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BOARD MEMBER SELECTION- A TASK OF PERFECTION

BOARD MEMBER SELECTION- A TASK OF PERFECTION

By Admin
Calendar

Aug 27 th 2020

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Lenovo shows us the way

Lenovo is a classic example of perfect boardroom leadership. By 2004, Lenovo was China’s fastest growing computer manufacturer with an annual revenue of $3 billion. It was third only to HP & Dell. However, in order to sustain itself, it had to create a global footprint. Luckily for them, it was around that time IBM approached Lenovo about a possibility of acquiring IBM’s personal computer division. IBM earned revenue more than 4 times for Lenovo but it also spent 6 times the cost to assemble its computers as compared to Lenovo. IBM’s high allocation of overhead cost to its PC division was slowly eroding its bottom line.

After much deliberation, the management accepted this challenge. It acquired IBM’s PC division for $1.75 billion. The real challenge had just begun. Liu Chuanzhi, the then executive chairman of Lenovo aggressively revamped the Board of the Company. A few of the changes he made that ultimately made this acquisition a success are:

 

Pre-acquisition

Post-acquisition

4 independent directors 3 executive directors

5 executive & non-independent directors 3 private equity directors 3 independent directors

All Chinese directors

4 of 11 directors were American

All board meetings in Chinese

Board meetings in English

Executive Chairman & CEO: Chinese

Executive chairman: Chinese CEO: American

Entire top management: Chinese

Chinese: 6 members American: 11 members

 

The acquired company truly became an international company. But the credit for its success goes to the tough decisions that the management took at the time of acquisition. Post-acquisition, the Board expanded its role from being concerned with company audit & executive pay. The Independent directors too took an active interest in the strategies developed by the company and did not restrict themselves only to protect the interests of minority stakeholders as they did pre-acquisition.

 Impact of an acquisition on Board:             

·        improved board capacity

·        enabled the right governance to the management team

·        created a board that was pro-active

 This example shows us the importance of having a perfectly balanced board. Lets’ now see the evolution of the roles of directors.


 English Oxford dictionary defines a Director as “a member of the board of people that manages or oversees the affairs of a business”.


 The traditional role of directors:    

·        to manage & overlook the execution of business plans & strategies

·        governance matters

·        to direct the affairs of the company

·        play second fiddle to the limited interests of the family members

Usually, all the major decisions are taken by the executives who we now designated as the Chief Executive Officer Chief Operating Officers. However, with the expansion of business, the growth of international markets, stakeholders like customers, investors, shareholders & governments are pressing Directors to be more accountable for their actions. They are seeking a more focused attention on building a more engaged leadership in the boardroom and not just the executive suite. The aim is clear: Governing boards should take a more active leadership of the enterprise, not just mentor it.

 Accordingly, selection of right candidate as a Board Member is the need of the day as such Directors are not only the lighthouse for the Company’s growth but also the drivers of such growth.


 As an attempt to consolidate our opinion, we have created a checklist which encompasses the qualities a director should possess & the basis on which he should be selected:          

·        Does a prospective director have the capacity to think strategically about the firm’s competitive position and thus contribute to the on-going evolution of its long-term goals?     

·        Is the board candidate familiar with and experienced in the specific strategic and execution issues derived from the central idea of business?      

·        Does the would-be director have a proven record of working collaboratively with executives at other companies in developing and implementing business practices stemming from the company’s central goals?  

·        Will the prospective candidate add intellectual and experiential diversity to the board, plugging weak spots and adding bench strength for guiding the strategy, goals, and execution?   

·        Will he be ready to tell when vital issues are on the line, the stakes and stress are a high and direct leadership of the company becomes essential?              

·        Does he generally add real value not only to the boardroom but also to the executive suite?

Hiring a right Board leader will make the Boards more competent through the process of right selection, setting right expectations from such Directors and timely evaluation of their performance to keep the Boards highly performing which drives the growth of the Organization. Further, the need to invest in its Boardroom by continuously upgrading their skills and caliber to embrace the challenges and outperform is the sign of the High Performing Boards. 

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Category

  • All
  • Boardrooms
  • BOARDROOMS
  • Independent Directors
  • Role of Board
  • Mindset Shifts of Boards
  • Independent Directors and Promoters
  • Sustainability / ESG
  • business implication
  • employee exits
  • COMMITTEE MEETINGS
  • Union Budget
  • Independent Director
  • Grow with Governance
  • Grow with Governance
  • INDEPENDENT DIRECTOR
  • Entrepreneurial Board
  • ESG & ITS IMPORTANCE
  • leadership coaching
  • Change Management
  • Advisory Boards
  • Boards
  • Boardroom
  • Brand Yourself as a Leader of the Company
  • Kindness
  • Are you hesitant to speak in the Boardroom!
  • Governance & ESG
  • Directors
  • Independent Directors
  • Corporate Governance
  • Leader development
  • Gratitude, Purpose
  • decision making
  • Systematic Investment Plans in Emotional Intelligence
  • Corporate Governance
  • The Board’s Role in ESG!
  • Balance Boards
  • Agility and Compassion
  • Governance and Board
  • Diversity and Inclusion
  • Directors,Promoter Directors
  • Board Members, Directors and Independent Directors
  • Board and Senior Management
  • New Directors
  • Cyber Insurance
  • Salary Increment
  • Economy Growth
  • Human Resources
  • Generating Wealth Beyond Money
  • Agile Mindset for Leadership
  • Aspiring Independent Directors
  • Board Leadership
  • Corporate Governance & Women on Boards
  • BOARD MEMBER
  • SME
  • WOMEN DIRECTOR
  • BOARD MEMBERS

