How Can Boards Leverage a Governance Consultant?
It’s necessary for today’s boards to properly oversee the current issues facing their organization, but they need to be looking forward to the next ten years or so and ensure that they will be just as well equipped at that time. In addition to being skilled and diversified, today’s boards need to be adaptable, creative, and open-minded. Boards need to be able to see risk and uncertainty as an inevitable part of both innovation and governance. The prevalence and prominence of risk in the corporate landscape mean that boards must be willing and able to see all the complex and variable aspects of risk. Not all boards can handle these issues on their own accord and that’s the right time to considering working with a governance consultant.
A governance consultant is different than a mentor or an advisory board. Governance consultants are skilled at looking at the scope of the board’s needs and they help devise strategies to help them improve their performance which transcends into improving the company’s performance. Boards may enlist the help of governance consultants to assist them in one or more areas.
Assistance with Improving Board Effectiveness
In light of past and recent media accounts of corporate fraud and poor behavior among board directors and executives, shareholders and stakeholders are placing lots of pressure on boards to improve their performance. Governance consultants provide an independent perspective and an objective assessment of the board’s performance which can be difficult to assess accurately themselves.
Governance consultants can help the board decide if it’s best to develop existing board director talent and managers or recruit new ones. They help to devise programs to evaluate the CEO and the board, monitor progress, and set up compensation plans. Consultants are skilled at helping to develop plans for effective risk management and enlisting the proper people, tools, and processes to help the company move forward. In addition, they work with boards to identify problems with board dynamics and culture and identify processes to help improve them.
It’s sometimes difficult for boards to understand how others outside the company view their reputation. Governance consultants have ways of helping boards gain insight to the external view of their organization.
Assistance with Board Director Recruitment and Succession Planning
To keep a proper pipeline of talent running through an organization, nominating and governance committees have a daunting task before them to continually pursue board director recruitment and succession planning. This is necessary to ensure that future board directors will have the appropriate skills to address many issues such as shareholder activism, cybersecurity, risk, diversity, and innovation, to name a few.
Governance consultants can be a valuable resource to help put together an effective board director hiring strategy. They’ll likely have access to different resources than the board and can use them to help find appropriate candidates with the right qualifications.
Diversity and inclusion are hot topics related to the quality of board performance. The role of a governance consultant can include finding people that have a diverse set of perspectives and backgrounds that are critical for an effective board. By focusing on diversity and inclusion, boards are also demonstrating to shareholders and stakeholders that board takes its duties seriously and that they’re intent on performing to the best of their ability.
Consultancy firms help to find candidates that are outside the realm of obvious choices. They often have connections with lesser-known, but well-qualified individuals who are skilled and equipped to handle complex issues and modern issues. Boards that are struggling with how to align the board around the company’s future transformational needs will find much value in working with a governance consultant.
Assistance with Executive Assessment and Development
Regarding the board’s responsibility to oversee the CEO and other senior executives, they need to make sure the management team has the skills and adaptability to help take the company to the next phase of development or level of profitability. Governance consultants can help assess the executive teams and help formulate plans to help them build strengths in certain areas and become better-rounded in all areas to ensure that the company is getting the full potential from their efforts.
Governance consultants will likely have the appropriate resources to evaluate executive teams against the new and specific challenges that are facing organizations today. Just as it is important to have a competent executive team, it’s just important for the next wave of executives to be prepared. Consultants can be instrumental in helping to develop a solid succession planning process to ensure that the company will have excellent executive talent in place now and in the future. Consultants are also adept at uncovering market insights and benchmarking to help companies decide about the timing of certain actions such as entering a new market, pivoting into a new industry, or completing a merger.
Assistance with Board Consulting
Some boards need help with forming an analysis process for establishing compensation packages and other boards merely want to know if their current processes are on track or if they can improve on them. A governance consultant is the perfect resource for shedding light on this issue.
Governance consultants are usually equipped to consult on any number and variety of governance issues including talent development strategies, compliance issues, approaches to ESG, and timing of mergers or acquisitions.
As an added benefit, consultancy firms usually have access to business workshops and other trainings where boards and executives can meet and interact with like-minded leaders, gather insight, and share intelligence.
What to Look for in a Governance Consultant
In making your choice about a governance consultant to work with, there are many things to consider. You’ll want to learn more about the experience of the consultant that you’ll be working with and understand why this group or individual was chosen to work with your organization. Does your recommended consultant have expertise with organizations that are in the same developmental stage as your organization? Do they have experience in dealing with companies undergoing rapid change, development, and evolution?
Beyond these important questions, you’ll want to agree on the cost and length of services.
Overall, it’s important to know your purpose in hiring a governance consultant. Are you looking for a stronger sense of objectivity? Are you looking for help with improving skills and talent? Is your organization going through a difficult transition? Do you need help in navigating a crisis? Can a governance consultant provide you with assistance that you can’t get elsewhere?
Finally, be sure of your purpose and come to an agreement with your governance consultant on how you will know when your goals have been achieved.