The Savvy Director Blog

The question posed above by my finance professor in business school may be one of the most impactful lessons of my university education. Not sure why, except maybe to suggest that his question really hit home.

The question was pretty much a side comment to the discussion that was underway at the time and I’m not sure it resonated with others in my MBA class. But it did resonate for me. I was not even into boards yet, so, it wasn’t about that. Nonetheless it’s a powerful...

There are no HiPPO’s in the boardroom, are there? Yes, there are when HiPPO stands for “Highest Paid Person’s Opinion.”

The HiPPO effect is when the highest paid person’s opinion carries more weight than anybody else’s in the room. That’s because we subconsciously endow highly-paid people with a degree of authority that they don’t necessarily deserve. It’s human nature to believe they are smarter, savvier, and more strategic than the...

Within the global discussion about the need for more diversity in the boardroom, the higher-level goal of maximizing diversity of perspective seems to get lost in the mix of what’s truly important when key decisions are being made.

On their own, completing a compliance checklist or creating a complicated matrix of gender, race, age, orientation, faith, and social status won’t result in better decisions. Creating the conditions for all directors, of all backgrounds, to feel...

Joining a new board of directors is like getting on a bus – one that’s already full of people and is well on its way to its destination.

The tricky part is that the bus isn’t stationary. Even as you hop on, it’s already moving.

Whether it’s your first bus ride or you’re a veteran, you’ve got to catch your breath, find your place, and settle in for the journey.

In the same way, whether you’re a first time director or you’ve already served...

When it comes to executive compensation, it’s best to be cautious about giving advice. There’s a great deal of variation across industry sectors and geography, a multitude of designs available, and many different factors to consider.

Yet the board of directors is ultimately responsible for making executive compensation decisions. It’s an important responsibility because having the right plan is a key factor in driving organizational performance.

Given these stakes,...

Most of the available advice about how to improve reports for the board of directors is about content from the senior management team – reminding us that, even though it’s easy to point the finger at management for voluminous reports that are painfully dense, the board itself is accountable to ensure it receives the information needed to fulfill its role. If you, as a director, aren’t happy with the form, length, style, and content of your board’s management reports,...

Organizations are becoming more and more dependent on third parties to provide the services they need to stay in business – from IT to accounting, from customer service to HR, and more. And the more we rely on third parties, the more important it is to evaluate and manage our exposure to associated risks.

The board of directors plays an important role by ensuring there’s a focus on effective third-party risk management before problems arise from the increased risk exposure.

...

Whether your board serves a non-profit that competes for funding or a business that competes for market share, having a sustainable competitive advantage continues to be the holy grail.

Your competitive advantage is what you do better than anyone else. If you’re lucky, you could have more than one such advantage. The ‘sustainable’ part of the phrase refers to the ability to continue doing those things better than anyone else over the long term.

Does the board of directors...

It’s happened to all of us. You’re at a board meeting involved in a lively discussion. But when you take a moment to step back from the conversation, you realize that the topic is rather trivial. In fact, it doesn’t deserve the time and energy that board members have been pouring into it.

Nevertheless, everyone has an opinion and insists on having their say. The discussion goes on and on, well past the time the relatively unimportant matter should have taken. It seems odd,...

For me, reading and learning about artificial intelligence (AI) has been like drinking from a firehose. I could choose to ignore it and get a nice glass of water from the filtered jug in my fridge. But that wouldn’t end well.

Instead, I’ve been learning that boards today aren’t yet seeing AI as an important education topic for their meetings or board retreats. There’s some curiosity around ChatGPT, but otherwise little sense of urgency. In my view, that’s a...