This newsletter’s Table of Contents is as follows:
1. A NEW Collaboration: Caribbean Association of Banks partners with Caribbean Governance Training Institute
2. Boards (and Board HR Committees) BEWARE: The ‘Great Recall’ is a golden opportunity for employers
3. The Essence of a Great Director: Look for them!!
4. Directors Return to the Boardroom
1. A NEW Collaboration: Caribbean Association of Banks partners with Caribbean Governance Training Institute
An unprecedented collaboration has been agreed between the Caribbean Association of Banks Inc (CAB)., and the Caribbean Governance Training Institute (CGTI), aimed at strengthening the Caribbean banking industry through the provision of comprehensive good governance training.
As the number one governance training and certification institute in the Caribbean Region, CGTI will now become the exclusive governance training provider for CAB, offering its unique suite of internationally recognized courses to the 81 bank members of the CAB.
The Caribbean Association of Banks Inc was formed in 1974. Almost two decades later, in partnering with the Caribbean Governance Training Institute to educate its members about 21st-century governance best practices, CAB Inc is achieving its vision and mission of becoming “the collective voice that protects, promotes and strengthens the regional banking sector … proactively influencing matters of interest to financial institutions through advocacy and education.”
Wendy Delmar, CEO of CAB Inc., stated that “this is a particularly auspicious time for us to be entering into a partnership of this nature, as the Caribbean banking sector is going from strength to strength at the moment. This collaboration enables CAB to help further empower directors, managers, and executives across the region, upskilling our member organizations and helping them become more efficient and more profitable.”
According to CGTI: “We are delighted to be selected as the CAB’s governance trainer of choice. We look forward to a long relationship similar to the ones we have forged with such notable organizations as the governments of Saint Lucia and Antigua and Barbuda, Sandals Resorts International and the Eastern Caribbean Central Bank.
As the number one governance training and certification institute in the Caribbean Region, CGTI will now become the exclusive governance training provider for CAB, offering its unique suite of internationally recognized courses to the 81 bank members of the CAB.
The Caribbean Association of Banks Inc was formed in 1974. Almost two decades later, in partnering with the Caribbean Governance Training Institute to educate its members about 21st-century governance best practices, CAB Inc is achieving its vision and mission of becoming “the collective voice that protects, promotes and strengthens the regional banking sector … proactively influencing matters of interest to financial institutions through advocacy and education.”
Wendy Delmar, CEO of CAB Inc., stated that “this is a particularly auspicious time for us to be entering into a partnership of this nature, as the Caribbean banking sector is going from strength to strength at the moment. This collaboration enables CAB to help further empower directors, managers, and executives across the region, upskilling our member organizations and helping them become more efficient and more profitable.”
According to CGTI: “We are delighted to be selected as the CAB’s governance trainer of choice. We look forward to a long relationship similar to the ones we have forged with such notable organizations as the governments of Saint Lucia and Antigua and Barbuda, Sandals Resorts International and the Eastern Caribbean Central Bank.
Source: Caribbean Association of Banks
2. Boards (and Board HR Committees) be aware: The 'Great Recall' is a golden opportunity for employers
Following the unprecedented pandemic, many employers face an unprecedented recall, demanding that employees return to the office after working from home for over a year. For most employees, that recall will be against their wishes. There will be friction, and while that friction has been at the forefront of conversation, there has been little focus on the rare opportunities this creates for employers.
Now is the optimal time for them to renegotiate existing employee contracts, dangling the carrot of continued work from home arrangements in return. Unless an employee worked from home before the pandemic, or has already been promised the permanent right to work from home, employers may legally compel those employees to return to the office. For some employees, that will be undesirable. For others, particularly those who moved long distances, impossible. In either case, employees are motivated to negotiate work-from-home arrangements, and employers may secure value in return for agreeing.
Employers will be playing what might be the most formidable bargaining chip available in recent history. Now is the opportunity to marshal employee enthusiasm for remote work toward new employment contracts with sturdier terms. For one, employees may accept less pay if they are able to work from home and be receptive to new compensation structures. There remains a bounty of other contractual terms to target at the same time.
We have previously written that most termination clauses are unenforceable as presently drafted, which renders employee terminations prohibitively expensive. However, employees who may have previously declined to sign a new contract with an enforceable termination provision might now do so in exchange for the privilege of working from home.
