High performance boards : a practical guide to improving and energizing your governance / Didier Cossin.

Includes index.

DIDIER COSSIN is a professor at IMD, Switzerland and the founder and director of the IMD Global Board Center. He is the originator of the Four Pillars of Board Effectiveness methodology and an advocate of stewardship. He is the author and co-author of books such as Inspiring Stewardship, book chapters (such as Governance Risk: A Guide for Investors) and many articles in the fields of governance, investments, risks and stewardship, several of which have obtained citations of excellence or other awards.

Didier works with asset owners, government officials, central bankers, boards and senior leaders to provide the latest thinking on best-in-class governance, board effectiveness, the governance of investments, board dynamics and strategy design. He favors an adaptive and interactive approach to finding distinctive solutions for organisations on a wide range of governance topics. His latest research focuses on stewardship, how we can foster organisations to have long-term positive social impact while creating economic value for all. His past research has dealt with optimising governance in critical decision-making situations (large investments, key personnel changes, M&As, strategic turnarounds and organisational threats). Didier also supports some leading non-profit organisations at fine-tuning their governance for impact.

About the Author xvii Acknowledgements xix Preface xxi Part I: The Four Pillars of Board Effectiveness 1 Joanne Marker and Board Service 3 Chapter 1 The Four Pillars of Board Effectiveness 9 The First Pillar: People Quality, Focus, and Dedication 11 The Second Pillar: Information Architecture 14 The Third Pillar: Structures and Processes 15 The Fourth Pillar: Group Dynamics and Board Culture 17 Chapter 2 Governance Challenges around the World 20 Scientific Lessons from Natural Selection 22 What is Transformational Leadership? 23 Should We Trust Leaders? 24 The Governance DNA 26 Chapter 3 The Successful Director: Values and Character 28 Duty of Care 30 Duty of Loyalty 32 Integrity: A Key Characteristic of Board Directors 32 Chapter 4 The First Pillar: People Quality, Focus, and Dedication 35 Quality 35 Focus 38 Dedication 41 Chapter 5 The Second Pillar: Information Architecture 45 How Complete is Your Information? 46 Chapter 6 Board Structures and Processes 50 Processes 51 Committee Structure 52 Board Secretary 53 Lead Director or Vice Chair 55 Chapter 7 Group Dynamics and Board Culture 56 Understanding Group Dynamics 57 Coalitions Within a Board Are Inevitable - and they Feed into Politics 60 Boards Fall into Traps 63 Drawing Strength from the Board's Potential 66 Developing Self-Awareness 67 Board Culture 69 Part II: Board Failures and Challenges 77 Chapter 8 Four Areas of Board Failure 79 Chapter 9 Risks and Ensuring the Right Board Risk-Philosophy 82 Chapter 10 A Board Member's Practical Guide to Risk Thinking 85 The Physical Health Check: Technical Risks 86 The Mental Health Check: Behaviours 89 The Strategic Risk Check 93 The Governance Risk Check 94 Chapter 11 Elements of Advanced Risk Techniques for Board Members: From Quants to Cyber 97 The Why and How of Quantitative Risk Assessment for Boards 98 Integration of Risks 101 The Outcome of Risk Assessment 102 Cyber Risk 104 Chapter 12 Crisis Management 107 Crisis as a Turning Point 110 There is Work to Be Done In Peaceful Times 111 Communication Principles 111 Another Powerful Weapon: Gathering Information 113 A Crisis Will Shed Light On Boardroom Fissures 115 Procedure vs. Authenticity 117 Communicate Your Way to Rebuilding Trust 118 Chapter 13 The Four Tiers of Conflicts of Interest 120 Tier-I Conflicts: Individual Directors vs. Company 122 Tier-II Conflicts: Directors vs. Stakeholders 124 Tier-III Conflicts: Stakeholders vs. Other Stakeholders 131 Conflicts of Interest within a Group of Stakeholders 135 Tier-IV Conflicts: Company vs. Society 136 Chapter 14 High-Level Fraud and Active Board Oversight 141 Why Does High-Level Fraud Happen? 143 Injustice 147 Lax Oversight 148 Problematic Culture 149 Financial Illiteracy 151 How to Create an Effective Oversight Environment 152 Preventing Injustice: Broaden the Notion of Conflict of Interest 152 Preventing Lax Oversight: Build Appropriate Frameworks 153 Preventing Toxic Behaviours: Create a Positive Culture 156 Strengthen Board Oversight Expertise with Special Focus on Legal, Compliance, Risk, Fraud, and Financial Reporting 159 Tools For Anti-Fraud Activities: Assessment, Prevention, Detection, and Investigation 160 Assessment 161 Prevention 161 Detection 161 Investigation 162 Part III: Board Best Practices 165 Chapter 15 The Board as a Strategic Asset 167 Five Definitions of Strategy 168 Clarifying the Board's Role 171 Taking Context into the Mapping Process 174 The Impact of Context on Strategic Views and Roles of the Board 175 The Board's Ultimate Strategic Significance 176 Chapter 16 A Primer on Finance Essentials for Directors 177 Reading Financial Reports 178 Understanding Ratios to Analyse Operating Strategies 179 Interpreting Between the Lines of Financial Statements 181 How to Identify Red Flags in Financial Statements 182 Implementing Desired Capital Structure 184 Understanding Valuation Fundamentals 185 Making Better M&A Decisions 187 Overseeing Risk 189 Joanne Marker and Board Values at Comfre 193 Chapter 17 Board Leadership and Values 197 Quality Boards Live and Breathe Integrity 198 Which and Whose Values? 199 Board Values vs. Organisational Values 202 Family Values in Business 203 Chapter 18 The Intricacies of Subsidiary/Holding Governance 204 Structures 206 Culture 208 Chapter 19 Fostering Entrepreneurship from the Board 210 'Best Practice' Governance vs. Entrepreneurship 211 Boards Should Actively Encourage Entrepreneurship 212 Chapter 20 The Board's Oversight Framework for M&As 217 Creating a Deal-Making Mindset 218 Seeing the Bigger Picture 220 Staging Deals with Maximum Precision 220 Integration 225 Confronting Litigation Involving M&As 226 Joanne Marker Confronts Failing Board Culture 229 Chapter 21 The Chair-CEO Relationship 233 The Role of the Chair 233 Chairs are Increasingly Active 237 Chair-CEO Dynamics - the Hallmarks of a Productive Relationship 238 Tests of the Chair-CEO Relationship 240 The Ideal Attributes of a Chair 242 Chapter 22 The Board-Management Relationship 244 Supervision 244 Support 246 Blurring the Board-Management Relationship 247 Writing Governance Codes is Easier Than Changing Behaviours 248 Chapter 23 Effective Diversity 251 Diversity is Good . . . But Why; and When? 251 Diversity as a Considered Choice 252 Gender 253 Culture 255 Personality 256 Age 257 Social Background 259 We Have Embraced Diversity . . . Now What? 260 The Chair's Role in Building and Nurturing Diversity 262 Chapter 24 The Talent Pipeline 265 The Board's Responsibility for Talent Management 265 The New Talent Dynamic: Culture, Values, Community 268 Chapter 25 Boards and Social Media 272 JP Morgan's Failed Foray into Twitter Q&A 273 Why Boards Should Understand Social Media 274 What Boards Should Do 276 Chapter 26 Boards and Investors 279 The Move toward Increasing Shareholder Engagement 281 Chapter 27 Managing Stakeholders 283 Shareholders vs. Stakeholders: A Definition 284 How to Identify a Company's Key Stakeholders 285 The Board Can Be Instrumental in Shaping the CEO-Stakeholders Conversation 285 Anticipating Stakeholders' Influence and Impact 286 Chapter 28 Stewardship from the Board 289 Building Upon a Rich Cross-Disciplinary Legacy of Thought 291 Psychological, Organisational, and Cultural Influences on Stewardship 291 Steward Leaders Build on their Unique Strengths to Drive Stewardship 292 Steward Leaders Deliver Long-Lasting, Meaningful, and Inclusive Impact 293 Becoming a Steward Leader: What it Takes 295 Stewardship Risks 297 Boards Are Key to Fostering Stewardship 297 Conclusion 299 Index 301

