The New Rules of Board Succession [Korn Ferry]

Boards today are navigating a landscape defined by constant change, emerging risks, and evolving expectations. In this episode, Doug Chia sits down with Jane Edison Stevenson and Claudia Pici Morris of Korn Ferry to explore how board succession must adapt to meet these challenges. They discuss the shift from relying on past experience to cultivating a continuous learning mindset, and why agility, curiosity, and self-awareness are becoming essential traits for directors.

The conversation introduces the concept of “corporate wisdom” and examines how diverse perspectives in the boardroom can shape better decisions. Jane and Claudia also unpack what it truly means for a board to be “fit for purpose,” emphasizing the importance of forward-looking succession planning, evolving mindsets, and the ability to bring in expertise dynamically. 

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Transcript

[00:00:00] Doug Chia: Welcome to the Public Company Series podcast, powered by OnBoard giving boards the clarity, security, and insights they need to make better decisions and deliver lasting value. I'm your host, Doug Chia. This podcast series is designed to give corporate directors, executives, and governance professionals the insights and tools they need to build boards that are agile, resilient, and prepared for the future.

[00:00:31] Doug Chia: Uh, it's based on the book Board Structure and Composition, which is part of the Public Company Series published by the New York Stock Exchange and JP Morgan. Our guests for today's episode are Jane Edison Stevenson, who is the Global Leader for Board and CEO Succession at Korn Ferry, and Claudia Pici Morris, who is the Board and CEO Solutions Leader for North America at Korn Ferry.

[00:00:59] Doug Chia: [00:01:00] Jane and Claudia authored the chapter of the book entitled Succession Planning for the Board, the Blueprint and the Talent. Jane and Claudia, welcome to the show. 

[00:01:11] Jane Edison Stevenson: Thank you. It's pleasure to be here. 

[00:01:13] Claudia Pici Morris: Thank you for having us. 

[00:01:14] Doug Chia: So I'll set the context for today's discussion and then we can get into it. So the underlying challenge that Jane and Claudia address in their chapter of the book is managing board succession to adopt the company's challenges

[00:01:29] Doug Chia: while those challenges are changing, and new ones are emerging. Just like the CEOs are essentially being tasked with changing the tires while the car is moving, the boards are also faced with that task when it comes to board composition. In their chapter Jane and Claudia talk about this challenge and then introduce two tools: the board succession blueprint, and the board success profile that they use to help boards remain [00:02:00] fit for purpose.

[00:02:01] Doug Chia: And so with that, let's take a deep dive. In the book, you say that boards that adapt to an agile and adaptive approach to governance stay effective in this fast moving landscape. Boards need to embrace a continuous learning mindset. Maybe you can explain what you mean by continuous learning mindset in the governance context as opposed to say, learning a new subject matter.

[00:02:31] Claudia Pici Morris: Thanks again for having us, and um. I think what we intended to, um, articulate is that given the rapid pace of change that's happening in the world boards as well as directors need to constantly be thinking about the challenges as they approach, and it's been clear that we are facing things that generations before us have never faced before.

[00:02:59] Claudia Pici Morris: So the old [00:03:00] adage of having past experience to inform future decisions is probably less relevant in today's world, and there's more of a need to surround yourself with current events, with, uh, understanding adaptive technologies, with understanding the geopolitical landscape that are currently changing minute by minute in order to ensure that the board stays focused on things that are most important that are gonna affect the company.

[00:03:30] Claudia Pici Morris: If you think about the role of the board, it's to of course ensure that the strategy and that the risks are being managed as well as of course, the performance and the hiring and firing of the CEO. So when it comes to the strategic and risks associated with performance, I think the idea that you can rely on past experience to really help you, um, becomes less relevant today.

[00:03:57] Claudia Pici Morris: And, um, just does require that there's [00:04:00] a, a learning agenda that's constantly being put forward for the board as a whole, and then for individual directors to ensure they stay current. 

[00:04:09] Jane Edison Stevenson: So, building on what Claudia said and maybe saying it just a little bit differently, uh, very often in the past there was so much continuity in terms of what was gonna happen, how it was going to happen and what needed to be done about it, that boards depended on past experience to inform what they needed to do in decision making and governance. Today, that's just not the case. The, the momentum and the speed of change is so great and some of the new paradigms that we're working in make it impossible for you to just use past as prologue.

[00:04:48] Jane Edison Stevenson: And so what we're finding is, uh, in the recruitment process and, and in who's sitting in the room, people who have that incisive capability to anticipate, [00:05:00] to adapt and to quickly, um, assess and change in terms of views, is really becoming more critical, uh, to effective decision making and strong governance capabilities.

[00:05:16] Doug Chia: You also talk about this concept of corporate wisdom being a strategic advantage. Maybe go into a little bit about what that, what that means. I think that's a great term. 

[00:05:27] Jane Edison Stevenson: Yeah. I love, I love that phrase, and I'll credit Steve Reinemund who created it, former CEO of, of PepsiCo. 

[00:05:34] Doug Chia: Former J&J board member who I worked with.

[00:05:37] Jane Edison Stevenson: Yes. 

[00:05:37] Doug Chia: We had to switch all of our products in our conference room from Coke to Pepsi. 

[00:05:43] Jane Edison Stevenson: Oh, okay. 

