Board leadership succession

Securing the Future of Your
Blood Bank Through
Succession Planning
© Signature Resources 2015
Les Wallace, Ph.D.
1

Who is this guy?
Ideal 21C job: Grandparent!
 University professor / administrator
 Hospital administrator—traditional Board
 International consulting company…
Touch 20,000 people yr. / Coach 28 Execs / 17 Boards a year
 50% for-profit / 50% government & not-for-profit clients
 Served on a regional Bank Board of Directors
 Serving on Counterpart International Board
 Serving on World Future Society Board
2

Today’s topics
 What is leadership succession?
 The Future of Governance.
 What is governance leadership succession?
 How do you plan for it?
 Active recruitment of board members.
 Selection processes.
 Board development to enhance competency.
3

What is leadership
succession?
 Leadership succession is the responsibility of boards
and organizational leaders to assure that a leadership
development plan is in place to prepare future key
leaders.
 An emergency succession policy is commonplace:
who will take charge should a key leader suddenly
become not available?
 Investing in leadership succession in-house does not
come with any promise of succession from the board
or organization—both entities should always conduct a
wide search for replacing key leadership.
4

What is Governance leadership
succession?
 Governance leadership succession is
the responsibility a board has to assure
board makeup and future appointments
meet the changing needs of the
organization.
 Leadership succession implies
advanced thinking, recruiting and
assessment of board members before
they are needed.
 Maintaining / improving competencies
of current board members is also
“competency succession.” Est.
average 1 hr./month.
5

3 Biggest Values
A Board Member Can Bring
Intellectual capital
6
You can do something about all three
Time
Networks

Values A Board Member
Can Bring
 Intellectual capital:
 Plan for future board composition.
 Invest 70% of most meetings in strategic
discussion.
 Invest in board awareness: external business
environment, benchmarking best practices,
officer development. +/- 2 hours a month.
7

Can Bring
 Time:
 Refresh your agenda efficiency.
 Invest in Chair, Vice-Chair and committee chair
development.
 Right committee structure.
 Consent agendas.
 Executive summaries and reports.
8

Can Bring
 Networks:
 Identify the networking the organization needs for
effective branding, marketing, insight.
 Include in your board job description: “use your
networks of influence and connections to further the
mission success of the organization.”
 Spend time during strategy discussion on “who in
our network might help us here?”
o With introductions, insight, marketing, etc.
9

My Job Today
 A look @ high performance governance practices as
assembled from BoardSource, National Association of
Corporate Directors, American Hospital Association,
American Society of Association Executives, The
Conference Board and others.
 Candid opinions based on work with 300+ boards:
For-profit, non-profit, international, financial,
healthcare, community, national associations.
 Open dialogue—your question is not an interruption!
10

Your Job Today:
Final Exam
 What might you take back to your board to start the
conversation about the board of the future?
11

What is
The Future of Governance?
“The future is already here—it’s just not
evenly distributed yet.”
12

Synthesis of Elements of Governance
13

“Nothing ages faster than the
future.” David Carr
© Signature Resources 2015 14
“The problem is never how to get new
innovative thoughts into your mind,
but how to get the old ones out.”
Dee Hoc, Retired CEO Visa Card Executive

Today’s Governance
From the Literature
NACD Public Company Governance Survey, Nat. Association of Corp. Directors (2014)
“What Directors Think” (2014), Spencer Stuart
priorities for Boards from national surveys:
① Strategic planning and oversight.
② Board composition
③ Board refresh.
④Risk oversight.
⑤Regular board assessments are considered very
effective by 85% of the survey population.
15

The Governance Future that is Here
 Term limits combined with governance leadership succession initiative keeps
board refreshed.
 Majority of meeting time invested in “strategically focused agenda.”
 Competency based director nominations.
 Competency development of directors receives serious focus--40 hrs. a year
[3.3 hrs. a month].
 Robust ERM committee and organizational activity.
 Governance Self-assessments become annual routines.
 “Independent Director” / “Outside Director” appointment to bolster Board
strength. [In the U.S. independent outsiders make up 66% of all board and 72%
of S&P 500 Company boards]
Are these themes surfacing with your Board?
16

