Ambassadors of merit (reloaded)

In July 2012 Valore D, the Italian association of businesses to support the talent of women, launched “In the Boardroom”, a programme to select and train the best Non-Executive Directors.

In the Boardroom was designed by Valore D, with the support of GE Capital, at the initiative of Linklaters and Egon Zehnder, our Firm. Together with Linklaters, we selected and provided all key faculty members.

In The Boardroom was meant to select and promote “Ambassadors of Merit“, ready to change Italy’s corporate governance for the better, as a result of the huge opportunity represented by a super modern law (that came into effect in 2012) fostering gender diversity in the boardroom (read here for the beneficial effects of this law).

 

Italy is today a positive example of an improving corporate governance in Europe and beyond. Women as a crucial factor of positive change have given such a strong contribution to this that we are well beyond the turning point.

On 20 and 21 November 2015, we celebrated the conclusion of In the Boardroom, which was launched in July 2012. Ever since, it has helped well over 500 talented women prepare for the role of Non Executive Director.

Of those, a significant number are now Non-Executive Directors.

I feel humbled by the exceptional contribution of so many talented women. They have set the example for everyone in terms of dedication, willingness to prepare for roles where now merit and competencies have replaced “word of mouth” as a key to rigorous selection. Women mean merit, competence and better corporate governance. In summary, more women in leadership means huge change for the better.

The next step is now to continue to work to foster the benefits of gender diversity, and diversity at large, also when it comes to executive positions. “In The Boardroom” has been an exceptional factor and its effects will be felt for many years to come.

Tommaso Arenare

www.twitter.com/tommaso_arenare

Identify, Involve, Inspire: How Successful Leaders Build an Effective Relationship with Stakeholders

In my profession, I have been privileged to see many great business leaders succeed in their role.

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Many traits mark a great business leader. This one I want to explore now:

How can successful leaders establish a fruitful relationship with all key stakeholders, which will in turn determine their own success in a new role?

We have already written that, in many ways, the week before a new job starts is crucial for its long-term success. Preparing our own analysis of the role and the company’s situation and mapping the stakeholders is the basis of a pre-work that anyone appointed in a position of leadership will need to do before the new job even starts.

Doing this effectively and with purpose requires, in essence, the ability to build effective relationships with the relevant stakeholders through identifying, involving and inspiring them. Let’s see how.

1. Identify

Let us ask ourselves first of all this question:

Who are the people that have a clear say in determining whether I am successful in the new role?

Part of them will be shareholders, part of them will be team members, part of them will be peers in and outside the company. In most cases, a significant group of those will include external stakeholders like influential journalists or industry experts.

When it comes to identifying stakeholders, a typical mistake would be to focus exclusively on colleagues or people that may have a sort of guidance or leadership role towards us. So, for example, a Chief Executive would only focus on the Chair of the board or on other fellow board members, as well as stakeholders, but without paying attention to their own team members. Instead, including our own direct reports is crucial. So many CEOs have lost their job as a result of not identifying crucial stakeholders amongst their own reports.

We want to map them carefully, thoroughly and prioritise them so that we get to a list of no less than ten and no more than about twenty of them. I often recommend a very simple spreadsheet, listing all of them by name, role, with one line of comments and “next actions” just next to their name. Most importantly, I recommend one column with a priority number next to each of them. This is a very simple tool which will help us keep our list fresh, change it, re-prioritise it, always making sure that we can add new stakeholders, remove some old ones and manage their expectations effectively and timely.

2. Involve

Once we have identified and prioritised them, we want to involve them, by doing the following:

  • Listen to them carefully. We want to learn from them and to make them feel involved in our own success. This implies, before we start in the new role, that we take the time for a personal interaction with each of them. We need to sit with them and ask such questions as:

If you were to consider me very successful in my role, what would you expect to happen within the next 12 months?

  • Inform & involve them regularly: as all of us, stakeholders want to feel involved and do not like surprises, ever less so if negative. Keeping them involved will require regular “check-ins” with each of them separately. This can happen by a conversation in person as well as by phone or other form. Yet, it will all depend on what type of relationship we’ve been able to build with each of them. Hence, the more we invest in building trust and relationships upfront, the better and the easier it will become to keep our stakeholders involved. Also, the type and form of involvement will depend on the level of priority that we will have been able to attribute to each of them.

3. Inspire

Great leaders become such also as they are able to inspire their own stakeholders. A very prerequisite for accepting a new leadership role is that the overall group of stakeholders who’ve engaged us needs to consist of people we like and we can inspire. Otherwise, we would have rather not taken the job in the first place.

