A Board’s Job Is To Challenge Short-Term Profit with Katja Rieger (Switzerland)

Profit-only thinking sounds efficient right up until it produces a board that cannot see the people, risks, and long-term consequences sitting right in front of it. We sit down with governance specialist Katja Rieger to unpack what responsibility in the boardroom actually means: stewardship, ethical judgement, and decision-making that includes stakeholders rather than treating them as afterthoughts.

We get practical about how boards work at their best. Katja Rieger explains why the CEO’s job is delivery, while the board’s job is challenge and balance, especially when quarterly targets squeeze out longer-term risk management. We talk UK corporate governance lessons, the value of independent non-executive directors, and why separating the chair and CEO roles matters for board independence and oversight.

Then we move into the conversations many boards postpone until it is too late: cyber attack response, red lines, and the importance of agreeing roles and principles before a crisis hits. From there, we dig into board diversity and psychological safety, including why having more than one woman on the board changes the quality of discussion, improves risk awareness, and can strengthen investor confidence. We also name the real blockers: trust networks, comfort with the status quo, and hiring based on familiarity instead of competencies like courage, constructive conflict skills, and integrity.

If you care about board effectiveness, responsible leadership, and governance that holds up under pressure, this is for you. Subscribe, share with a director or founder, and leave a review. What is one boardroom question you think every organisation should ask earlier?

Music, lyrics, guitar and singing by Dr Ariel Rosita King

Teach me to live one day at a time
with courage love and a sense of pride.
Giving me the ability to love and accept myself
so I can go and give it to someone else.
Teach me to live one day at a time.....

Transcript

Welcome And Why Responsibility Matters

Dr Ariel R King 0:41

Hello and welcome to another episode of The Business of Life. Today we have a very special guest, Miss Katja Ryger. Welcome.

Katja Rieger 0:51

Thank you for having me, Dr. Ariel.

Dr Ariel R King 0:54

I'm so happy that you're here today. Would you please introduce yourself and our topic for today to our audience?

Katja Rieger 1:01

Of course. I had a varied career, and what drives me currently is boardroom governance, in particular, responsibility in the boardroom, and that is our topic for today. The reason why I find that important is in all of my career I realized that there's a lot of good people in business, but somehow we manage to push topics like responsibility, doing good, morality even, out of the business. It's not that it's immoral, but we kind of think to separate it. And business is all about rational decisions, all about profit, and in reality it's not. So I would like to bring back a little bit more of responsible thinking into the business. And because I work with sports, this is where I'm gonna start.

Dr Ariel R King 2:01

That's absolutely wonderful. I think it's such an important topic. So let's get started.

Katja Rieger 2:08

Okay. Well, let me start with what is responsibility. In the 70s, there was this infamous article about all a company all aboard has to think about is the shareholder, i.e. the people who own the shares. And practically he said, and with Milton Friedman, he said, it's all about profit. Now that was never true. That was not true in the past, that is not true now, and it wasn't true then. And most likely

Redefining Responsibility Beyond Profit

Katja Rieger 2:46

he didn't even mean it exactly like it, but it really influenced a lot of business people. And even if you go back to Adam Smith and The Lots of Nation, he was talking about responsible merchants or responsible actors in the whole capitalist system. So an organization is never just about profit, profit is a good outcome out of doing a good job. So responsibility for me is actually very simple. It's including other kinds of stakeholders, it's including longer-term thinking in the dialogue about the big decisions for a company, and doing it, of course, with a moral grounding, with stewardship, and amongst ethical fair people.

Dr Ariel R King 3:45

I think that's so important, you know, responsibility and responsibility, as you said, not just for the shareholders, but also for those that they are either uh doing the business for, those around the business, those are affected by the business. And I'm wondering the word response in order to respond with stewardship, as you were saying, is important. But let's talk more about this. I think it's quite interesting.

