How Can Boards Leverage a Governance Consultant?
While it’s important for boards to manage issues and challenges that their organisation is currently facing, merely reacting to problems as they arise isn’t enough for a company to flourish. Taking a reactionary approach doesn’t promote strategic, long-term thinking. Boards need to be forward-looking and plan ahead for the next ten or so years to ensure that they will be ready to face challenges at that point, not just the ones emerging today and in the near future.
Today’s boards are required to be adaptable, innovative and flexible to be able to foresee risks and uncertainties and embrace them as part of the governing process.
For an SMB or a nonprofit organisation, risks are inevitable and prevailing. With that, boards need to have a suitable risk management procedure to see and understand the complexity of multi-faceted risks. However, it’s important to note that not all boards have the ability to address these challenges on their own, and that’s alright. It is in these situations, boards can and should consider working with a governance consultant.
What are governance consultants? They are different from mentors or advisors. Governance consultants are experts who analyse the board’s needs and help formulate strategies to improve the board’s, and ultimately the organisation’s performance. Governance consultants generally can offer assistance in one or as many areas as boards need.
Below are just some ways of how a board can leverage governance consultants.
To create a more effective board
With many reports of fraud and indecent business practices among board directors and executive members, company shareholders are emphasising and pressuring for better performance, oversight and governance. To help, governance consultants can offer an independent, unbiased viewpoint and an objective analysis of the board’s performance, something that can be hard for the board to assess accurately themselves. As the saying goes, “You can’t read the label on the jam jar when you are inside it.”
For example, governance consultants can offer advice on whether the board should hire new board members and managers or develop existing talent. They can help create programs and strategies to assess the executives and the board, monitor progress and establish compensation plans because they are skilled in developing effective risk management processes and allocating resources to help organisations move forward. Additionally, they can work with board members to pinpoint specific issues with board dynamics and culture and come up with solutions to improve them.
To develop a more seamless board director recruitment and succession planning process
Board director recruitment and succession planning can be a daunting task for boards because there is pressure to maintain steady and diverse talent. These processes need to ensure that the board is selecting and developing people who are able to address many issues that the board will face, from cybersecurity and shareholder activism, to diversity and risk.
Because recruitment and succession planning is such an important process, governance consultants can offer valuable advice on how to put together an effective board director hiring strategy. With access to a plethora of resources, governance consultants can help boards find suitable candidates with the appropriate skill sets.
Diversity is a contributing factor for the success of a board. Governance consultants can help by scouting for people with diverse backgrounds, experiences and perspectives that are crucial for an effective board. By making diversity a focal point, boards can also demonstrate to shareholders and stakeholders that the board takes its duties and roles seriously and that they are doing their best to run effectively.
Governance consultants can help boards track inconspicuous candidates as they usually have connections with lower-profile but well-qualified individuals who are able to deal with complex and modern challenges. Boards that are trying to find replacements for board directors or are having trouble with devising a succession plan can gain valuable insight from governance consultants in this area.
To oversee executive progress
Boards have the responsibility to oversee the CEO and other senior executives. They need to ensure that the team of executives is capable of helping the organisation move forward and grow. This is a hugely important task, and therefore must be performed well. Boards can benefit from governance consultants when it comes to overseeing the executive progress because governance consultants can assess the executive teams from a third-party perspective. They can also help form strategies to help executive teams develop their weaknesses to become more well-equipped in handling all sorts of unexpected challenges.
Oftentimes, governance consultants will have the appropriate resources to assess executive teams against the challenges that they are facing. Not only can they help make sure the organisation has a reliable, competent executive team, they can also help prepare for the following wave of executives. Governance consultants can be invaluable when it comes to developing a proper succession planning process because of their resources and access to specific tools, people and techniques to help prepare the board, the executive team and the organisation for future challenges.
To guide the board through other governance issues
Governance consultants aren’t just helpful for the reasons listed above. But, as mentioned, they can help with many other areas of the board as well, as they can generally consult on any sorts of governance issues, including compliance issues, approaches to ESG, talent development and mergers and acquisitions.
For example, some boards may need assistance with forming an analysis process to establish suitable compensation packages, and other boards may want to get a better understanding of where the board and the organisation stand. Governance consultants can step in and offer their insight on how to achieve whatever goals the board has.
In addition, governance consultants also have access to business workshops and training, where boards and executives can gather and meet other leaders, gain insight and share their experiences and knowledge with one another.
How can your board find the perfect governance consultant?
When it comes to selecting the right governance consultant to partner with, there are many factors that need to be taken into account.
Your board should take the time to understand and learn about the governance consultant’s experience. Why was this group or individual chosen to work with your board and organisation? Does this governance consultant have experience with organisations that are in the same developmental stage as your organisation? Do they have prior experience in handling clients going through changes, developments and growth?
Apart from these questions, your board also needs to see eye to eye with the costs and the lengths of the services.
In a broader sense, it is very important to identify and understand the purpose of hiring a governance consultant. Your board needs to agree on the reasons for working with a consultant and make sure that the governance consultant offers insight and resources that you cannot obtain anywhere else. Is it to discover a stronger sense of objectivity? To improve and recruit new talent? To navigate a challenging transition? To increase diversity?
Finally, once you have chosen a governance consultant, as a group, your board must clearly state and come to an agreement on how you will track your progress and measure your achievements.