Archive

  • 2021
    • April (3)
      • Will you drive your vehicle without a dashboard?
      • Are you making SIPs to improve your Emotional Intelligence
      • Corporate Governance needs a Moral Compass – Ethics in Indian Boardrooms!
    • August (9)
      • Grow with Governance: ESG is the umbrella for CSR, says Vedanta's Roma Balwani
      • Grow with Governance: PadUp Ventures' Rajat Jain Demystifies Correlation of Governance and Economic Growth
      • Grow with Governance: Family governance impacts the culture of a family-run business, says Equations Advisors' Mita Dixit
      • Entrepreneurial Board
      • NEW REGULATORY PROVISIONS RELATED TO INDEPENDENT DIRECTORS
      • ESG & ITS IMPORTANCE FROM THE POINT OF VIEW OF BOARD MEETING
      • Start early, don't wait till retirement to become an Independent Director, says Increate Value Advisors' Milind Sarwate
      • The winding road of leadership coaching in the post-pandemic era
      • Challenges of Organizational Culture Change
    • February (4)
      • Re-examination of Purpose by the Boards in Post -Pandemic Era
      • What Makes Great Boards Great! Performance Evaluation by Boards and Role of Independent Directors
      • Promoter Director – Time to become Custodian of Governance!
      • Diversity and Inclusion – The Board Perspective!
    • January (2)
      • New Directors - Have you done your due diligence
      • Cyber Security Insurance and Boards
    • July (7)
      • Why Advisory Boards Are Important for Indian Business Corporates?
      • Grow with Governance: ESG essential to repair the damage economic activities caused to the earth, says CA Shailesh Haribhakti
      • Top 10 areas to contribute in Boards as Independent Directors
      • Top 10 Questions to Ask in Boardrooms!
      • Essential HOWs of Boardroom!
      • Kindness is key
      • How to Brand Yourself as a Leader of the Company?
    • June (6)
      • Leading from the Boardroom
      • Are you hesitant to speak in the Boardroom!
      • The Neem Project a Leadership case study
      • Directors Liability in India
      • Why do promoters need Independent Directors?
      • Corporate Governance Deviation – Infosys Case Study
    • March (4)
      • Board Refreshment: Finding the Right Balance for your Board!
      • HR Governance and Board – How Important Is It?
      • Agility and Compassion: Two Pillars for Boards in the Post Pandemic Era!
      • Modernizing Governance: The Board’s Role in ESG!
    • May (3)
      • Restructuring appraisals in 2021 – Gratitude, Purpose & Meritocracy
      • How do you make your personal Brand?
      • Leadership Coaching: How does it help Leaders
    • October (2)
      • Are Independent Director’s required on the Board?
      • 'Ethics & Governance' lesson should start from school, says Federal Bank's Independent Director, Sankarshan Basu
    • September (3)
      • Grow with Governance: As an Independent Director ensure your voice is heard, says Apurva Purohit
      • Grow with Governance: Push for ESG agenda; pool CSR funds to maximise impact, says Ranganath NK, former MD of Grundfos Pumps
      • Grow with Governance: Boards should prepare companies for different risks, says National Insurance Academy's G Srinivasan
  • 2020
    • August (4)
      • WOMEN DIRECTOR-An Emerge
      • ARE YOUR BOARD MEMBERS SAVVY WITH FINANCIAL TERMS AND EXCEL IN FINANCIAL LITERACY QUOTIENT AS PER COMPANIES ACT 2013 MANDATES.
      • BOARD MEMBER SELECTION- A TASK OF PERFECTION
      • SME IPO – AN OPPORTUNITY TO CAPITALIZE YOUR BUSINESS
    • December (3)
      • Good or bad, Salary Increments always cause a heartburn among employees
      • Is Economic Progress Enough?
      • Emotional Intelligence
    • November (3)
      • Generating Wealth Beyond Money
      • "Agile Mindset for Leadership"
      • Tips for Aspiring Independent Directors
    • September (3)
      • Independent Director
      • Lean Thinking Boards
      • Corporate Governance & Women on Boards
  • 2022
    • August (1)
      • Liability of Independent Directors – An Important Aspect of Corporate Governance
    • February (4)
      • A Hero's Farewell: How to handle employee exits with dignity
      • Green Bonds: An Instrument for Financing a Sustainable Future
      • Tool for effectiveness of Board Committees - Ask Right Questions
      • Russia-Ukraine war and India’s Business Implication
    • July (2)
      • Stagnation or Evolution – Mindset Shifts of Boards when Company sees Stagnated Growth
      • Risk Assessment and Minimization Procedures – Role of Board
    • March (2)
      • A study on Sustainability Report of Container Shipping Companies.
      • India and The ESG impact of Crypto Currencies
    • May (1)
      • Independent Directors liability under GST
    • November (1)
      • Workplace Sexual Harassment and the Role of Board
    • October (2)
      • How many Boards are too many?
      • Women in Indian Boardrooms Vs Diversity = Inversely Proportionate
    • September (2)
      • Organizing for the Future – Important keys to becoming future ready
      • Are you ready to serve on the Board?