[00:05:44] Doug Chia: Every time he showed up. 

[00:05:46] Jane Edison Stevenson: Okay. I loved the phrase, and so I wanna credit Steve for it. It really refers to the varying points of insight that come together in a boardroom to create [00:06:00] corporate wisdom. If you think of a kind of a kaleidoscope and all the different lenses that create that, you know, beautiful mosaic that you see,

[00:06:10] Jane Edison Stevenson: that, that's really what it looks like when you have a terrific board and you, you have the vantage points that help to mitigate risk and help to maximize opportunity, and it widens the aperture of each of the members in the board because they're in this group setting that has a relationship that creates that corporate wisdom.

[00:06:33] Doug Chia: Yeah, I, I think that's a, you know, a great thing to point out that, you know, when you think about the collective wisdom of the corporation, people don't often think of the board as part of that collective wisdom. And so I think, uh, this concept incorporates the board really well. You know, you also talk about this concept of being fit for purpose.

[00:06:56] Doug Chia: Uh, and you say that for boards to remain fit for [00:07:00] purpose, a proactive succession plan is a must. Renewal creates a culture where directors evolve alongside the company and bring new capabilities that align with those required at the leadership level. So yeah. Why don't you talk a little bit about being fit for purpose and evolving alongside the company.

[00:07:23] Doug Chia: I think that's an important thing to understand. 

[00:07:25] Claudia Pici Morris: I think there's multiple elements of what it means to be fit for purpose. One is, um, experientially, right? Making sure that there's relevance to the organization and to the future strategy. But secondly, and probably most importantly. It's around mindsets, um, and behaviors that are most going to ensure the effectiveness of a director and of the board as a whole.

[00:07:53] Claudia Pici Morris: So we believe that there are newer competencies and [00:08:00] behaviors that need to show up in the boardroom to ensure that they are truly contributing in a way that can be valuable to the overall organization such as having an agile mindset, being an incisive decision maker, as Jane said earlier, um, having this constant view of the landscape, taking the time to invest outside of the boardroom for their own, um, learning and edification.

[00:08:28] Claudia Pici Morris: As we talked about before, these are all new criteria that are, we think, a must for the future board, and therefore it really changes what we mean by fit for purpose. So it's not just experience, it is competencies, mindsets, and behaviors that are gonna be most relevant to evolve the board. 

[00:08:47] Jane Edison Stevenson: One of the things that, uh, is so important relative to fit for purpose is to have a perspective that's aligned across the board around what to your best crystal [00:09:00] ball capabilities is going to

[00:09:03] Jane Edison Stevenson: define the biggest challenges and the biggest opportunities, 3 to 5 years out. And so as you start to think about that lens and stretch that muscle of what those might look like and what those strategic priorities are that are going to define success or failure for the company, you start to think very differently about the composition of what is needed today.

[00:09:27] Jane Edison Stevenson: So it moves you from a succession to a kind of a progression orientation, if you wanna think about it that way. So when you are losing a board member to retirement or for whatever reason, and then you're thinking about what is the specification for that board member, if you're looking at it, just based on replacing the credentials of the person who left,

[00:09:50] Jane Edison Stevenson: you'll have one, you know, fit for purpose. If you're looking at it against this lens of a future-focused organization where the business priorities are the [00:10:00] definition that then, uh, create what the frame is for that next hire. It looks quite different, and that's where you get into that progression mindset and you're building against those capabilities and each opportunity that you have, you're looking to better

[00:10:16] Jane Edison Stevenson: align what capabilities you have on the board against the future agenda. And it's interesting because it isn't just about the individual capabilities that get added to the board member. Interestingly, because of the definition we just talked about with corporate wisdom, you know, we all, we all are better or we're all different,

[00:10:39] Jane Edison Stevenson: and you start to create this concept of elevation on the board and the ways that people come together with their experiences start to expand how leadership and management in the organization sees opportunity and it elevates what, what everyone's able to do in that [00:11:00] environment. Um, it's I guess very similar to, uh, creating, uh, you know, a difference between the same question when asked by two different people.

[00:11:10] Jane Edison Stevenson: Right? And some, some times you hear a question and it, it really puts you on the defensive and you're, you're kind of narrowing your aperture to, um, that posture. Some people could ask the same question and it actually opens your mind to think about things that you hadn't thought about before and to make wiser choices.

[00:11:30] Jane Edison Stevenson: Um, and that's, uh, you know, in a larger scale what we're looking to try to achieve on the boards that we serve. 

[00:11:38] Doug Chia: And also a characteristic of a, a good board member or a skillset. I've heard the term, the art of the question, and I think that's, you know, it goes to that. So I think that, you know, this fit for purpose and continuous learning mindset, they, they seem to fit well together because essentially the [00:12:00] board is continuously trying to

[00:12:03] Doug Chia: determine who are we competing against, not just today, but tomorrow? And how do we make these adjustments that you don't have the opportunity to do that that often? And so when you do it, you have to be very intentional and you have to essentially, you know, kind of look into a crystal ball and say, okay, what are the challenges that are gonna come four or five years down the road?

[00:12:28] Doug Chia: Because this director is probably gonna be with us for like 5 or 10 years. 

[00:12:33] Jane Edison Stevenson: Hopefully 10. Right? 

[00:12:34] Doug Chia: Yeah. 

