Supervisory Board Membership – the how to

Earlier this year, Albert Froom, Managing Partner of Leaders Trust, accepted an invitation from Accord Group ECE to come to Warsaw and share his expertise on Supervisory Board trends in Europe. “It was important to me to bring a seasoned professional who advises boards and places both executives and non-executives on an international level. Albert started his career in 1987 and was ranked within the top 150 most influential headhunters in the world by Business Week, so the choice was obvious”, says Corinne Klajda, Managing Partner at Accord Group ECE.

What are the roles of Supervisory Board Members (SBM) in relation to the Management Board?
Firstly, they make decisions on salaries, the bonus structure, car allowances, etc. Secondly, they – as the name suggests – supervise not only what but also how things are done. Thirdly, they act as coaches and advisors as well as sounding boards.

Long gone are the times of cigar smoking older gentlemen. Being a SBM is a part-time role with full-time responsibility. Additionally, nobody notices the Supervisory Board when the sun is shining, but it is the first to be blamed when it is raining”, says Froom.

The composition of the SB is as important as that of the executive board. Complimentary competencies are key. Does the SB represent all necessary points of view such as legal, communication, commercial, technology and finance? What about skills and personality? Does the SB add value as a team? What about individual contributions?

Thanks to corporate governance initiatives, as well as societal pressure, several trends are visible:

Size: SBs are becoming smaller, with a preference to one-tier rather than two-tier boards.

GPS: SBs interpret their roles more from a principle-based perspective rather than one based only on checking rule boxes.

Professionalization: Supervisory board memberships require the highest integrity and competence, which in turn means that members are expected to continue their executive development and education.

Public Eye: Due to societal pressure, SBMs are becoming more visible and are under more scrutiny: are they walking their talk? Are they a role model? Are they open for dialogue?

Technology: The impact is visible on two fronts. On the one hand, it disrupts business models and on the other, cyber security has to be addressed.

Diversity: Froom notes, “Looking at European statistics, the vast majority of companies systematically comply with gender quotas aimed at reaching 30-40% of women on SBs by 2020. True diversity goes beyond that. Companies should look at dimensions like generation, background. I’d love to see a patient join the SB of a hospital or a child the SB of a toy company.”

How does an executive obtain their first SB role? 51% land it via their network; 20% through an intermediary; and the remaining 29% are placed on the SBs of their current employers.

However, you should never accept an invitation blindly. Make sure you ask yourself the following questions:
Fit: can I add value? Do I like the style of the CEO? Will I get along with the Chairman of the SB? Do I have complimentary competencies?
Risks: are there any potential conflicts of interest? What development phase is the company in? What condition are its finances in?
Commitment: do I really have the time? Do I feel connected to the company? Will I enjoy it?

Froom adds, “Relying on Murphy’s law, never combine a CEO role with a Chairman role of the SB. If something goes south, both will go at the same time. And remember, as a SBM you are not in charge. You are not allowed to touch the steering wheel. You are in the backseat.