Hence, building a relationship of trust and substance with them will need to be something we aspire to do as well as something we like to do. Inspiring our own key stakeholders will take our greatest ability to build bridges of trust with them, as well as nurturing our relationship with a regular dialogue of substance.

We will inform them, but we will also seek their advice when appropriate. In some cases, it will  be crucial to be able to show our own vulnerability, which can result into a sign of greater strength. As we dialogue with them, we will realise that we will also strongly contribute to influencing and defining the very same criteria they will use to define our own success. This will lay a much more solid foundation for our long term future in the role.

It is difficult to overemphasise how many great people have failed as Chief Executives (and even more so in different roles) for lack of thorough identification, involvement and inspiration of key stakeholders.

As we do the above, we lay the foundation for a much easier and more secure path to our own success as executives and leaders.

Tommaso Arenare

www.twitter.com/tommaso_arenare

This post was also published on LinkedIn.

The “Who” element, the “Female Opportunity” and a matter of pride

Claudio Fernández-Aráoz published “Great People Decisions” in 2007. The book has achieved global fame with fifteen international editions, emphasizing how important people decisions are for the success of one’s personal life as well as for the broader impact of leadership in the world we live in.

Claudio Fernandez-Araoz

I have been a proud Egon Zehnder colleague of Claudio since 2004. I am now ever more proud as I hold in my hands “It’s Not the How or the What but the Who“, Claudio’s most recent book that was released at the beginning of June 2014 during the celebrations for Egon Zehnder’s 50th anniversary.

It's not the How or the What but the Who

More will follow on the extraordinary leadership insights that Claudio’s forty-four short essays can provide the reader. If only for a short minute, in this post I want to focus on Essay 34, where Claudio describes what he calls “the Female Opportunity”:

Over the past few years, as I’ve traveled the world to speak with senior private and public leaders about talent issues,… I am often asked where I see the most opportunity. My answer is never a country, it’s a gender: women.

Claudio Fernández-Aráoz, “It’s not the How or the What but the Who”, Harvard Business Review Press, p. 160

 

A couple of pages later, Claudio, whom we at Egon Zehnder had the privilege of seeing in action speaking at our Milan office to an audience of 80 women leaders in 2012, ends this chapter on the Female Opportunity quoting one best practice: Italy.

Italy as best practice for the "Female Opportunity"

Italy as best practice for the “Female Opportunity”

And he does so with specific mention to the recent history of Italy’s most effective legislation in favor of diverse boards, arguing in the very same direction (indeed quoting this very Open Thinking) as we have for a long time.

Women mean talent, positive change, better corporate governance and endless possibilities.

 

Tommaso Arenare

www.twitter.com/tommaso_arenare

A couple of things we learn from a law on #diverseboards

I was recently asked what lessons we learn from the implementation of Italy’s law 120/2011 fostering gender Diversity on corporate Boards (so-called “Golfo Mosca” law).

In summary, this law provided an unexpected positive nudge to the country’s very perception on gender diversity, as well as to its corporate governance.

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Let me comment on both aspects.

Improving the stance on Gender Diversity through reducing unconscious biases

Humanity is thought to have taken its modern form some 200,000 years ago. Back then, when we used to live in the Savannah, in small closely-knit family groups, most of our key decisions were about our “fight or flight” dilemma, when we would face dangerous animals or other dangerous human beings and we had to decide, in as little time as possible, if the best way to save our lives was to “fight” for survival or else “flight away”.

A “snap judgment“, as the word implies, is our unconscious habit to make a decision about people, or reacting to people, in a matter of very few seconds after we meet with that someone or we face the situation we consider as a challenge. A snap judgment is a very precious and important habit, which we have developed over millennia of evolution.

Separately, “similarity bias” happens when we select people that are more similar to us, as opposed to people who appear more different. Evolution has fostered this trait, as a key manner to survive ever since the difficult times when we would live in the Savannah, trying to escape from animals and all sorts of dangers.

The combination of snap judgments and similarity biases is the one reason why gender diversity (but also age diversity, geographic diversity and possibly many other aspects of diversity) is so difficult to happen without a little nudge (such as that of a proper law). The “Golfo-Mosca” law forced shareholders to select new members of the board from the “under-represented gender”, overcoming unconscious fears, to the advantage of merit, competencies and corporate governance.