Employers should also be adding a clause that allows them to implement temporary layoffs. Layoff provisions were incredibly rare in employment contracts prior to the pandemic (except for unionized employees). Their absence created a conundrum for employers, who were faced with constructive dismissal lawsuits when they were forced to lay off employees amid stringent lockdowns. That mistake must not reoccur, and temporary layoff provisions are now a necessity when negotiating new employment contracts.
Employers should also take another instrument from the union tool bag: Contractual terms that allow for disciplinary action. To the surprise of many employers, they do not have the right to suspend employees if that is not in their employment contracts. However, discipline, and particularly the right to suspend, can be a crucial means of maintaining an orderly, productive, workplace.
Perhaps an employee working from home will feel relaxed enough to accept different vacation allotments or working hours. When negotiating with the gilded work-from-home bargaining chip, employers are limited only by their own creativity. At the same time, those crucial contractual terms can also be implemented in agreements with new employees. There is an unprecedented opportunity for employers to recruit new talent. One could lead the pack in allowing remote work, pilfering star employees from employers who will not budge on a return to the office.
Instead of fearing the great recall, employers should be seizing it. Few boardroom activities are more consequential than CEO succession planning, and many directors would argue that it is the single most important thing they do. Boards therefore are spending more and more time on succession-related activities, reflecting not only their concerns about executive leadership but an awareness that a successful succession event takes years to pull off.
Now is the optimal time for them to renegotiate existing employee contracts, dangling the carrot of continued work from home arrangements in return. Unless an employee worked from home before the pandemic, or has already been promised the permanent right to work from home, employers may legally compel those employees to return to the office. For some employees, that will be undesirable. For others, particularly those who moved long distances, impossible. In either case, employees are motivated to negotiate work-from-home arrangements, and employers may secure value in return for agreeing.
Employers will be playing what might be the most formidable bargaining chip available in recent history. Now is the opportunity to marshal employee enthusiasm for remote work toward new employment contracts with sturdier terms. For one, employees may accept less pay if they are able to work from home and be receptive to new compensation structures. There remains a bounty of other contractual terms to target at the same time.
We have previously written that most termination clauses are unenforceable as presently drafted, which renders employee terminations prohibitively expensive. However, employees who may have previously declined to sign a new contract with an enforceable termination provision might now do so in exchange for the privilege of working from home.
Employers should also be adding a clause that allows them to implement temporary layoffs. Layoff provisions were incredibly rare in employment contracts prior to the pandemic (except for unionized employees). Their absence created a conundrum for employers, who were faced with constructive dismissal lawsuits when they were forced to lay off employees amid stringent lockdowns. That mistake must not reoccur, and temporary layoff provisions are now a necessity when negotiating new employment contracts.
Employers should also take another instrument from the union tool bag: Contractual terms that allow for disciplinary action. To the surprise of many employers, they do not have the right to suspend employees if that is not in their employment contracts. However, discipline, and particularly the right to suspend, can be a crucial means of maintaining an orderly, productive, workplace.
Perhaps an employee working from home will feel relaxed enough to accept different vacation allotments or working hours. When negotiating with the gilded work-from-home bargaining chip, employers are limited only by their own creativity. At the same time, those crucial contractual terms can also be implemented in agreements with new employees. There is an unprecedented opportunity for employers to recruit new talent. One could lead the pack in allowing remote work, pilfering star employees from employers who will not budge on a return to the office.
Instead of fearing the great recall, employers should be seizing it. Few boardroom activities are more consequential than CEO succession planning, and many directors would argue that it is the single most important thing they do. Boards therefore are spending more and more time on succession-related activities, reflecting not only their concerns about executive leadership but an awareness that a successful succession event takes years to pull off.
Source: Lexology
3. The Essence of a Great Director: Look for them!!
More than any set of abilities you might find on a résumé, the ability to be a good director is a personality trait. It involves qualities of insight, outlook and character. Yes, boards that have deep industry knowledge tend to be more strategic and focus more on the long term. But the strategy is a way of thinking, relying on judgment and experience. The directors who come in to reshape a business are often from outside the industry. Transformation is their skill.
Your prerequisite in selecting board members should be the breadth of vision and leadership ability; only then should you consider whether a candidate has the background and expertise you want. These attributes have nothing to do with age. Some people at twenty-five have a broader perspective and are more powerful leaders than far older peers.
