board leadership succession

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Securing the Future of Your Blood Bank Through

Succession Planning

© Signature Resources 2015

Les Wallace, Ph.D.

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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

Serving on Counterpart International Board

Serving on World Future Society Board© Signature Resources 2015

© Signature Resources 2015 3

Today’s topicsWhat is leadership succession?

The Future of Governance.

What is governance leadership succession?

How do you plan for it?

Active recruitment of board members.

Selection processes.

Board development to enhance competency.


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.


3 Biggest Values A Board Member Can Bring

Intellectual capital

You can do something about all three

Time

Networks


Values A Board Member Can Bring

Intellectual capital:

Plan for future board composition.

Invest 70% of most meetings in strategic discussion.

Invest in board awareness: external business environment, benchmarking best practices, officer development. +/- 2 hours a month.


Values A Board Member Can Bring

Time:

Refresh your agenda efficiency.

Invest in Chair, Vice-Chair and committee chair development.

Right committee structure.

Consent agendas.

Executive summaries and reports.


Values A Board Member Can BringNetworks:

Identify the networking the organization needs for effective branding, marketing, insight.

Include in your board job description: “use your networks of influence and connections to further the mission success of the organization.”

Spend time during strategy discussion on “who in our network might help us here?”

o With introductions, insight, marketing, etc.

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My Job Today


A look @ high performance governance

practices as assembled from BoardSource,

National Association of Corporate Directors,

American Hospital Association, American

Society of Association Executives, 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!

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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?


What is The Future of Governance?

“The future is already here—it’s just not evenly distributed yet.”


Synthesis of Elements of Governance

“Nothing ages faster than the future.” David Carr


“The problem is never how to get new innovative thoughts into your mind, but how to get the old ones out.” Dee Hoc, Retired CEO

Visa Card Executive

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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The Governance Future that is Here


Term limits combined with governance leadership succession initiative keeps board refreshed.

Majority of meeting time invested in “strategically focused agenda.”

Competency based director nominations.

Competency development of directors receives serious focus--40 hrs. a year [3.3 hrs. a month].

Robust ERM committee and organizational activity.

Governance Self-assessments become annual routines.

“Independent Director” / “Outside Director” appointment to bolster Board strength. [In the U.S. independent outsiders make up 66% of all board and 72% of S&P 500 Company boards]

Are these themes surfacing with your Board?16

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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High Performance Governance

Assessment

1. Is Our Board Composition Right for the Challenge?

2. Are We Addressing the Risks That Could Send Our Company Over the Cliff?

3. Are We Prepared to Do Our Job Well When a Crisis Erupts?

4. Are We Well Prepared to Name Our Next CEO?

5. Does Our Board Really Own the Company’s Strategy?

6. How Can We Get the Information We Need to Govern Well?

7. How Can Our Board Get CEO Compensation Right?© Signature Resources 2015 19


Assessment

8. Why Do We Need a Lead Director Anyway?

9. Is Our Governance Committee Best of Breed?

10. How Do We Get the Most Value out of Our Time?

11. How Can Executive Sessions Help the Board Grow?

12. How Can Our Board Self-Evaluation Improve Our Functioning and Our Output?

13. How Do We Stop from Micromanaging?

14. How Prepared Are We to Work with Activist Shareholders and Their Proxies?



And then there’s committee work…

A dark alley down which good ideas are led to be strangled!

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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.”© Signature Resources 2015


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


Transformational

Transform: to completely change something.

Transformational: a focused effort to make significant changes to strengthen the relevance and value of an organization.

“Evolution keeps you alive; Revolution keeps you

relevant.” Gary Hamel, Leading the Revolution


Transformational

Where are the revolutions happening

in your domain?

Who are the disruptors?

A Board should know these and

discuss how they are doing on a regular basis.

If the national / regional conferences you go to

Don’t discuss these—find a different conference!


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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Competent

Real time assessment* of effectiveness following each board meeting.

Annual self-assessments and development plans drive improvement.

All committees / task forces have written charters and clearly identified outcomes or deliverable expectations.

Committee charters reviewed every couple of years. A dose of governance leadership development at every meeting (+/-

15 minutes) e.g. compliance refresh, board’s role in organizational culture, board succession planning, etc.). [Ave director education investment 22.1 hrs. each per NACD 2012-13 survey]

*Assessment: http://www.slideshare.net/LesWallace/board-self-assessment


http://www.slideshare.net/LesWallace/board-self-assessment

http://www.slideshare.net/LesWallace/board-self-assessment

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Governance CompetencyGovernance is less about the technical literacy of a board member regarding a specific challenge facing the organization (e.g., HR, marketing, finance/budget, legal, ERM)…

…It’s more about the leadership competencies that give a board member a sophisticated peripheral vision to oversee a complex business enterprise.


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Governance CompetencyFiscal literacy about large enterprise business

(diversification, capital investment, tracking KPIs).

Serious customer service or market based planning experience.

Strategic mindset and experience.

Change & organizational transformation leadership.

Executive oversight—leading organizational leaders.

Technology literate.

Mergers / Acquisitions.

Compliance / regulatory savvy.© Signature Resources 2015

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Governance Youth Movement(As seen by some)


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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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Director Refresh Questions

How does your Board assure competent nominations to the Board of Directors?

How many potential board members do you currently have in the pipeline?

Can both of these be enhanced?



Questions?

Next UP:Planning and Active Recruitment

SelectionContinuing Board Development

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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

Gender

Age

Ethnicity

Length of blood bank board service

Leadership experience and competencies

Special competencies / experience / networks

e.g. risk management, M & A, Chamber of Commerce, managed care, FDA, etc.

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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 committee

Executive 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 blood center.

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.


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.© Signature Resources 2015

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New Board Orientation II

Onsite 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.



Sustaining CompetencyAnnual self assessment guides board

improvement

Special 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.


Questions?

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

about the board of the future?

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Contemporary Literature on Governance

Twelve Principles of Governance that Power Exceptional Boards (BoardSource 2005)

Owning UP: The 14 Questions Every Board Member Needs to Ask (Ram Charan, 2009)

Governance as Leadership: Reframing the Work of Nonprofit Boards (Richard Chait, et. al., 2005)

The Future of Governance (Jay Lorsch, 2012)

Principles of 21st Century Leadership: Journey to High Performance (Les Wallace, 2013)

What are you reading?



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/