Katja Rieger 4:14

Well, I'm not the only one who's advocating for it. There has recently been a really interesting article from the Institute of Directors. You know, that the UK is quite advanced with regards to regulation. And I think about 20 years ago, they had a very important report. It called, it was called the Higgs report, which was talking about the responsibility of the non-executive director of the board members. They at that time wanted to professionalize the board members. So

Stewardship And The Board’s True Role

Katja Rieger 4:52

it wasn't just like the good friend, and it wasn't just like a good old boys' club there nodding to everything the CEO recommended. So that was then, and they started a new thinking about what an independent board member today should do. And that's where they brought in the concept of stewardship. And again, they're not the only ones, but they laid it out really nicely. And I believe that is what actually boards are for. The CEO is operationally responsible and delivers towards targets, and that can be quarterly, yearly, maybe three years. The board is the counterbalance to the CEO's at times narrow focus on those targets. They are the ones who will need to caution the CEO with a longer outlook. They will have to warn him about risks, they should discuss amongst themselves about risks which are not on the radar. And they then have to make the very important decisions, yes or no, to some at times risky business decisions. And it doesn't mean not taking risks, but it means taking risks in a very informed and responsible manner.

Dr Ariel R King 6:18

That's so very true. And may I ask boards that are for-profit and those who are not-for-profit, are the are they the same?

Katja Rieger 6:27

They're not the same.

Dr Ariel R King 6:28

I'm talking about, sorry, in terms of stewardship, my apology.

Katja Rieger 6:33

Well, they should be the same. And of course, uh more so in the non-for-profit, because non-for-profits are all about purpose. There, maybe sometimes the board needs to be thinking more of the profit side. Because we need profit to sustain a business, even if it's a non-for-profit.

CEO Power And Board Independence

Katja Rieger 6:55

But the stewardship applies to it applies as well to the CEO. A really, really good CEO should be a steward of his business too. But the CEO is very busy. And with all of the demands on the not just the CEO, but on the C-suite, on the whole executive leadership team, it really helps to have an other body who can think out of the box, who can think longer term, and can bur takes the burden of the more responsible decision when the shareholder may want profit now.

Dr Ariel R King 7:32

I like that. So are we talking about the executive part of the board is the CEO, president, secretary, treasurer, and perhaps the vice president, or it depends on where it is. And so are you talking about the other board members that can actually take this on more than the executive team?

Katja Rieger 7:53

So it depends on the jurisdiction. But many boards have an executive team. They're not the board, they're the executive team. And the CEO can be on the board, it doesn't have to be on the board. There's a big difference between the US, for example, and Europe, because in Europe, we definitely don't want the CEO to be the chair. But in America, that's very common.

Dr Ariel R King 8:19

Oh, really?

Katja Rieger 8:20

So, yes, and in Europe, the CEO can be on the board, doesn't have to be on the board. He usually or she usually is in the board meeting, sometimes with a vote, sometimes without a vote. That really depends. Personally speaking, I think it's a little bit of a conflict of interest for the CEO, certainly to be the chair, but definitely to be even on the board because the board oversees what the executive team, in particular, the CEO does. So for expediency, for speed, or whatever, you can have the CEO on the board because it's several people voting, and it is indeed more of a group decision on a board than it is very often in the executive team. But it's it's a tricky thing because indeed the board practically oversees the CEO.

Dr Ariel R King 9:16

Exactly. And what you need is that independence. So may I ask, um, looking internationally, and I know that you've worked internationally, are there other countries that do this, or is that an anomaly for a CEO to actually be on the board?

Katja Rieger 9:33

So the CEO on the board, that is actually fairly normal. The CEO being the chair, that is more an American kind of thing. There is a lot of best practices who say in UK and others, the CEO should not be the chair. So it really, really depends. And as I said, because it's a group decision, it's in my opinion, okay for the CEO to be on the board just as long as he's not the most powerful. So the chair position definitely should not be the CEO.

Dr Ariel R King 10:07

Thank you. That's good to know. So in most parts of the world, since our podcast is also international, in most parts of the world, then the chair of the board is not the CEO. The chair of the board is the chair.