DESCRIPTION
A comprehensive guide to transforming boards and achieving best-practice governance in any organisation.

When practising good governance, the board is the vital driver of organizational success, while fostering positive social impact and economic value creation. At all levels, executives around the world are faced with complexities rising from disruptive business models, new technologies, socio-economic changes, shifting political circumstances, and an array of other sources. High Performance Boards is the comprehensive manual for attaining best-in-class governance, offering pragmatic guidance on improving board quality, accountability, and performance.

This authoritative volume identifies the four dimensions, or pillars, which are crucial for establishing and maintaining best-practice boards: the people involved, the information architecture, the structures and processes, and the group dynamics and culture of governance. This methodology can be applied to any board in the world, corporate or non-profit organization, regardless of size, sector, industry, or context. Readers are introduced to a fictitious senior board member – an amalgamation of board members from well-known organisations – and follow her as she successfully handles real-life challenges with effective governance. Drawn from the author’s 20 years of practice and confidential work with boards across the world, this book:

Demonstrates how high-performance boards innovate and refine their practices
Discusses examples of board failures and challenges, including case studies from both for-profit and non-profit organisations including international organizations and state-owned agencies or even ministries
Provides a proven framework to create best-in-class governance
Includes a companion website featuring tools for board assessment and board practice
High Performance Boards has inspired more than 3000 board members around the world. This book is essential reading for professionals and managers interested in governance and board members, senior managers, investors, lawyers, and students of governance.