Great board members have an almost paradoxical ability to be collegial and constructive on the one hand and challenging on the other. Brendan Swords, CEO of Wellington Management, says, “You want humility and courage. The best board members have good listening skills. They’ve got thick skin. They’re willing to speak without fear and ask hard questions. They’re fully prepared. They’re highly engaged. They’re open-minded.” By contrast, the worst board members have poor listening skills. He says, “They’re like bulls in a china shop, and are always pushing their own thesis, their own agenda, to the exclusion of all others.”
You can tell good board members from bad ones by the questions they ask. In any boardroom, it’s easy to distinguish the directors who really try to get inside the company, traveling to different regions and spending time with local staff, from those who just show up at the meetings. For that reason, seek board members who are ready to work hard. Having board members with the time and energy to invest will help eliminate management’s information advantage. To that end, be sure that you know what motivated the director to join the board. Otherwise, you may find that their contribution doesn’t live up to their résumé.
Look for board members who have the courage of their convictions. Mary Erdoes of J. P. Morgan Asset & Wealth Management says, “If you ask what a good board member is, it’s someone who refuses to be handled and knows when they’re being handled because it’s very easy for a company to do.”
So, beware of management attempts to stock the board with pawns. In his letter to shareholders in the 2019 Berkshire Hathaway annual report, Buffett writes that the CEO of a company searching for board members will almost certainly check with a candidate’s current CEO about whether this person is a “good” director—“good” being a code word meant to avoid pollution by anyone who has challenged the present CEO’s compensation or acquisition schemes. As Buffett puts it, “When seeking directors, CEOs don’t look for pit bulls. It’s the cocker spaniel that gets taken home.”
A genuinely good board member can combine the best traits of a CEO and an investor. That’s why we like to see two people with CEO experience on every board. Only a CEO knows what the CEO’s job is—an essential insight when selecting a new leader for the company. Often a CEO search led by a non-CEO feels like it’s in the hands of amateurs. You also want CEOs in the boardroom when things go south. They are most likely to make the tough calls and least likely to run for the exits.
But don’t assume that someone will be a good director just because they have a good record as a CEO at another company. Some former CEOs hated what they deemed to be meddlesome behavior by their own boards and may make corresponding accommodations to the CEO somewhere else. Ed Garden of Trian Partners says, “It’s amazing how respected CEOs who have impressive résumés and who generated impressive shareholder returns add no value in the boardroom of their new company. It depends on their willingness to learn about the business, to challenge the CEO and the social dynamic in the boardroom, and to be provocative and facilitate debate.” For that reason, he would be leery of appointing a sitting CEO to the board: “They are simply too busy running their own company. I feel that they’re on that board to build gravitas.”
In any case, avoid putting the outgoing CEO of your own company on the board. The presence of the former boss can crimp the style of the new incumbent and complicate matters for the board in its dealings with management. A crucial element in discussions with management is a confrontation with reality. Elena Botelho at ghSMART says, “How many boards do you know where there’s really honest dialogue? Where people say, ‘All right, this acquisition didn’t go well. So now let’s make the most out of it. How do we learn from it?’”
The uncomfortable questions frequently come from smart, competent people who aren’t former CEOs—the scientist or the technologist who is willing to probe and who doesn’t assume that everything is going to be OK. The presence of the old CEO can inhibit such discussions, with the other directors reluctant to criticize decisions made by their peer.
Your prerequisite in selecting board members should be the breadth of vision and leadership ability; only then should you consider whether a candidate has the background and expertise you want. These attributes have nothing to do with age. Some people at twenty-five have a broader perspective and are more powerful leaders than far older peers.
Great board members have an almost paradoxical ability to be collegial and constructive on the one hand and challenging on the other. Brendan Swords, CEO of Wellington Management, says, “You want humility and courage. The best board members have good listening skills. They’ve got thick skin. They’re willing to speak without fear and ask hard questions. They’re fully prepared. They’re highly engaged. They’re open-minded.” By contrast, the worst board members have poor listening skills. He says, “They’re like bulls in a china shop, and are always pushing their own thesis, their own agenda, to the exclusion of all others.”