[00:12:35] Jane Edison Stevenson: And, and it's, it's, it's a bit of a combination of that alignment process around that future focus and the capabilities of, of the individual board members. And, and I'll never forget, I was working with a board around the alignment on this future focus for their progression into the future.

[00:12:57] Jane Edison Stevenson: And as we started talking about some of the issues they [00:13:00] were facing, and some of the things that were coming at them much quicker than they were expecting. It became clear that the, the main, uh, kind of the chassis for the business, if you will, um, was likely gonna get disintermediated within 2 to 3 years.

[00:13:19] Jane Edison Stevenson: And so thinking about some of the challenges and the the needs that the business had suddenly shifted very dramatically in a way that they just clearly hadn't thought of in that context. And so that of course then changes how you think about the skills that you need and what's going to be the most enhancing to the capabilities, not only of the board, but

[00:13:45] Jane Edison Stevenson: of the board making decisions to frame, you know, the success or failure of the business. That was a particularly dramatic one, but it makes the point. 

[00:13:54] Claudia Pici Morris: I think there's one other element of being fit for purpose that is beyond just [00:14:00] skillset and people who are sitting on the table is also thinking about, again, if you think about agility as being one of the key elements to success in the future, it's maybe thinking differently about how the board operates.

[00:14:12] Claudia Pici Morris: So for example, as Jane just said, there are gonna be situations where companies are faced with something that they didn't expect. So just take for example, the tariff situation or, um, or even just disruptive technologies, how that's changing the face of, of how companies are thinking about their business models.

[00:14:29] Claudia Pici Morris: I think one of the things that a lot of the boards, uh, and, and particularly non-gov chairs are talking about is how do you bring in that expertise for a specific problem when you don't have the real estate available around the table? And so there's been a lot of discussion around creating committees or ad hoc committees, if you will, of people who the board can bring in that bring a specific expertise [00:15:00] to deal with a certain challenge for a period of time to help bring insights into the boardroom and for management that can help work through that problem and just change the course of how they think about that going forward.

[00:15:13] Claudia Pici Morris: So that's another way a board can become more fit for purpose. It's not just around capabilities, competencies that are sitting around the table, but how agile you are in thinking about bringing in expertise, maybe not just on a one-off basis for a learning mindset, but actually to solve problems and making that board more effective, um, and helping the company achieve their long-term goals.

[00:15:35] Doug Chia: I guess another thing about staying fit for purpose, um, it's not just a board collective effort in terms of the, the composition. Some of the onus falls on each individual director as well, and yet you point out that directors also need to evolve alongside the company. Obviously, if you have a continuous learning [00:16:00] mindset, you're kinda well positioned to do that, but what kind of things have you seen directors do to get themselves, uh, to evolve, uh, as, as the company's challenges, uh, expand or shift underneath their feet?

[00:16:16] Claudia Pici Morris: I mean, if you take for example, what's happening with AI, I think every director is curious on how to govern that. They're not gonna be experts necessarily themselves, but there are a lot of courses and certification programs similar to what we saw happening with cybersecurity when that came on the scene in a big way, uh, several years ago.

[00:16:37] Claudia Pici Morris: But I, I do think that, um, there has to be an effort made by the individual director to at least understand the questions that need to be asked in the room, whether or not they're experts is gonna be less important, but just having that ability to keep that conversation at a strategic level, knowing how to ask the questions that get to the heart of the [00:17:00] what could be, again, the opportunities and potential risks of that, of that, for example, technology. That will actually change, um, the dialogue very much in the room.

[00:17:10] Claudia Pici Morris: But the, there is a lot of discussion and energy around how do I get better at asking the right questions even if I'm not an expert? And then how do we bring in that expertise to help if the question becomes too sophisticated for the board to really opine on? And so that's, that's something that we've been hearing a lot about and, and, and we ourselves are working with a lot of directors.

[00:17:35] Claudia Pici Morris: We have a forum that we host and we are actually, um, working on ways that we can create a masterclass for directors to better understand how to relate to the technological changes that are happening for organizations and bringing in a lot of experts, creating workshops, etcetera. That's, that is more of what we're seeing and I think there's a lot of energy for directors to [00:18:00] spend time there.

[00:18:01] Jane Edison Stevenson: It kind of means outside the boardroom spending, uh, the, the energy to be vulnerable and not to be the expert, uh, to collaborate with people in areas that you really don't have, um, the expertise, but you have the ability to question. And in a sense, it's that learning mindset that we talked about earlier and the agility to come up with, um, a new frame for looking at the future.

[00:18:31] Jane Edison Stevenson: Uh, as you said, it's about asking the right questions, um, asking them in the right way, but it is also about having enough insight and information that is gained outside the boardroom to be truly effective and elevating inside the boardroom. 

[00:18:48] Doug Chia: You know, another thing you talk about, uh, when, um, boards are assessing their composition, it's not just about composition,

[00:18:56] Doug Chia: it's about bringing in key mindsets. [00:19:00] It's probably easier to identify the key mindsets than to evaluate whether somebody actually has those. And so how do you, you know, how do you get at that? 

