Mike Bennetts has been a CEO for 15 years. He’s been a director of private companies for 20 years and public companies for over 10. Mike has seen governance from both management and board perspectives. Henri Eliot asks him about corporate governance for the next generation of directors.
Henri Eliot: How effective governance has helped Z or any other organisations from your experience?
Mike Bennetts: Personally from my experience, I define governance as being strategy (the game we play and how we win) and risk management. Therefore, effective governance is just doing that and not doing the job of management. It’s equally important that boards have diversity of skills and experience. This is what we refer to as “outside in thinking to partner with management”. I have worked with both ex CEO’s and longtime professional directors – neither is better, and is more about the individual rather than the model.
What makes a great director or Chair from your experience?
Directors or Chairs need to focus on what matters and not the small stuff, especially don’t overplay your expertise – as a hammer everything looks like a nail. They should see the big picture – long term versus short term, balanced scorecard versus financial results, customers versus shareholders.
Personal attributes include self-awareness and self-confidence coupled with an ability to deal with external pressures (customers, shareholders) and not just push your agenda (as a customer or other personal interests, e.g. other directorships).
It’s equally important to recognise your impact on others in the absence of deep relatedness. Directors need to have the capacity and desire to learn and share their learnings – not just impose their way on the company. It needs to be fit for purpose.
Directors need the ability to work with a diverse group of people with differing skills and experience. They use influence rather than expertise or authority, respect alternative views and build on those.
Teamwork is much more important in governance than in management, which includes working with management outside of the Board meeting, e.g. management forums. It’s also getting all thoughts and background conversations on the table and an ability to appreciate what it is like to be Management.
Finally, the Chair role is the most challenging. As “first among equals”, the Chair facilitates discussion (e.g. referee and coach rather than player, or even player-coach) and getting all to provide input, from introverts and extroverts, who sit around the table. We also need to be clear on the relationship with the CEO. An effective chair/CEO dynamic is essential.
Why we need the next generation to be interested in corporate governance earlier in their career versus near the end?
For several reasons: it helps you be a better manager, i.e. walk in the shoes of your own board; youngsters are good enough to run billion-dollar companies, so why not governance where the risk of failure is less; opportunity for learning and exposure to skills and experience you would not normally come into contact with; can help create a pool of professional directors earlier in their career so we get diversity of youth into the boardroom.