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The Board of Directors is usually recognized as the most
important governing body of a corporation. Its role is based
on organizing past and present events and taking actions,
evaluating competitive situations and risks, preserving and
pursuing greater value to the organization.
However, in the past years, directors have be
en accumulating a lot of legal
responsibilities and the compliance agenda has been
a constant, having taken extraordinary amount of time
from the directors. The fear of new regulations, corporate
scandals and corruption cases are some of the issues
causing this problem.
Moreover, in evaluating the composition of the Board of
Directors, the profile of most of itsmembers is an executive
in the final phase of his or her career, or already retired,
and for many, participation in 4 or 5 councils is their “new
career”.
In a context of risk assessment, there is no doubt that
this kind of experienced executive fits best to compose
a Board and fulfill this function. Accustomed to past risk
situations, these executives can better manage situations
to be avoided.
However, by focusing on risk, the role of thinking about
the future ends up being delegated to the managers
directors. Thus, in many cases the CEO ceases to operate
the demands and directives coming from the board, and
plans to the future, without seeing what the board wants
and without focusing its energy on the effective delivery
of what the board demands. In this scenario, the function
of the CFO is also hampered by lack of vision and by this
situation, where discipline to conduct business is relatively
distanced from the strategic planning, which again should
be led by the Board, since one of its key roles is to create
longevity for the business.
The result of this logic? Many board members and CEOs
have been dismissed. Especially those who look more like
statesmen than businessmen. Among them was Jeffrey
Immelt of General Electric. In June 2017, he unexpectedly
announced plans to retire after 16 years in office. Ford CEO
Mark Fields has been in office for less than three years
when he was fired last May. In common, both faced a
fluctuating share price and pressure fromactivist investors.
THE
STRATEGIC BOARD OF DIRECTORS
- A NEW
LANDSCAPE FOR GLOBAL ORGANIZATIONS
By LUIZ ROBERTO CALADO, Vice-President, Brazilian Institute of Financial Executives (IBEF-SP), and by JOSÉ ROGÉRIO
LUIZ, CEO, ITU Partners e Board Member, Sao Paulo, Brazil, article provided by IBEF, Instituto Brazileiro de Executivos de
Finanzas, the Brazilian IAFEI Member Institute
BRAZIL
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