Future Governing Boards
“In the not to distant future, new
board members, at all levels of
enterprise--from community
organization to corporations--will be
required to ‘certify governance
competency’ to quality for an
appointment / election.”
Les Wallace 
17

Future Governing Boards
 Term limits the norm.
 Recruitment focuses on competencies and connections.
 Compensation for not-for-profit board will support increased
competencies.
 Diverse board makeup will become the norm rather than the
exception.
 Board officer development will become a higher priority
investment.
 Board coaches will be commonplace.
18

High
Performance
Governance
Assessment
1. Is Our Board Composition Right for the Challenge?
2. Are We Addressing the Risks That Could Send Our Company Over the
Cliff?
3. Are We Prepared to Do Our Job Well When a Crisis Erupts?
4. Are We Well Prepared to Name Our Next CEO?
5. Does Our Board Really Own the Company’s Strategy?
6. How Can We Get the Information We Need to Govern Well?
7. How Can Our Board Get CEO Compensation Right?

High
Performance
Governance
Assessment
8. Why Do We Need a Lead Director Anyway?
9. Is Our Governance Committee Best of Breed?
10. How Do We Get the Most Value out of Our Time?
11. How Can Executive Sessions Help the Board Grow?
12. How Can Our Board Self-Evaluation Improve Our Functioning and Our
Output?
13. How Do We Stop from Micromanaging?
14. How Prepared Are We to Work with Activist Shareholders and Their
Proxies?

And then there’s committee work…
A dark alley down which good ideas are led to be strangled!
21

21st Century Governance
 Boards as Committees (‘50s-’60s)
CEO Driven
 Boards as Managers (’60s-’70s)
Operational / Fiduciary
 Boards as Trustees (‘80s-90’s)
Policy and Strategy (John Carver)
21st Century Boards
Transformational Leaders “Board
of Directors must be a strategic asset.”

Strategy is about Transforming
the Organization to Remain…
Viable
Valuable
Vibrant!
23

21st Century Governance
and Strategy
21st Century Boards
Transformational Leaders
The Board should be a strategic asset to the organization!
What’s the implication for board makeup?
For succession?
24

Transformational
 Transform: to completely change something.
 Transformational: a focused effort to make significant
changes to strengthen the relevance and value of an
organization.
“Evolution keeps you alive;
Revolution keeps you
relevant.”
Gary Hamel, Leading the Revolution
25

Transformational
Where are the revolutions happening
in your domain?
Who are the disruptors?
A Board should know these and
discuss how they are doing on a regular basis.
If the national / regional conferences you go to
Don’t discuss these—find a different conference!
26

Strategy is about Transforming the
Organization to Remain Viable, Valuable,
and Vibrant!
So your board needs to be…
 Strategic thinkers.
 Change compatible.
 Focused on transformation of the enterprise.
 Effectively navigating changing customer, regulatory
and constituent demands.
 Strategic planning looking three to five years out.
 Annually refreshing the strategic plan.
27

High Performance
Governance: Competence
 Board job descriptions identify leadership competencies required.
Nominations, interviews, screening confirm competencies.
 Term limits (officers and board seats) assures governance refresh and
infusion of fresh eyes / new competencies.
 Governance Leadership succession program in place develops
future leaders from the field early… 1-3 years out:
and future board officers.
 No emeritus status board members.
 Board members failing the involvement / attendance / conduct
standards are removed for cause: bylaws are specific to these
expectations.
28

High Performance Governance
Competent
 Real time assessment* of effectiveness following each board
meeting.
 Annual self-assessments and development plans drive
improvement.
 All committees / task forces have written charters and clearly
identified outcomes or deliverable expectations.
 Committee charters reviewed every couple of years.
 A dose of governance leadership development at every meeting (+/-
15 minutes) e.g. compliance refresh, board’s role in organizational
culture, board succession planning, etc.). [Ave director education
investment 22.1 hrs. each per NACD 2012-13 survey]
*Assessment: http://www.slideshare.net/LesWallace/board-self-assessment
29

Governance Competency
Governance is less about the technical literacy of a
board member regarding a specific challenge
facing the organization (e.g., HR, marketing,
finance/budget, legal, ERM)…
…It’s more about the leadership
competencies that give a board member a
sophisticated peripheral vision to oversee
a complex business enterprise.
30