Katja Rieger 10:19

Very true. And I give you there's different companies. So there could be listed companies, there could be family companies. In a typical family company, the owner could be the chair. And they may have a completely independent outside CEO, like a professional, or it could be somebody from the family, it depends. But the chair is somebody who is not operationally involved.

Dr Ariel R King 10:50

As someone who's had a foundation for 25 years, and as a foundum CEO, I've never been the chair of the board. So I know that to be something that's incredibly important. Let's talk more about the board's function and responsibility and stewardship. Generally, is it the is it almost the same internationally, or does it change by area of the world or culture or things like that?

Katja Rieger 11:19

Now, personally speaking, I would say there is not enough thinking about responsibility globally. But that very much depends on the company, and that depends, of course, on the maturity of the regulations. But even in a very mature regulation, we have very responsible boards, and we have very wonderful boards. Take again the UK or take Switzerland, both quite advanced in regulations and quite prescriptive in some

Risks Boards Miss Until It’s Too Late

Katja Rieger 11:57

ways, even. However, both countries had their scandals, both countries had their failings, and boards can fail independent of the regulation, and boards can even fail with very well-meaning people who are doing all the right kind of things. So, one of the reasons why I want to bring more responsibility into the boardroom consciously is you only have a certain number of meetings in the boardroom. And not all the topics which need to be discussed in the boardroom are discussed. And when it happens, it's very often too late. Just as an example, how to react to a cyber attack. That is a discussion which very much touches responsibility because the question to pay or not to pay is even a question of illegality. So if you only have that discussion when it happens, it's number one too late. Number two, under pressure, you may very well decide in the wrong direction. And number three, you don't think under pressure about the responsibility. So if you have that discussion ahead of time, then you can say you can decide your red lines, you can decide as well, and that helps you in a crisis, roles and responsibilities, and then you have um prepared certain like scripts and processes, all of that is good. But the fundamental question of how do we deal with such a scenario, that is a discussion which needs to be discussed at the board. And that is just a very practical example. But I'd like to have more companies, more boards, for them to have a discussion about the purpose of the company. Believe me, the majority of the people on the board will have different ideas and opinions about the purpose of a company. And having that discussion is a wonderful thing, which really helps with decision making and again with some of the difficult questions.

Dr Ariel R King 14:20

I like that. So that almost goes back to the mission and the vision, right? What do we do and why do we do it and who do we do it for? But I think that's so important because you you want to have various opinions on a board. You want to have people that have various strengths within their knowledge base and also within their experience base. But at the same time, perhaps is that one of the most important functions of a board is to have a board that's varied. So many of these decisions can be worked out with the various types of talents and interests and information.

Katja Rieger 14:53

Absolutely, because a good decision is never an easy decision. So if you have all the same kind of people having the same experience, having the same opinion, and mind you, the majority of the boards has men of a certain age, of a certain business career, who have

Diversity And Psychological Safety In Decisions

Katja Rieger 15:17

been educated, who have become successful to think that profit is really, really important. That's how they got to where they are. And that means if they have a discussion all alone about the purpose and about responsibility, they will agree very quickly that the most important decision is to be profitable. Now, mind you, that is not quite correct. There's a lot of responsible men who I know on boards and a lot of very ethical and moral men. But if you're too similar, your decision will be too narrow. So I personally, and it's not just a question of gender, it's a question of all kinds of diversity, and in particular, the diversity required for the organization you work on. So it could be socioeconomic. If your clients are of, say, a poorer background, you better have somebody from the background on your board, just so that person can speak on behalf of the clients. And that is good for marketing, that is good for customer retention, but as well for responsibility. So there's many aspects of diversity, and I think a board really, really needs to not only have a diverse board, but foster psychological safety so the diverse opinions really get exchanged.

