A Time When Generalists Are Most Needed
The current crisis may be proving the theory that bucking the specialist director trend was, and is, the right way to go.
In Generalists We Trust
The Corporate Board Member article, "A Time When Generalists Are Most Needed," quoted Russell Reynolds Associates Consultant Anthony Goodman on considerations for boards when choosing new directors. The article is excerpted below.
The piece below first appeared in the Q2 issue of Corporate Board Member, before the pandemic struck. In the aftermath of this crisis, the argument for generalists appears even more compelling as boards lean heavily on their seasoned directors, who may lack micro expertise in, say, cybersecurity, but possess the confidence, savvy and well-honed governance skills to help usher a company through a global catastrophe.
In Generalists We Trust
Once upon a time, corporate boards were filled with generalists. Typically sitting or retired CEOs, these chieftains had run multi-million-dollar businesses, held plenty of P&L responsibility, managed teams of thousands and knew their way around a balance sheet. They weren’t experts, per se, in any one specific area, but as generalists, they knew how to ask the right questions, evaluate answers critically and challenge management for more.
Then, the world got complicated. Globalization, technology, data ubiquity, social media and more came together to make generalist skills seem inadequate to keep up with the whiplash-inducing pace of change—nobody but the deepest experts who lived and breathed that topic could be expected to be current. As board responsibilities grew, directors attempting to manage a host of new risks—skills shortage, ESG, data privacy, disruption—began hearing from governance gurus that they had to have more expertise in residence. Without a cybersecurity expert on the board, how would they be able to determine whether management was adequately handling the company’s risk of being hacked? With no technologists or marketing savants in the room, how could the board be sure the company’s leaders were keeping their fingers on the erratic pulse of consumer demand and safeguarding against disruption?
That’s particularly true when it comes to digital transformation, which requires a whole lot more than tech expertise, says Anthony Goodman, senior member of Russell Reynolds Associates’ board & CEO advisory partners division. “You’ve got to be thinking about talent and the development of the people you have and recruitment of the people you need. There’s a huge human capital piece to it. So, it’s really being able to take a much more holistic view of digital transformation than purely a technological one.”
Goodman recommends, in some cases, establishing term expectations up front with a board member who is bringing some specific expertise that the board needs now but may not need several years on. “Because these skills actually can go out of date more quickly than you would think,” he says. On the plus side, because so many more companies today have embarked on digital transformation, the pool of potential directors with that experience has widened—even if that only means an edge of a year or two, he says, adding: “In the land of the blind, the one-eyed man is king.”
Consider unusual suspects. Boards are increasingly looking at candidates one level down from the top, business unit heads who have led through transformation or have had to answer to the board on related issues. “If you want demographic diversity, you’ve got to look beyond CEOs and CFOs,” says Goodman, but typically that still means somebody with P&L ownership. “They’re running their own businesses, and maybe they report to the CEO.”
To read the full article, click here.