Governance Competency
 Fiscal literacy about large enterprise business
(diversification, capital investment, tracking KPIs).
 Serious customer service or market based planning
experience.
 Strategic mindset and experience.
 Change & organizational transformation leadership.
 Executive oversight—leading organizational leaders.
 Technology literate.
 Mergers / Acquisitions.
 Compliance / regulatory savvy.
31

Governance Youth Movement
(As seen by some)
32

Governance Diversity
and
Youth Movement
“Suddenly—Age is a Diversity Issue”
www.cues.org/article/view/id/Good-governance-age-is-board-diversity-issue
33

Director Refresh Questions
 How does your Board assure
competent nominations to the
Board of Directors?
 How many potential board
members do you currently have
in the pipeline?
 Can both of these be
enhanced?
34

Questions?
Next UP:
Planning and Active Recruitment
Selection
Continuing Board Development
35

Governance Leadership Succession
① Profile the ideal board member for where you’re
going—not where you are.
② Identify a pool of candidates.
③ Engage, Develop, Cultivate the pool.
④ Narrow the pool by giving the most capable and
Committed greater immersion and development.
① Encourage the best to stand for board appointment.
Create a Board Makeup Dashboard:
Current and Desired in the Future
36

Board Profile:
Today - Tomorrow
 Gender
 Age
 Ethnicity
 Length of blood bank board service
 Leadership experience and competencies
 Special competencies / experience / networks
e.g. risk management, M & A, Chamber of
Commerce, managed care, FDA, etc.
37

Governance Leadership Succession
Timeline?
Board of Directors makes annual commitment to
identify and develop potential new board members
ahead of vacancies.
A minimum 12 months before a known vacancy, a
pool of potential candidates are identified and
screened as to interests and qualifications.
 Preferable:
2-3 years in advance of a board appointment the
Board of Directors has identified people with
potential and is involving them in some way in
governance development and/or volunteer efforts
for the enterprise.© Signature Resources 2015
38

Planning for a Future Board
 Chair and Vice Chair have crucial conversations with
board members who should move on.
 Term limits assure opportunity for new appointments
without having to have difficult conversations.
 Three year terms with one reappointment is typical.
 Create a “board profile” of what you will need 3-5
years out.
 Create a pool of potential candidates and actively
screen them for competency and mission alignment.
 Actively recruit.
39

Planning for a Future Board
 Crucial conversations regarding legacy moves:
“Based upon our profile of future board needs we would like
to act quickly on refreshing our makeup.”
“You’ve given valuable service however we would like you to
consider relinquishing your board seat for a new
appointment.”
The CEO should not be involved in these conversations
with board members who need to move on!
40

Who Guides Board Recruitment?
 Governance and Nominating committee
 Executive Committee
What’s the role of the CEO?
 Involved in conversations about potential future
board needs
 Involved in end of screening interviews with
potential candidates
 Heavily involved in new board orientation
41

Where / How do you find folks who
might fit the ideal profile?
 Board & past Board know some in the community.
 The Executive / Management team knows some.
 Your networks of community and business leader
contacts know some.
 You can research names from the university,
community leadership & chamber lists for potential.
42

Finding Competent Board
Members
 88% Ask for board member recommendations.
 69% evaluate board composition via a gap analysis or
matrix.
 63% invite non board members to serve on committees.
 63% cultivate relationships with colleagues or community
leaders.
 41% cultivate relationships with corporations or other
organizations.
BoardSource Nonprofit Government Index 2012.
43

Board Members:
Where do you Find Them?
 Colleges and Universities—faculty and graduate students
 Chambers of Commerce
 Specialty Chambers—Black, Latino, Asian, Native American
 Young Professional Groups
 Professional Associations
 Small Business Alliance Groups
 Specialty Legal Societies
 State not-profit societies
 Mid-to upper managers of business in your area
 Your network of high performance leaders!
44

Selection
 You will end up with a number of highly qualified
candidates who might serve your blood center.
 Narrowing the group to the vital few must align with
all the goals of your new board profile:
competencies, experience, demographic addition,
networks.
 Don’t be afraid to add a board member with which
the current board was not familiar before the
search.
 “Fresh eyes” will be a valuable contribution to your
board.
45

