Global Technologists

Do you know what the new profile for members of the Board of Directors is? Clarke Murphy, Global CEO of Russell Reynolds, an American leadership management consulting firm for Boards of Directors and Upper Management will let you know.

AltoNivel | July 12, 2018

The Alto Nivel article, “Global Technologists," interviewed Russell Reynolds Associates CEO Clarke Murphy. He discussed new profiles for Boards of Directors and how this can impact traditional family-run businesses in Mexico. An excerpt of the article, translated from the original Spanish, is below.

Family businesses in Mexico are focusing on making their boards of directors as effective as possible, so that they help them detect the opportunities that exist in the country, identify risks, and design strategies that increase their assets.

Good directors can help companies develop well, improve in the areas that they know poorly, and attract competencies and abilities to their company. In an organization with mid-level growth, a good director can show them how to improve, grow, transform themselves, and adapt to the changes in the market.

Alto Nivel spoke of the new profile of directors with Clarke Murphy, global CEO of Russell Reynolds, a leadership management consulting firm for Boards of Directors and Upper Management.

AN: Many companies know the benefits of having a Boards of Directors, but how important is it to have external or independent members?

CM: In the case of more institutional companies, one only spoke of having a good headperson before, preferably the CEO or the CFO to be certain that the organization has a good strategy and good leadership. Simple. Now, the competition is international; companies compete on other markets. Today, we see US and Asian companies competing here, in new markets, and they need to understand well the differences in the market and the culture. Therefore, members with a great amount of experience and knowledge of certain topics are required. For example, organizations today ask if one understands the digital transformation, if one knows about e-commerce, whether they should worry about topics of cybersecurity.

If the organization will enter a regulated market, it can save itself time and secure the permits more quickly if, on its Board, it has someone who comes from that market or who has experience in it. Therefore, having members with specific abilities, knowledge, and experience helps companies to operate better.

On the other hand, there are the family businesses. Their greatest challenge is competing when faced with changes in industry and the rhythm of global competition. In order to become more competitive, it can attract to its Board someone with experience who is capable of understanding the problems of the organization and who can serve as a mentor so that those family members who run the business develop more quickly in a professional sense.

Russell Reynolds understands the strategies of the company and the necessities of the Board. We do not bring someone in to point a finger at what is wrong and what is right. We bring to companies this mix of experience and knowledge that allows the family to be introduced into corporate culture. That is our role.

AN: In a family business, what is the difference between a board member with a certain specialty and resorting to a consulting firm? 

CM: A consulting firm will search out more business after having done the consultation. They will try to achieve quotas, projects, bonuses, etc. while the Board member will think of the company, its performance, its strategy, and the opportunities. In addition, a Board Member works half time. He has 25 years of experience, and when his role is finished, he goes home. The best thing is to create a mix of both, and to choose a consulting company that has the experience to lead you to making good decisions.

AN: In Mexico, 97% of companies are family companies. At what moment should an organization of this type constitute a corporate management?

CM: That will depend on how competitive it wants to be. Today, change is so constant and so accelerated that the sooner the company resorts to an external Board, the better. Many companies that are growing prefer to have their structure ready as soon as possible, because, if they have to go public or enter a regulated or new market, they will have everything ready.

You also have to keep in mind that it takes Board members time to get to know the company and its culture.

The article was originally published in Alto Nivel.

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Global Technologists