[00:19:14] Jane Edison Stevenson: One of the things that's always, uh, been a conundrum that, that Claudia and I and others on our team have laughed about is when you do a board search, there's always a very strong resume component that's sort of the

[00:19:27] Jane Edison Stevenson: price of entry, if you will. And yet the reality is that once someone walks into the boardroom, their resume is almost irrelevant, right? There's no operating offset for a board member. There's only who they are and the ways they engage and, um, bring information and insight into the room, elevate others or shut people down, etcetera.

[00:19:52] Jane Edison Stevenson: And so, uh, one of the things that is part of the art form of, uh, doing effective board search [00:20:00] is getting under what really is the driver for this person? Are they there because of a sense of purpose, which is really an important mindset in, in the boardroom? Or are they there for themselves? Are they really bringing in an inclusive mindset?

[00:20:18] Jane Edison Stevenson: I'm talking about that ability to see truth and to recognize and value it to irrelevant of where it's coming from, so there aren't, um, internal biases or limitations that prevent, uh, the, the, the corporate wisdom from emerging, looking for an understanding of how they collaborate and what they bring to others.

[00:20:43] Jane Edison Stevenson: Um, recently was aware of and dealing with a situation where a board member literally felt that 9/10 of a board were not up to the same quality of themselves. You can imagine that [00:21:00] that makes it very difficult to bring out the best in other people, and so ultimately it was a fairly short tenure.

[00:21:08] Jane Edison Stevenson: And those are the kinds of things that we're talking about that you try to get under and, uh, understand if someone in an operating role is, um, very, very strong in, you know, talking versus listening at let's say 80/20, it's unlikely that they're gonna change that in the boardroom. So getting at some of those things, the things that really, really drive them.

[00:21:34] Jane Edison Stevenson: Um, and then additionally understanding the sense of courage that they have. I think we're more than in any era in the 37 years that I've been doing this work I've ever seen, there is a need for people who are willing to ask those tough questions and to anticipate a hairpin turn that is probably very uncomfortable to talk about.

[00:21:58] Jane Edison Stevenson: And so really [00:22:00] understanding that level of equal parts courage and judgment, uh, is a really important element to the mindset of an effective board member. 

[00:22:11] Claudia Pici Morris: When we think about how to assess someone, we think about it across three dimensions. One is thought leadership that they bring, interpersonal leadership that they bring, and then personal leadership that they bring.

[00:22:24] Claudia Pici Morris: Aligned with those are five or six different competencies and mindsets that we assess, uh, directors against when we're, when we're helping, um, bring new directors to any board. And, uh, we get to, uh, a lot of those specific questions through understanding how they think about a problem, for example. So. As, as Jane said, I think we believe that there are several mindsets that make the difference between a good director and a great director. At Korn Ferry

[00:22:57] Claudia Pici Morris: we have some proprietary technology that we [00:23:00] use in an assessment situation where we can evaluate those people's intrinsic drivers that Jane mentioned to see how those show up in their mindsets, but ultimately, it's really understanding how they behave in these types of settings and the choices that they make is how we actually assess where their natural tendencies tend to be.

[00:23:23] Claudia Pici Morris: And I think this is important because especially now, given the challenges that boards are dealing with, it is critical that the culture of the board is one in which they can actually successfully work together. And even when there's dissent, even when there's differing opinions, to get to the best outcome.

[00:23:41] Claudia Pici Morris: And so making sure that the board has those kind of mindsets, clearly defined on, uh, on the things that they value most. And then assessing the directors against their ability to really, whether they have that mindset or capability. So, for example, Jane talked about courage. That's, that is a, a very [00:24:00] important driver that leads to how someone shows up in the boardroom, either as independent or as

[00:24:06] Claudia Pici Morris: opinionated, uh, collaborative or not? I mean, those things really do, um, have an impact in how that person will show up, um, as part of the board as a team. So we do think that it's not necessarily easy to identify. I think the boards need to, as part of their succession process, identify the key areas that are gonna be most important to them as a group to be able to function effectively and be able to support the company and we have this, um, capabilities and definitions on how they can get there. 

[00:24:38] Jane Edison Stevenson: When you think about the composition of a board and what you've got in the room already, and then adding to that. That can make a big difference in terms of whether you need more voices in the room or you need really powerful listening in the room as well.

[00:24:53] Jane Edison Stevenson: And, uh, powerful listening changes how everyone thinks. So it's not just what people [00:25:00] say, it's the, the presence that they bring into the room. The, the additional thing that is a mindset of such importance, and I think especially today and going into the future, is that learning orientation. Someone that just loves to learn, that is curious, that is, um, constantly looking to understand how impact works.

[00:25:25] Jane Edison Stevenson: And it starts with their self-awareness and their situational awareness. Do they understand either the presence of what they already bring into the room or the presence that they need to convey a particular topic in a way that, uh, changes views and, and creates the right conversation? You know, we, we talk a lot about people who need to understand the power of their space, but some people don't understand how much [00:26:00] power they actually have, and that can be equally problematic. If you have the listening of a group,

[00:26:06] Jane Edison Stevenson: then using that in a really effective way can be an enormous contribution to to the power of a board. So I, I think we can't underestimate that and it's a, it's a barrier of entry. Uh, you know, you'd like to think that any board member has self-awareness and situational awareness, but it's that coupled with that constant learning and changing that goes with a variety of situations that are not the same that they were five years ago.

[00:26:38] Jane Edison Stevenson: That is really the, the artistry that takes, um, a director to a next level of impact and capability. 