Onboarding
 Adequate orientation is critical to helping the new
board member to a fast start.
 Based upon an hourly value of board service for you
@ $500/hr. and an estimated 62+ hours of service a
year—you’re bringing on the equivalent of a $31,000
investment (first year value).
 One day on site with the executive team and key
staff for briefings and dialogue is a minimum.
 Another 3+ hours with Board Chair, Reviewing
committee minutes, strategic plan and other
documents is a minimum.
46

New Board Orientation : Materials Review
Offsite materials review
 History of the organization.
 Mission, vision, values statements
 Summary of services, special capabilities,
planned services.
 Newsletters, press clippings.
 Financial performance past three years
including external audit.
 Regulatory / compliance review findings.
 Annual Report.
 HR org. chart & bio-sketch of professional
backgrounds of key staff.
 Strategic Plan.
 Board by-laws.
 Three years of board minutes.
 Board policy and procedures.
 Current board profile and professional
background bio-sketches.
 Board commitment and conflict of interest
statements for signing.
 Recent governance self-assessment results.
 Committee structure and charters.
 Committee Minutes.
 Board calendar.
47

New Board Orientation II
Onsite introductions and briefings
 Staff leadership welcome meeting
and introductions.
 Key programmatic one on one
meetings.
 Financial briefing from CFO and
review of board financial dashboard.
 ERM briefing from the Chief Risk
Officer or Supervisory committee
chair.
 Human resources briefing including
review of board “organizational
climate” dashboard.
 Customer briefing including last
twelve months satisfaction and value
survey results.
 Board Chair briefing: Board
composition philosophy and
leadership succession.
 Recent board self-assessment
results.
 Board committee assignment.
48

New Board Orientation III
Governance Education
 Digest assigned articles and booklets—even better, require
specific reading prior to the appointment—voluntary pre-
certification.
 Phone consultation with Governance committee chair upon
completion of reading and orientation.
 Discuss annual calendar of conferences and expectations for
attendance and learning commitments.
49

Sustaining Competency
 Annual self assessment guides board improvement
 Special emphasis on environmental scanning,
benchmarking, board tutorials (e.g. regulation,
quality, supply chain, etc.), keep eyes on the
changing horizon.
 Officers and future officers need specific
development about their roles, functions and
leadership approaches.
50

Questions?
51
Final Exam:
What might you take back to your board to start the conversation
about the board of the future?

Contemporary Literature on Governance
Twelve Principles of Governance that Power Exceptional Boards
(BoardSource 2005)
Owning UP: The 14 Questions Every Board Member Needs to Ask
(Ram Charan, 2009)
Governance as Leadership: Reframing the Work of Nonprofit Boards
(Richard Chait, et. al., 2005)
The Future of Governance
(Jay Lorsch, 2012)
Principles of 21st Century Leadership: Journey to High Performance
(Les Wallace, 2013)
What are you reading?
52

Who is this guy?
53

Les Wallace, Ph.D.
President, Signature Resources Inc.
Les@signatureresources.com
 Dr. Wallace is recognized for tracking business environment and workplace trends and their impact
upon business and government. His publications have appeared in Leadership Excellence,
Personnel Journal, Credit Union Management, Public Management, and Nation's Business as well
as numerous research and conference proceedings. His latest book, co-authored with Dr. Jim
Trinka, A Legacy of 21st Century Leadership, outlines the leadership organizations need in a global,
fast moving business environment. His book, Principles of 21st Century Governance (2013) is being
used by many boards in the profit and not-for-profit sectors to design governance development
approaches.
 His new book, Personal Success in a Team Environment (2014) is used by individuals and
organizations to improve teamwork, career building and success at work.
 Les is a frequent consultant and speaker on issues of organizational transformation and leadership,
employee engagement, strategic thinking and board of directors development and governance. His
clients include Fortune 100 businesses, Government agencies, and not-for-profit organizations
world-wide. Dr. Wallace is also the host resource on the 9Minute Mentor, a series short video
tutorials governance.
 Les has served on the Board of Security First Bank and currently serves on the international Boards
of the World Future Society and Counterpart International. He is a member of the National
Association of Corporate Directors. Les writes an on-line column for CUES Center for Credit Union
Board Education.
 Preview his video series on governance: www.signatureresources “Dr. Wallace on Camera.”
 https://twitter.com/9MinuteMentor

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