Also: When the weather is nice, everyone can be commissioner
Good governance. Sounds great when you can say that about your company or organization, when that is under control you are doing a great job.
What is good governance?
If we assume the meaning of "longer-term governance" for governance, "good governance" is about longer-term good governance. Since companies and organizations differ in objectives, activities and size, 'good governance' is also different for each company and organization. Each party must determine for itself which aspects play a role in this.
But clearly, good governance is not only about the company or organization's primary goal, such as selling a product or providing a service and the financial ratios. It is also about the values the company uses to achieve this goal. Consider, for example, diversity, sustainability, talent development and innovation. There is no one-size-fits-all list of criteria of good governance to give; it is different for each company and organization.
Supervisors and directors need to have a discussion about which norms and values and the resulting moral compass is quite important. In addition, they need to address the increasing complexity in leading organizations and are required to take a critical look in the mirror.
A Supervisory Board member is collectively responsible along with the other members on a collective basis. This means that each member of the Supervisory Board is jointly responsible for the functioning of the Board.
Both a supervisory director and a supervisor have a monitoring role and thus the term supervisor is also used as a collective term for both roles.
'A supervisory director is actually there primarily when the weather gets bad. Then you have three types. The supervisory director who sits at a distance, who is of no use to you, but who also doesn't bother you. The supervisory director who asks insane amounts of questions and basically just covers himself. That takes a lot of time. And the supervisory director who understands that speed is of the essence, even if the whole picture is not yet visible.
Do commissioner and company form a good match?
When the weather is nice, anyone can be a commissioner; what matters is what he or she does when the storm hits. A good commissioner, according to him, does not ask a thousand questions, but only the two or three most relevant ones. Then the commissioner must look carefully to see what has been done with his two or three questions by the management. If nothing happened, then he will have to consider whether his questions were good, whether he and the company are a good match. A supervisory board is not an academic institution. A company does have to do something with it. So not only ask questions, but also follow through and follow up. It sounds very simple, but in practice it apparently often goes wrong, given the number of examples of failing supervision in recent years.
The storm is currently raging outside: organizations are still struggling with the consequences of the pandemic, energy crisis, etc. So it is a good time to put the RVC along the bar of and ask yourself what type of commissioner you are.
First of all, the distance commissioner: does the board currently actually benefit from you as an advisor and supervisor? Or do you not only literally keep your distance - neatly according to the corona measures - but also figuratively?
For important decisions, you have to be able to discuss things freely and preferably look each other in the eye, "As commissioners you have to be vigilant and keep renewing insights. As an RVC, you often visit operations and do deep dives, for example in the research function. In addition to meetings, individual commissioners also have conversations with employees, depending on the committee they are on and their area of interest.
As an RVC, you have to be proactive by asking for information. If there is a topic in between that you think is important, but that you don't understand well or want to understand better, you ask people, often from middle management in the company, in a briefing session to explain the topic in more detail. They enjoy doing that themselves. Not infrequently, other supervisory board members then go along as well. As an RVC, you always have to think about what you don't know or don't understand if you think it's relevant. That's in your job.
However, the number of questions you ask as a supervisory director must be properly funneled and dosed, especially during a crisis. So: are you a question machine gun, constantly getting in front of the board? Especially in a crisis, when it matters, time is scarce and action must be taken quickly. But it is also the time when things get really exciting for supervisory board members: after all, if the crisis is not managed properly, the supervisory board member runs a liability risk and it can damage his or her reputation. However, the commissioner who shows protective behavior by asking many questions is too concerned with his or her own interests and less with those of the company, and ultimately his or her legwork only increases the risk of things going wrong. Good supervisory directors are brave enough to set the pace without the whole picture already being visible.
The essence of the task of supervisory directors or non-executives can basically be reduced to just three roles: supervision, insight and selection. And this also includes do's and don'ts. The supervisory director should not take the director's place in his role as supervisor: a governance classic. But even in the insight role, the supervisory director must be careful. He should not come up with stories about this achievements and previous jobs. That may be insight, but at some point that CEO is going to get extremely annoyed. Of course you can share knowledge with the CEO if he asks for it, but being a supervisory director is a fundamentally different profession.
And then there is the selection role of commissioners. Diversity in a broad sense is an important starting point for the "line-up. The pooling of international knowledge and experience not only leads to a lively exchange of views from different perspectives, but enables a SB member to quickly and effectively bring developments in the world to himself.
The crises have meant that the management and supervisory boards of companies today have to put a lot of energy into issues such as risk management, governance and reporting on this. It is my belief that companies with a robust risk culture would do well to voluntarily and robustly report on their essential risks and processes to manage them. This requires an attitude that goes beyond comply-or-explain. It requires courage to deviate, to explain the deviations transparently and convincingly, and to demonstrate that this is the best mode of governance for the company in question. Regulation should encourage discipline in this behavior and allow for variation and explanation so that users, companies and regulators can learn from it. To the board and council I advise: 'Make your case - explain and demonstrate.
John Mahboeb
Source: https://vsbstia.org/?p=7257
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