Dr Ariel R King 16:45

I think that makes a difference. Part of success is being able to meet the needs of those who you're doing business for. And in order to do that, then you need to have whatever information that you need. So I can see why it's really important. Uh the reason why it's really important to have a diverse board. Although when you look at boards and statistics, that's quite not the case. Why don't we talk about women on board? Since this is something that's been coming up very lately, because as you said, most of the boards are made up of mostly men of a certain age. We know that as middle age with the same type of, if not background, the same type of information, the same type of uh education, and basically the same orientation to life and to business. Why is it important to have uh let's just start with gender, why is it important to have women on the board?

Katja Rieger 17:38

So, first of all, because of the different perspective. This is something which,

Why Women On Boards Change Outcomes

Katja Rieger 17:45

like a blind man talking about color, you know, a man has not experienced life in the shoes of a woman. And half of the customers, half of the employees are women. And even if it's not half, depending on the culture, we need the experience of the women on the board. And that is partly for the employees. The more women are rising up through the ranks, the more we need to have somebody up there who actually knows how difficult it is to juggle family and a career and to maybe introduce some be it flexibility or certain policies, or just to nudge the board to think about that aspect. But not just that, another aspect which women bring is in generalizing, it's always hard. But the voice is saying if it would have been Lehman's sisters, we wouldn't have had the financial crisis.

Dr Ariel R King 18:46

Now there might be something to that.

Katja Rieger 18:49

Well, I would say women are very diverse. I mean, we are very diverse, and there's some women who are more risk takers and some women who are more risk averse. However, the attitude towards risks is usually very often different to men. And the risks which women see is different as well. So, again, from a business context, retention of capable women, that is something which a woman on a board can speak to very well. Or financial inclusion if you're a bank and so on, that is something a woman can speak to. And there is so many aspects where a woman's voice in the board will make the discussion richer. But I don't just want to talk about one woman because we know very well if it's just one woman, number one, very often she's not heard, or she's assigned all the Totchie Feely topics or all the women's topics and so on. So ideally, I'd like to have in most boards at least two women, and ideally, indeed, the 30% kind of like target, because it really helps women to be heard better and to be heard not just as women, but with their different perspective.

Dr Ariel R King 20:16

Do you think that having and and looking at and having women on the board actually also changes the bottom line, not just in profit in terms of money, which is very important, but also in terms of the longevity of the business, risk adversity of the business, more coverage of the business. Do you think that having women actually changes some of the trajectory of some of these areas?

Katja Rieger 20:42

Yes, and there's even research there. Some of the research even coming from McKinsey, which is known to be a very rational, like minded consultancy. So, yes, women on the board add value to a lot of different aspects. And you mentioned quite a bit, uh many of them. It can be profit, definitely scandals. Having women on the board, and that's hard to measure, yeah, because avoiding scandals is is, I mean, like you avoided them, so you don't have them. It's hard to measure. Retention, employee attractiveness, investor attractiveness, having more women on the board actually inspires investor confidence. And that is not just because it's um like DEI nice to have. Currently, that would be even a disadvantage. But investors know very well that the balanced perspective, and again, the potential bigger risk averseness of the women may be really, really good for the business. So investors are looking for that.

Dr Ariel R King 21:53

So so basically it's I mean, it's a bottom line, then isn't it? It's an issue that has nothing to do. I mean, some of it is cultural, but it's not just cultural. It's a matter of if you want the business to do well, if you want to have a positive trajectory within the business within so many years and so on and so forth, then um you're gonna give yourself the best advantage. And that best advantage is to have women on the board.

Katja Rieger 22:18

I couldn't agree more.

Dr Ariel R King 22:21

So let's talk a little bit about what stops rationality with boards in getting women and why is it so difficult to get women on the board, especially paid boards.

Katja Rieger 22:35

Very good Christian. Number one, the system protects itself. Currently, most boards are still dominated by men, and in most leadership positions, you will get the job not just because you're capable, but because you're trusted. And the trusted is not always rational.

The Status Quo And Trust Networks

Katja Rieger 22:59

It usually is not actually. And who do the current people on the board know and respect and trust? It's very often other male colleagues.

Dr Ariel R King 23:17

Right. People like themselves that they can relate to.