You can tell good board members from bad ones by the questions they ask. In any boardroom, it’s easy to distinguish the directors who really try to get inside the company, traveling to different regions and spending time with local staff, from those who just show up at the meetings. For that reason, seek board members who are ready to work hard. Having board members with the time and energy to invest will help eliminate management’s information advantage. To that end, be sure that you know what motivated the director to join the board. Otherwise, you may find that their contribution doesn’t live up to their résumé.
Look for board members who have the courage of their convictions. Mary Erdoes of J. P. Morgan Asset & Wealth Management says, “If you ask what a good board member is, it’s someone who refuses to be handled and knows when they’re being handled because it’s very easy for a company to do.”
So, beware of management attempts to stock the board with pawns. In his letter to shareholders in the 2019 Berkshire Hathaway annual report, Buffett writes that the CEO of a company searching for board members will almost certainly check with a candidate’s current CEO about whether this person is a “good” director—“good” being a code word meant to avoid pollution by anyone who has challenged the present CEO’s compensation or acquisition schemes. As Buffett puts it, “When seeking directors, CEOs don’t look for pit bulls. It’s the cocker spaniel that gets taken home.”
A genuinely good board member can combine the best traits of a CEO and an investor. That’s why we like to see two people with CEO experience on every board. Only a CEO knows what the CEO’s job is—an essential insight when selecting a new leader for the company. Often a CEO search led by a non-CEO feels like it’s in the hands of amateurs. You also want CEOs in the boardroom when things go south. They are most likely to make the tough calls and least likely to run for the exits.
But don’t assume that someone will be a good director just because they have a good record as a CEO at another company. Some former CEOs hated what they deemed to be meddlesome behavior by their own boards and may make corresponding accommodations to the CEO somewhere else. Ed Garden of Trian Partners says, “It’s amazing how respected CEOs who have impressive résumés and who generated impressive shareholder returns add no value in the boardroom of their new company. It depends on their willingness to learn about the business, to challenge the CEO and the social dynamic in the boardroom, and to be provocative and facilitate debate.” For that reason, he would be leery of appointing a sitting CEO to the board: “They are simply too busy running their own company. I feel that they’re on that board to build gravitas.”
In any case, avoid putting the outgoing CEO of your own company on the board. The presence of the former boss can crimp the style of the new incumbent and complicate matters for the board in its dealings with management. A crucial element in discussions with management is a confrontation with reality. Elena Botelho at ghSMART says, “How many boards do you know where there’s really honest dialogue? Where people say, ‘All right, this acquisition didn’t go well. So now let’s make the most out of it. How do we learn from it?’”
The uncomfortable questions frequently come from smart, competent people who aren’t former CEOs—the scientist or the technologist who is willing to probe and who doesn’t assume that everything is going to be OK. The presence of the old CEO can inhibit such discussions, with the other directors reluctant to criticize decisions made by their peer.
Source: Corporate Board Member
4. Directors Return to the Boardroom
The COVID-19 pandemic forced most corporate boards to pause in-person meetings. But with cases falling throughout the US and vaccines now widely available, directors say their boards are meeting face-to-face again. In mid-June, we polled board members, executives, and governance professionals about their plans. It’s clear that the return to the boardroom is well underway—and will accelerate as 2021 continues.
In fact, virtually all respondents (93%) say they’ve already resumed face-to-face meetings, or intend to do so by year-end. Even so, some virtual meeting practices will continue. More than half (54%) of those surveyed told us their boards or committees will continue to meet virtually some of the time. And 34% said directors will have greater flexibility to choose their preferred method of participation, a sign that many boards are open to hybrid models mixing in-person and virtual.
Key findings
Face-to-face by fall.
Boards aren’t wasting time when it comes to resuming in-person meetings. A significant share of respondents (43%) say they’re already meeting face to face again (and an additional 3% never stopped). But most of those who aren’t, plan to resume in-person meetings by the end of September.
Video meetings are here to stay.
More than half of respondents say they plan to keep at least some board/committee meetings virtual (54%). And over a third (34%) plan to give directors the flexibility to choose their method of participation.
Boards get back to socializing.
Just 8% of respondents said their boards plan to curtail the social element of board meetings, such as dinners or outings.
For most, board meetings are looking different.
Only about 10% said their boards have not adopted any changes going forward.
Source: PWC