Without the proper nudge of a similar law, countries that are rightly considered as a cradle for merit and competency-based choices, such as the UK or the US, have not been able to move the presence of women boards swiftly to anywhere above the 15 to 17% mark (end of 2013) as opposed to about 20% in Italy over the same period.

Improving Corporate Governance

Another great result of Italy’s “Golfo-Mosca” law was that overall corporate governance improved. Some leading Italian companies have rightly taken the law as a great opportunity to reduce the number of board members, so as to make better use of their boards. FIAT Chrysler for example, reduced the number of its board members from 16 to 9 in 2012, thereby making it more effective as well as smaller.

We have also seen the development of several training programs for candidates to the position of non-executive director (with Valore D’s “In the Boardroom” being particularly dear to me, as you will read in a separate section).
This actually sets a new benchmark not only for women but for men as well. If shareholders have to select new board members, all things remaining equal, they would inevitably prefer to select candidates that have gone through specific training.

The real next step is to bring gender diversity down from boards to executive levels. We need to foster mentoring as a way to ensure that when it comes to promoting talent, women are in a similar position as men. Similarity bias, as we have described above, impacts very much on the promotion of executives. We want to intervene to reduce the impact of similarity bias in favour of promotions based on talent and merit.

Tommaso Arenare

www.twitter.com/tommaso_arenare

FT Innovative Lawyers 2013: Claudia Parzani

The FT Innovative Lawyers is a great award. I am so honoured that our “In the Boardroom” program was part of the reason for Claudia Parzani’s being acknowledged by the FT. In addition, I love to think that how women are changing Italy is only a beginning of how they will keep transforming the world for the better.

Live from Planet Paola

Claudia ParzaniOne of the ten winners in this year’s FT Innovative Lawyers survey, among over 600 participants, is Claudia Parzani of Linklaters, chair of corporate association Valore D and co-creator of In the Boardroom, an initiative she developed with GE Capital and Egon Zehnder to provide training and skills to prepare women for boardroom positions. Claudia also created the Breakfast@Linklaters network, featured in this year’s Client Service category.

Kudos to Claudia! I am proud to be participating in her boardroom program and honored to be in her circle.

Update & Correction (Oct. 17, 2013): post corrected to clarify that In The Boardroom was developed through collaboration among Linklaters, GE Capital and Egon Zehnder. The supporting member companies of Valore D can be found on this page.

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Three dimensions for more effective leadership of #diverseboards: rethinking the role of the Chair

Even if with a margin for improvement, yet Boards are diversifying rapidly – in terms of gender, nationality, culture and outloook. The Egon Zehnder 2012 European Board Diversity Analysis signalled that the number of women Non Executive Directors had increased four times across Europe over the prior eight years. There are large countries (Italy is an example) where the number is growing even further. We believe this trend will also affect the US and gradually other countries globally.

In addition, we have observed that a significant increase in gender diversity typically translate into further diversity: diversity of backgrounds, diversity of geographies (with an increase in international board members), diversity of age (generally, younger board members sitting at the table will also increase the variety of perspectives).

As Boards become more diverse, differences create a huge opportunity for those very Chairs to leverage on them, learning additional competencies to draw in diverse Board members, build on their insights and ensure livelier debate and board leaderhip. In addition, new Non Executive Directors, joining Boards with ever broader diversity, carefully scrutinise how Chairs leverage their additional, diverse capabilities and competencies.

This change is rapidly making an impact on all key competencies of a good  Chair, even more so than on all other Board members.  Running the risk of oversimplifying, a Chair will need to adapt along the following dimensions:

