board know some in the

community. The Executive / Management team knows

some. Your networks of community and business

leader contacts know some. You can research names from the university,

community leadership & chamber lists for potential.



Finding Competent Board Members

88% Ask for board member recommendations.69% evaluate board composition via a gap

analysis or matrix. 63% invite non board members to serve on

committees.63% cultivate relationships with colleagues or

community leaders.41% cultivate relationships with corporations or

other organizations.BoardSource Nonprofit Government Index 2012.

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Board Members:Where do you Find Them?


Colleges and Universities—faculty and graduate students Chambers of Commerce Specialty Chambers—Black, Latino, Asian, Native American Young Professional Groups Professional Associations Small Business Alliance Groups Specialty Legal Societies State not-profit societies Mid-to upper managers of business in your area Your network of high performance leaders!


SelectionYou will end up with a number of highly qualified

candidates who might serve your CU.Narrowing the group to the vital few must align with

all the goals of your new board profile: competencies, experience, demographic addition, networks.

Don’t be afraid to add a board member with which the current board was not familiar before the search.

“Fresh eyes” will be a valuable contribution to your board.

“Associate members” has become a popular new board member recruitment and decision mode.

Future Governing Boards


“In the not to distant future, new board members, at all levels of

enterprise--from community organization to corporations--will be

required to ‘certify governance competency’ to quality for an

appointment / election.”Les Wallace

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Future Governing Boards


Term limits the norm. Recruitment focuses on competencies and connections. Compensation for not-for-profit board will support increased

competencies. Diverse board makeup will become the norm rather than the

exception. Board officer development will become a higher priority

investment. Board coaches will be commonplace.

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Sustaining CompetencyAnnual self assessment guides board

improvementSpecial emphasis on environmental

scanning, benchmarking, board tutorials (e.g. regulation, quality, supply chain, etc.), keep eyes on the changing horizon.

Officers and future officers need specific development about their roles, functions and leadership approaches.

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Governance Diversity and

Youth Movement


“Suddenly—Age is a Diversity Issue”www.cues.org/article/view/id/Good-governance-age-is-board-diversity-issue

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Governance Youth Movement(As seen by some)



Questions?

Final Exam:What might you take back to your board to start the conversation

about the board of the future?


Extra Credit

On Boarding the New Board Member

Make the proper investment!


OnboardingAdequate orientation is critical to helping the

new board member to a fast start.Based upon an hourly value of board service for

you @ $500/hr. and an estimated 62+ hours of service a year—you’re bringing on the equivalent of a $31,000 investment (first year value).

One day on site with the executive team and key staff for briefings and dialogue is a minimum.

Another 3+ hours with Board Chair, Reviewing committee minutes, strategic plan and other documents is a minimum.

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New Board Orientation : Materials Review

Offsite materials review

History of the organization.

Mission, vision, values statements

Summary of services, special capabilities, planned services.

Newsletters, press clippings.

Financial performance past three years including external audit.

Regulatory / compliance review findings.

Annual Report.

HR org. chart & bio-sketch of professional backgrounds of key staff.

Strategic Plan.

Board by-laws.

Three years of board minutes.

Board policy and procedures.

Current board profile and professional background bio-sketches.

Board commitment and conflict of interest statements for signing.

Recent governance self-assessment results.

Committee structure and charters.

Committee Minutes.

Board calendar.


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New Board Orientation IIOnsite introductions and briefings

Staff leadership welcome meeting and introductions.

Key programmatic one on one meetings.

Financial briefing from CFO and review of board financial dashboard.

ERM briefing from the Chief Risk Officer or Supervisory committee chair.

Human resources briefing

including review of board “organizational climate” dashboard.

Customer briefing including last twelve months satisfaction and value survey results.

Board Chair briefing: Board composition philosophy and leadership succession.

Recent board self-assessment results.

Board committee assignment.


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New Board Orientation III

Governance Education

Digest assigned articles and booklets—even better, require specific reading prior to the appointment—voluntary pre-certification.

Phone consultation with Governance committee chair upon completion of reading and orientation.

Discuss annual calendar of conferences and expectations for attendance and learning commitments.



Who is this guy?

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Les Wallace, Ph.D.President, Signature Resources [email protected]

Dr. Wallace is recognized for tracking business environment and workplace trends and their impact upon business and government. His publications have appeared in Leadership Excellence, Personnel Journal, Credit Union Management, Public Management, and Nation's Business as well as numerous research and conference proceedings. His latest book, co-authored with Dr. Jim Trinka, A Legacy of 21st Century Leadership, outlines the leadership organizations need in a global, fast moving business environment. His book, Principles of 21st Century Governance (2013) is being used by many boards in the profit and not-for-profit sectors to design governance development approaches.

His new book, Personal Success in a Team Environment (2014) is used by individuals and organizations to improve teamwork, career building and success at work.

Les is a frequent consultant and speaker on issues of organizational transformation and leadership, employee engagement, strategic thinking and board of directors development and governance. His clients include Fortune 100 businesses, Government agencies, and not-for-profit organizations world-wide. Dr. Wallace is also the host resource on the 9Minute Mentor, a series short video tutorials governance.

Les has served on the Board of Security First Bank and currently serves on the international Boards of the World Future Society and Counterpart International. He is a member of the National Association of Corporate Directors. Les writes an on-line column for CUES Center for Credit Union Board Education.

Preview his video series on governance: www.signatureresources “Dr. Wallace on Camera.”

https://twitter.com/9MinuteMentor


http://www.signatureresources/



Board succession planning

Leadership & Management

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