[00:26:45] Doug Chia: You know, we've heard a lot about board members saying that, you know, they look around the room and they see. So many number of people who probably, you know, need to move on. But one thing you point out is that every [00:27:00] board member should assess their contributions to ensure that they are still relevant to the organization.

[00:27:07] Doug Chia: Kind of flipping this on their head and time for little introspection every once in a while. How much of this self-reflection are we seeing out there? 

[00:27:18] Claudia Pici Morris: I do think that boards are getting more sophisticated around self-assessments. We just put out our annual study on board assessments and there are some clear trends around how boards are really thinking about whether they are fit for purpose and really looking in a mirror and trying to understand how they could get better.

[00:27:38] Claudia Pici Morris: Because the alternative is, you know, they might lose competitive advantage or they might really face some significant challenges that will put the company in danger if they don't have the right people around the table. So I do think that people are being much more thoughtful around how valuable they are in the role and looking for that feedback.

[00:27:58] Claudia Pici Morris: I think in the past it used [00:28:00] to be taboo for a director to get individual feedback outside the US It's done, uh, quite liberally with, um, board assessments that individual directors do get feedback. Um, and I think we're seeing a trend moving toward more toward that direction. So that they know how their contribution is perceived, not only by people around the table, but even by the senior management in the room who are looking for that guidance.

[00:28:26] Claudia Pici Morris: And so, um, I think that we've seen more of a trend in that direction, which is positive. Now, has that helped with people maybe self-selecting out sooner? Maybe not. The, the turnover rates are still slower, um, when it comes to public company board seats, and we still have the preponderance of career directors, but I do think that there, there's starting to be a real awareness that actually having more active capability in the boardroom is, is becoming critical

[00:28:56] Claudia Pici Morris: and so I think understanding that your [00:29:00] composition and your capabilities are still valued in terms of the wisdom that you bring is something that I think directors are acutely aware of today. And so they just need the support and they need to have, um, the kind of mechanisms in place to ensure that they're getting that feedback.

[00:29:16] Doug Chia: Let's get into one of the signature things that you present in the chapter, and that's the idea of a succession blueprint and that this, you know, blueprint, and I'll let you describe it, but it is something that goes beyond a skills matrix, which people are really used to seeing by now and you know, has become somewhat generic in some cases.

[00:29:38] Doug Chia: So why don't you talk through this, the, the succession blueprint that you use. 

[00:29:43] Jane Edison Stevenson: So whenever you think about, um, the needs on a board, to end up with a really great board, you have to think about a number of different, uh, aspects of a director's orientation. The one we always gravitate to, as you mentioned, is the skills [00:30:00] matrix, and so you're looking for a particular resume

[00:30:03] Jane Edison Stevenson: capability that adds to, uh, the composition of the board, which is very important. Still remains fundamental. But then how do you ensure that in this age where we do have some progress relative to diversity, that that's maintained? Because every time someone who is a woman or someone from an underrepresented level of ethnicity, etcetera, leaves, then it changes that composition as well.

[00:30:31] Jane Edison Stevenson: And then you've got the composition as we've been talking about, of personal styles and characteristics and capabilities. And so bringing those together is really an art form, and that's where we try to use a blueprint and we're looking at all of those different things in concert and looking at where are the opportunities that we have, four, bringing one or two or three of those things all at the same time into composition with the [00:31:00] board.

[00:31:00] Jane Edison Stevenson: The other thing that changes relative to having a blueprint where you're looking at multiple dimensions besides just the experience capabilities, is the opportunity to think in advance. And we're seeing a lot more of this where you have a, a blueprint and you understand what you're looking for in the future, and sometimes you have an opportunity that's a rare one.

[00:31:24] Jane Edison Stevenson: Um, so for example, maybe you are looking for a particular skillset and it's a year from now, but because you have this blueprint, you're looking out and you're looking at a progression, and so you understand that, um, there's someone that's going to be available who fits, you know, the personality dimension that you are looking for,

[00:31:48] Jane Edison Stevenson: brings diversity by, let's just say in one situation that I'm thinking of a black woman, a P&L leader, who is a perfect fit by industry, expertise, et [00:32:00] cetera, perhaps 12 to 18 months early. Now, the odds that that same person is gonna be available later is, is less. So how do you build that blueprint so you start to take advantage of those things and, and build out the capabilities of the board in concert,

[00:32:16] Jane Edison Stevenson: with opportunities that might not just fit into a transactive model where you're having an opening because of a planned retirement at a certain time?

[00:32:27] Claudia Pici Morris: When we think blueprint, we really think about a needs assessment. Where is the board today? Where does it need to be? And again, it's not just skills and capabilities, it's

[00:32:40] Claudia Pici Morris: leadership behaviors, it's mindsets, it's insights. So the best blueprints are created through the integration of insights, data, and then a clear sense of purpose. Again, going beyond the technical capabilities, it requires effort on the part of the board. [00:33:00] This is where I think boards need to take a more proactive approach and say, as we were saying just before, there needs to be a conversation around

[00:33:10] Claudia Pici Morris: what is it that this board needs? And it's not just capabilities. Maybe there isn't the kind of innovation that, um, discussions that needs to be happening. Well, what does that look like in a person? It's not just, has this person commercialized innovation in the past, and it is, do they have that learning agility, that curiosity, that intentionality around the way they think about the world, the way they look around the quarters, the way they process information,