Katja Rieger 23:20

Exactly. And unfortunately, there's been recent research as well that when women are promoted, and that's not just the board, that's for leadership positions as well. It's usually women who protect the status quo. People love the status quo. It worked for them, in particular the decision makers. The status quo was what brought them where they are, and it's very comfortable. So why would they want to rock the boat?

Dr Ariel R King 23:51

I guess that's true with any board member, isn't it? Male or female. You don't want people to rock the boat. You want people that are going to be more like you. But in doing that, it seems like what the success or the higher success that can be obtained cannot be attained because we're we're staying stuck in. And this is not about business, isn't it? This is about psychology and behavior and sociology and who we are as human beings. So it seems like there are times that who we are as people actually gets in the way of this idea of doing good business.

Katja Rieger 24:26

Yes, you are completely right. And that is the advantage of the board. I'm quite passionate about board work, and frankly, I think it could be something which we could even consider for executive teams, because executive teams are quite hierarchical. The CEO is the boss, and all the rest obeys the CEO. Now, the board is a team, and even so, the chair is nominally the highest. In reality, he's the first among equals, the primo center paris. And really good chair indeed is more of a facilitator, an enabler of good team decisions, and not the one who says, okay, enough discussed, I now decide. So the way a board discusses when it's a trusted environment, when it's a really good board of mature people who appreciate different opinion and have intellectual humility to maybe change their minds and so on. This board could be the one who could be comfortable enough to rock the boat and change the status quo. Because it's very hard to be the only one responsible for a very bold decision. But a board can make that decision together, and that is psychologically much easier.

Dr Ariel R King 25:52

Absolutely, absolutely much easier. So we're almost running out of time. We just have several minutes left. May I ask you what are some of the important points that we should think about when it comes to boards and board diversity and uh why boards are so important?

Katja Rieger 26:12

So the important thing, most important thing for boards, is that we should really think more carefully to hire for competency and not just for somebody we know and not just for a glossy CV. And what I mean with competency is to carefully think as well, what kind of competencies we need. And I just give you some which are

Hiring For Courage Integrity And Conflict Skills

Katja Rieger 26:36

particularly important in a board, and I'm not sure if they're always looked for. So one is, for example, the courage to speak up. But another one to complement is is the constructive way of dealing with conflict. So a lot of people have the courage to speak up, in particular former CEOs and so on, but they're very often very defensive when somebody has a different opinion. So having the courage to bring up their own opinion and issues, but having the skills, the constructive mindset to listen well and to come to a mutual decision. Maybe a compromise, but maybe explore it until you can all be on board. Those would be particularly important qualities for board members. Another one which everybody thinks we have on a board, but nobody really hires for is integrity. It's believe me, everybody thinks we have integrity, but nobody challenges their own integrity. And that is something which sometimes we should be looking into a little bit deeper. And we can interview for it and we can assess for it. So this I actually created we created a prototype to assess for some of those confident competencies, because we really want the boards to hire more for that. And then men, women, regardless, but the competencies and not just the CV. So that's for the diversity.

Dr Ariel R King 28:21

Thank you so much. And how can our listeners get in touch with you?

Katja Rieger 28:25

Well, you can share my email. I'm very happy to share it or my website as well. And on LinkedIn, of course. I'm always happy to exchange with people. And anybody who wants to consider their board and having a discussion about some of those responsible topics, it's always worthwhile doing, and I'm very, very happy to share some case studies and share some advice how they can do it.

Dr Ariel R King 28:51

Thank you so much. And I hope that you consider another invite because there's so much we really need to talk about in terms of boards, and your expertise

How To Connect And Final Reflection

Dr Ariel R King 28:58

is so needed. Thank you.

Katja Rieger 29:00

Thank you for having me. Really appreciate it.

Dr Ariel R King 29:03

And for listeners, remember if I am not for myself, who will be for me? If I am only for myself, what am I? If not now, then when? That was by the philosopher Hillel. And I've added if not me, then who? Thank you so much for joining us.