  • Inclusive leadership & team effectiveness: in the new, more diverse environment, in addition to key interpersonal skills (such as collaboration & influencing skills, but also their Board Leadership, as well as their Coaching & Developing skills), a Chair will need to work towards greater inclusive leadership and team effectiveness. Leaders with a diverse team will face viewpoints that have not been expressed before. New generation Chairs will need to facilitate an inclusive environment in order to appreciate and combine the knowledge and experience of individuals with different backgrounds and viewpoints;
  • Listening & trust building in a more diverse environment: this is an additional and crucial component of a Chair’s ability to succeed when leading a diverse Board. Listening means the ability to suspend one’s agenda and judgement, making room for other people’s thoughts, ever more so in a more diverse environment. In the life of a diverse Board, listening implies being able to remain silent for long, in order to gather sufficient elements for making up one’s own opinion. Also, listening means being capable of asking proper, effective, most of the time open-ended questions, both during the Board sessions and, even more importantly, between them. A diverse set of perspectives requires the Chair to be more skilled at facilitating discussions and soliciting input from members of the team that come from less assertive cultures or personalities. Chairpersons will find that they will have to seek the opinion of more introverted colleagues and they will need to facilitate and navigate the more complex discussions into a conclusion that all members respect, if not agree with. In some instances, this will imply the seeking out of a point of view, its recognition, and then the ability to keep engaged even those colleagues whose point of view might not have prevailed. Discussions among diverse groups will require higher energy to lead them successfully, avoiding excessive confrontation;
  • Dealing with unconscious biases: the Chair will need to influence the Board’s decision making process with the ability to establish effective communication channels with all board members, no exception. In order to do this,  broader diversity of the Board will also require that the Chairs learn how to identify and deal with two crucial unconscious biases which can hamper effective, independent decision making at Board level. They will to tweak some consequences of two unconscious biases through a little nudge. Similarity bias happens when we select people that are more similar to us, as opposed to people who appear more different. Evolution has fostered this trait, as a key manner to survive ever since the difficult times when we would live in the savannah, trying to escape from animals and all sorts of dangers. A “similarity bias” results when individuals are more likely to imitate cultural models that are perceived as being similar to the individual, based on specific traits (such, for instance, age, gender, geographical location and so on…). Similarity bias is even enhanced by our other bias, which we call snap judgement, whereby we unconsciously make up our mind on someone during the first milliseconds after we meet. The combination of snap judgements and similarity biases is the one reason why gender diversity (but also age diversity, geographic diversity and possibly many other aspects of diversity) is so difficult to happen without a little nudge. Effective Chairs will learn to nudge themselves towards overcoming both unconscious biases.

All the above requires growing levels of self-awareness from Board members and Chairpersons. The journey towards the benefits of greater diversity and inclusion at Board level has started. I am convinced that it will continue to be a satisfying and rewarding experience.

Tommaso Arenare

Three things to look for in a successful Non Executive Director

All of us working for a better corporate governance have often been asked such questions as these:

How can we tell who is right for which board?

What are the key competencies that make a newly appointed Non Executive Director succeed?

Of the many talented people we can come across, who will make exceptional Non Executive Directors?

In most cases, the answers will depend on a number of circumstances in the kingdom of Obliquity and Black Swans, i.e. totally unpredictable events. Yet, identifying a candidate for a board search and assessing them against a specific situation can make the likelihood of success significantly higher.

What are the three things we look for in a Non Executive Director candidate?

With the risk of over-simplifying it, I would like to elaborate a bit on the following:

  1. Credibility: no candidate can have positive impact on a Board unless they rapidly build credibility with all relevant stakeholders. Credibility is built through a combination of the candidate’s collaboration and influencing skills, on the one hand, with their “harder”, non-people-related competencies, such as their technical background, their ability to contribute additional market knowledge to the Board and to the strategic orientation of the board itself on the other. Even if a candidate has already exceptional reputation to bring to that Board, they will need to build credibility with all relevant stakeholders, starting with fellow board members. to appreciate and combine the knowledge and experience of individuals with different backgrounds and viewpoints.
  2. Listening & trust building skills: this is an additional and crucial component of a candidate’s ability to succeed on a Board. Listening means, amongst other traits, the ability to suspend one’s agenda and judgement, making room for other people’s thoughts. In the life of a Board, listening means being able to remain silent for long, in order to gather sufficient elements for making up one’s own opinion. Also, listening means being capable of asking proper, effective, most of the time open-ended questions, both during the Board sessions and, even more importantly, between them. Listening implies the ability to wait and select proper timing to act, avoiding the risk of early reactions which may jeopardise long-time effectiveness.
  3. Independence & Integrity: once credibility has been built, through a process which can last from a few seconds in the initial meeting to a longer period of several Board sessions, the Board member will need to be able to use their judgement and speak up, possibly standing against the Board’s prevailing opinion in an effective manner. This is what we call integrity and independence. Being independent requires the ability to influence the Board’s decision making process both ethically and effectively. It requires, amongst other things, the ability to establish effective communication channels with fellow board members and, most importantly, with the Board’s Chairperson.

Credibility, listening & trust-building, independence & integrity are three of many aspects we see when we meet exceptional Non Executive Board Members. They may not be sufficient, yet they represent a strong signal of an emotional intelligent person, most likely to succeed even in a very demanding Board.