[00:33:39] Claudia Pici Morris: in order for them to be able to bring that thinking into the boardroom? So it's more around the way people think in concert with the capabilities and technical skills that they have. The matrix today only covers the technical capabilities 'cause that's you, you give it a check or you don't. And we put those in the proxy and we hope [00:34:00] that satisfies investors, but that doesn't necessarily make them effective,

[00:34:04] Claudia Pici Morris: an effective board. It's these other elements. And so when you look around the table and you think about the intrinsic capabilities and mindsets that each board director brings and how they weave together into a mosaic of capabilities that work in harmony with one another, it really changes the game of how that board can contribute to the company. Um, and also it highlights maybe behaviors that you don't necessarily want or maybe holding the board back in some way. And so when you think about the people who leave it, and when we typically create these board matrices or we do a needs assessment, when we ask about the people who are departing and you ask what the contribution is, very rarely is it "God,

[00:34:46] Claudia Pici Morris: he was a great CEO." It's always like, this was the guy who asked the most insightful questions in the room, and how do we replace that? Or this is the lady who really made sure that we [00:35:00] got the issues on the table in the right way. It's so funny because it's so counter to what the matrix actually puts together.

[00:35:07] Claudia Pici Morris: So when we have these discussions around succession planning, it's what are you really losing in terms of the holistic capabilities? Not just the technical ones that are gonna make a difference. And then how do you actually make sure that you're finding those capabilities to enhance the board going forward?

[00:35:27] Claudia Pici Morris: With our work, it's through a lot of strong, um, behavioral interviewing, but it's also through extensive referencing about those individuals to just see what they're like. I mean, again, when we do a board search, we often hear people say, you know, this person is, is uniquely qualified, but what are they like?

[00:35:47] Claudia Pici Morris: What are they like? And so it's getting to that answer, what are they like? That really changes a matrix to a, to something that's more of a blueprint that looks at the holistic individual, not, and how that holistic [00:36:00] individual fits into the team that is the board. 

[00:36:03] Jane Edison Stevenson: It moved the question from just what to how and why.

[00:36:09] Jane Edison Stevenson: You know, I think the how is really important, but the why is also really important. And the why is, for what purpose? What is it that the company is up to? Um, what is it that we want people to move against? And that transforms to a three dimensional orientation as we talked about. 

[00:36:29] Doug Chia: I like the term blueprint over matrix.

[00:36:32] Doug Chia: 'cause Claudia, you were saying that a, a matrix is essentially a checklist at the end of the day, but when someone says blueprint, that's more of a picture, right? It's more of a design. Uh, my sister's an architect, so she prepares blueprints. They don't look like checklists. They look like designs for spaces.

[00:36:53] Doug Chia: Um, 3D spaces, as we were talking about. Now, in part of the blueprint, you [00:37:00] say that to build an effective succession blueprint, boards should consider some of following components. And the number six, uh, component that you talk about is how will the board address rotation and refreshment. So I think we know what refreshment is all about.

[00:37:19] Doug Chia: What, what do you mean when you talk about rotation? You talk about rotation within the board, um, and different roles? Uh, just, yeah, just go into that a little bit. 

[00:37:31] Claudia Pici Morris: When we think about rotation, we mean a progression. So again, I don't think great board members are manufactured, we think they're developed over time.

[00:37:46] Claudia Pici Morris: And so in order for, um, great board members to evolve, it's important to give them different perspectives. Um, so for example, hiring an audit chair and that person being the audit chair for the duration of the time that they're on the [00:38:00] board is really a shame because having them participate in other committees and maybe even chair other committees,

[00:38:07] Claudia Pici Morris: they bring a different lens to how they think about the problem than the traditional one. So that's one, one thing you can think about in terms of rotation. The other is, again, rotation off the board. Right? And so that's the hardest thing. And when we get asked by our clients, you know, and, and actually if you look at any survey of board directors, they'll always say there's maybe one or two directors that maybe have

[00:38:34] Claudia Pici Morris: past their prime in terms of their contribution in the boardroom, but it's, it's almost taboo to ask them to move on. I think that the real estate, though, it has always been valuable, but even more valuable today given how fast the world is changing. And I think there's more of an openness for boards and particularly the non-gov committee, which is responsible for this to really have the more

[00:38:59] Claudia Pici Morris: [00:39:00] specific conversations with those directors to understand their intention and really have them get that feedback about whether or not they're continuing to contribute in the same way they had in the past and honoring what they had contributed while also helping them understand that it may be time for them to consider, um, stepping off the board.

[00:39:20] Claudia Pici Morris: So it's, it's an insanely difficult conversation to have and there are all these mechanisms that boards try and put in place to manufacture that rotation. Whether it's, um, term limits or age limits. But to be honest, that still doesn't solve the problem fast enough. Right? So it's really about the conversation and about respecting the contributions people make while also highlighting, you know, where the organization is and where that individual is and, and identifying the gap that might need to be addressed.

[00:39:51] Jane Edison Stevenson: And this is where the why and understanding what is it that the company is up to and what will define strategic priorities that are [00:40:00] success or failure indicators comes into play. I, I had a conversation with an outgoing director who has been sunsetted just recently, and it was done in the most elegant way because there was a clear understanding of some of the objectives of the business and the ways that in this case, this particular director had already contributed,

[00:40:24] Jane Edison Stevenson: but that those had changed and therefore they needed to use that spot for a different set of, of contributions going forward. And it was, um, I thought exceptionally well done, but the reason it could be well done was because it wasn't personal. It was so clear that there was this blueprint and that there was a different need.

[00:40:48] Jane Edison Stevenson: We needed a window there before, but we need a door there right now because we have to get in and out more easily. Or, you know, just to make that as an illustration to your sister's architecture there, Doug. [00:41:00] The other thing that I think is so important relative to this is that we have, over the last decade brought in a lot of specific functional expertise to boards.

[00:41:13] Jane Edison Stevenson: And so helping those functional experts to really bring an enterprise view is paramount. And one of the ways to do that is to cycle them through different committees, as Claudia talked about. And sometimes, uh, because we're in an era where there is so much more CEO turnover at the top, there is a need to have real understanding of the CEO role in order to do that, and so

[00:41:43] Jane Edison Stevenson: that's another situation where, um, sometimes there is a need to bring some level of functional expertise off the board in order to accommodate the need of having, um, sufficient CEO experience to actually be able to [00:42:00] evaluate the role and the person that is being, um, cultivated either in the pipeline internally or being evaluated externally.

[00:42:08] Jane Edison Stevenson: And that's a very real consideration on today's boards, that we're seeing. And it doesn't mean that you need one or the other, you need both. But the composition changes depending on the dynamic of what it is that the business is addressing. And that what should become a more consistent metric of whether I'm adding the value I was intended to on the board, or whether my, you know, my date has sunsetted.

[00:42:36] Jane Edison Stevenson: It's usually not just a self-awareness that that's happening. There's also a need for some mirror to be raised in terms of the topic, so that it, you know, it elicits that self-awareness and there can be a mutuality to making a transition at an appropriate time. 

[00:42:57] Claudia Pici Morris: I believe that board [00:43:00] members always have the best interest of the company in mind.

[00:43:03] Claudia Pici Morris: It's very rare that you see a board member who is really out for themselves. I mean it, it does happen maybe, but for the most part, it's really about making sure that the organization is successful. And when you put that lens on the conversation and you have the blueprint that really demonstrates that window really does be need to become a door,

[00:43:25] Claudia Pici Morris: I love that analogy, I think it takes the emotion out of the conversation and it allows it to be one around how do we make sure that this company is successful to be able to handle what's coming in the future. 

[00:43:39] Doug Chia: So, so moving into, you know, the kind of the more individual assessment, um, your concept is, uh, what you would call a board success profile.

[00:43:50] Doug Chia: Um, and naturally this profile is going to, uh, contain, um, you know, certain experiences that a board might be [00:44:00] looking for in their, uh, prospective director. But one thing you also point out is that there should be certain leadership behaviors for each director that will make them a success on a high performing, uh, public company board.

[00:44:20] Doug Chia: So leadership behaviors, I think that's something that doesn't often get talked about, at least in, not in the board context. So why maybe talk about, you know, what kind of leadership behaviors, uh, should a board be looking for in a prospective director? 

[00:44:39] Claudia Pici Morris: Our board profile, um, again, is focused in three categories:

[00:44:44] Claudia Pici Morris: personal leadership, interpersonal leadership, and thought leadership. And within each of those, there are five competencies, behaviors, and mindsets that define each one of those. We think of this as the infrastructure behind how [00:45:00] you think about your board. We think the board should actually have representation across all of the 15, but not only in one person.

[00:45:08] Claudia Pici Morris: One person's gonna bring a certain amount, others will bring others. But the idea is that there's some level of contribution across all 15 of those, those behaviors and mindsets. In terms of thought leadership, what falls under that in our mind is integrative thinking, which is someone who sees the broader macro landscape and connects the dots holistically to generate creative resolutions that are more than just the sum of its parts or astute judgment.

[00:45:37] Claudia Pici Morris: Someone who draws the conclusion based on an appropriately broad set of factors, risks, and opportunities, focusing on relevant issues that needed to drive the desired organizational outcomes. So those are just two of the, under the thought leadership, but you see, it actually puts some clear definition around those elements of that portion [00:46:00] of the profile.

[00:46:01] Claudia Pici Morris: And what we have done is we've actually created a, a worksheet that a director would take. And again, it could be done two ways: one, the director can fill it out about themselves. They can't select all of them. So which ones do they feel that they're strong on? Which ones do they feel that they kind of hit the mark, but maybe are it's, it's more of a meets criteria, and then which ones do they feel that there are opportunities for them to develop?

[00:46:27] Claudia Pici Morris: And that really serves as the foundation for that director to be able to hold that mirror up to themselves and say, okay, here's what my contribution is, and now how do those contributions fit into the the defined contributions that the board has decided makes up the culture of that board and their effectiveness.

[00:46:46] Claudia Pici Morris: And so I think it's, it's a very powerful tool. And when you think about the assessments that boards do on themselves, if they use that same framework, not only assessing themselves, but then evaluating their, their peers [00:47:00] against that, then you start to get a really clear picture on, um, how that board maps to the desired

[00:47:07] Claudia Pici Morris: culture and, um, effectiveness that is required for that organization. 

[00:47:11] Doug Chia: In, 

[00:47:11] Doug Chia: in any search, for any type of job, and, you know, directorship is a job. You do an assessment of that person's leadership style. Um, and that's to, for this purpose is to figure out, okay, based on this person's leadership style, how are they gonna fit within the board's culture?

[00:47:33] Doug Chia: One thing that you talk about in the chapter though, are unknown leadership behaviors that hurt rather than help. So here you remind us that the candidates aren't perfect. I mean, nobody is. They're all gonna have their strengths and weaknesses. Even though someone was a CEO of a corporation doesn't mean that they are kind of the perfect board member, and that

[00:47:58] Doug Chia: leaders do [00:48:00] sometimes have leadership styles that could be detrimental to a particular group or a particular situation. How do you do due diligence on unknown leadership behaviors that might be detrimental? You know, I've been in situations where you have someone come in and then they don't work out and you know you part ways.

[00:48:27] Doug Chia: Then later on someone tells you, if you had talked to me before you hired that person, I could have told you, you know, why that person wouldn't be a good fit for your organization. And it's kinda like, well, that's great that you're telling me this now, but in terms of trying to pinpoint that before it happens, how do you accomplish that?

[00:48:52] Doug Chia: Or how do you try to accomplish that? 

[00:48:54] Claudia Pici Morris: There isn't enough of a premium put on building the consensus around the blueprint in [00:49:00] advance of moving that to an actual, um, search and placement. You know, those issues should be vetted well in advance of any potential placement so that you do get, as Jane said, the collective wisdom of the full board around

[00:49:16] Claudia Pici Morris: what is gonna be required, and then do extensive referencing when you do have the candidates against those things to ensure that, that you know, you know as much what is required versus what's you prefer to stay away from. Every time we do a blueprint with the client, it's easier for them to identify what they don't want,

[00:49:39] Claudia Pici Morris: versus what they want. And I think what the board profile does is give them language around how to articulate those in a clear way to be able to vet those that very clearly once we have the mandate around how that person stacks up to those things. So I, I think not having the language [00:50:00] around how to define what you want or what you don't want has been a real, um

[00:50:06] Claudia Pici Morris: problem for boards in the past, and we've seen this as a major breakthrough in the conversations we have with our clients around how to really get at those must haves versus don't wants in the director so that we can vet them and reference them appropriately before it gets to the point of nomination.

[00:50:26] Jane Edison Stevenson: And that brings us to actually testing it out. It's very interesting. I having done this for a long time, have learned that you know, how the person in the process treats administrative support personnel is a very good indication of, um, a lot about the person and also how they handle the process is as much a part of the reference as the reference itself.

[00:50:57] Jane Edison Stevenson: It's easy to kind of overlook [00:51:00] those things in the context of a resume. And one of the things that is for sure is that being a CEO and being, being a great CEO and being a great board member are not always the same. In fact, often, they are not. Because what it takes to operate a business versus being an advisor who elevates the capabilities and the outcomes of a business are quite distinct and different.

[00:51:28] Jane Edison Stevenson: And so what we're always looking for is that person who has the wisdom of experience, um, but who also has developed, um, a level of self-awareness and self-actualization where their gratification comes more from empowering other people where the doing is not them. That's really tricky, and so especially if [00:52:00] someone doesn't have a long board track record,

[00:52:03] Jane Edison Stevenson: and they're, you know, in an operating role, understanding the drivers, and we talked about this earlier, but I think it comes up again in this setting of what really fills their tank, what puts gas in their engine. Because if it is around that operating outcomes and, um, the power of the role, that tends to be not a great fit for an extraordinary board member.

[00:52:33] Jane Edison Stevenson: So getting at some of those issues, um, either through referencing or assessments that we've done both, uh, can be very, very helpful to what becomes about 80% of the success or failure of a board member in the boardroom. 

[00:52:51] Doug Chia: Yeah, so I guess this circles back to what we were talking about at the beginning in terms of, a lot of it depends on how you ask the [00:53:00] question

[00:53:00] Doug Chia: when you are doing these reference checks. There are ways to ask the question that are guaranteed to elicit a lot of positives, and there are ways of asking the questions that identify some of the weaknesses or shortcomings without flat out saying, okay, what is this person bad at? And so I think that's a, a good place to wrap up our discussion for today.

[00:53:26] Doug Chia: Jane and Claudia, thanks so much for joining us to talk about the board succession blueprint and the board success profile. So thank you. So that concludes this episode of the Public Company Series. Podcast Powered by OnBoard. I'd like to thank Jane Edison Stevenson, and Claudia Pici, Morris of Korn Ferry for sharing their insights on board succession planning.

[00:53:54] Doug Chia: And I encourage you to read their chapter entitled Succession Planning for the Board, the [00:54:00] Blueprint and the Talent, which you can find in the book Board Structure and Composition, part of the Public Company Series published by the New York Stock Exchange and JP Morgan. You can read and download the entire book at www.nyse.com/pcs.

[00:54:18] Doug Chia: To learn more about OnBoard, visit www.onboardmeetings.com. And for additional resources and episodes, visit www.publiccompanyseries.com. And don't forget to subscribe to receive all new episodes of the Public Company Series podcast and rate us and leave a review. I'm Doug Chia, and we'll see you next time.