Is your board of directors ineffective? More strategy less compliance please

Toward a value-creating board, more strategy less compliance please

MALTAway is your board governance partner, furthermore having a NED with international experience in the BOARD, reinforce widely the diversity, independence and compliance requirements for a better Corporate Governance, Leadership and Business results

The amount of time board directors spend on their work and commit to strategy is rising

Directors say they dedicate more time now to their board duties than ever before and that, since 2011, they’ve cut in half the gap between the actual and ideal amount of time they spend on board work. In the newest McKinsey Global Survey on corporate boards,1the results confirm that strategy is, on average, the main focus of many boards. Yet directors still want more time for strategy—more than any other area of their board work—when they consider its relative value to their companies.

We asked directors about the effect their boards have on company value and found that, in general, respondents believe their impact is high or very high—which was also true in our previous survey on the topic.2 To gain a deeper understanding of how boards create value, we took a close look at larger commercial companies and identified patterns between directors’ assessments of the board’s overall impact, effectiveness at executing specific tasks, and the way the board works. From our analysis emerged three types, or profiles, of boards, which we call ineffective, complacent, and striving. Interestingly, some directors’ initial views on their overall impact diverge from how effective they say their boards are at individual tasks. To be successful, then, the results from our three profiles suggest that boards must be effective at individual tasks, maintain a trust-based but challenging board culture that embraces feedback, and aim to improve continuously.

Time spent—and commitment to strategy—are on the rise

On average, the amount of time directors spend on board work has increased notably in recent years. Compared with 2011, respondents now say they spend five more days per year on board work, cutting in half the ten-day gap between the actual days spent and the number of days directors want to spend to get it right

 

As the number of days has grown, so has the amount of time spent on strategy, where board members tend to say they make their biggest contributions (Exhibit 2). Indeed, directors are almost twice as likely to say their boards are more effective at strategy than any other area of their work; they report the least effectiveness at organizational health and talent management.3 Strategy is also where directors spend nine days per year, the greatest amount of time across the seven areas of board work we tested.

But for all of their focus on strategy, most directors would like to dedicate even more time to strategic issues. Fifty-two percent of directors say they want to increase the time they spend on strategy in the next few years, based on its relative value to their companies (Exhibit 3). An equal share say the same for organizational health and talent management, an area where boards spend only three days per year.

A board’s actions, dynamics, and self-perception all matter

To gain a more comprehensive understanding of how boards can be successful, beyond the time directors spend on their work, we looked closely at three factors of board performance: directors’ assessments of what impact their boards have overall, how their boards perform specific board tasks, and how their boards operate.4 After considering responses at both the global and the task level (where some interesting differences emerged), our analysis resulted in three types of boards: those that are ineffective, those that are complacent, and those that are striving.5

The ineffective boards

Compared with their peers, the directors on ineffective boards report the lowest overall impact on long-term value creation and the least effectiveness at the 37 tasks we asked about. Notable shares say their boards don’t execute some of these tasks at all: 70 percent, for example, say their boards don’t align with the executive team on how to manage company risk. Of the tasks they do perform, only minorities of these directors say their boards are effective at any one. Ineffective boards do best at securing and assessing their management teams: 44 percent say their boards are effective at discussing top-team performance with the management team, and 42 percent say they’re effective at regularly reviewing the top-talent pipeline. When it comes to how boards operate, less than half of ineffective-board directors report a culture of trust and respect in the boardroom or that directors seek out information on their own. Only 1 percent say their directors received sufficient induction training.

The complacent boards

By contrast, directors on the complacent boards have a much more favorable view of their overall contributions. Close to half say their boards have a very high impact on long-term value creation—the largest share among the three types of boards. But when asked to consider their boards’ execution of 37 specific tasks, there are only 3 for which a majority of respondents report effectiveness: ensuring that management reviews financial performance, setting the company’s overall strategic framework, and formally approving the management team’s strategy.

Organizational health and talent management is a particular weakness: just 9 percent of directors on complacent boards, for example, rate their boards as effective at ensuring the company has a viable CEO successor who can step in at any time (Exhibit 4). Compared with ineffective boards, though, these boards have a stronger sense of trust and teamwork. Two-thirds of complacent-board directors report a culture of trust and respect, and about half say their boards spend enough time on team building. At the same time, they struggle to embrace feedback. Less than one in five say their boards regularly engage in formal evaluations, either individually or as a board, or that their chairs ask other directors for input after meetings.

The striving boards

The striving boards, then, are the most well-rounded of the bunch. Just 26 percent of these directors rate their boards’ overall impact as very high, compared with 44 percent at the complacent boards. But on specific tasks, they report much greater effectiveness than their peers on every single one—and at least half of striving-board respondents say they’re effective at 30 of the 37 tasks. These directors rate their boards as particularly good at strategy and performance management (Exhibit 5). For example, 69 percent of respondents on striving boards say they effectively adjust strategy on a continuous basis; only 35 percent on complacent boards and 2 percent on ineffective boards say the same.

Striving boards stand out, too, in the ways they operate (Exhibit 6). These directors report an exceptionally strong culture of trust and respect, that board members and the management team constructively challenge each other (76 percent say so, compared with 53 percent of complacent-board directors), and that chairs run meetings well. Feedback is another area that distinguishes these boards. Striving-board directors are more than twice as likely as complacent-board directors to say their boards conduct regular evaluations, and more than three times likelier to say their chairs ask for input after each meeting. That said, there’s significant potential for even the striving boards to improve: only one-third of these directors say their boards regularly evaluate themselves.

Finally, directors on striving boards commit much more time to their work than others do: on average, they spend 41 days per year on board duties. The complacent-board members spend only 28 days per year—even less time than directors on ineffective boards, who report spending 32 days on board work.

Looking ahead

  • Spend even more time. This year’s results indicate across-the-board increases in the time that directors spend on board work, compared with previous surveys. While directors at striving boards already spend 41 days per year and have no ambitions to spend more time, the average board member spends 33 days and says he or she would, ideally, spend 5 days more. In our experience, though, many board members are spending 50 days or more per year on board work, either due to regulatory pressure or simply owing to the fact that the time required to do a good job is usually more than directors initially expect.
  • Balance trust with challenging discourse. According to the results, the boards that are most effective and well-rounded also have the strongest board dynamics. In a healthy boardroom, a culture of trust and respect is vital. But so is an environment where directors and company leaders challenge each other. It’s no coincidence, then, that directors at striving boards report these characteristics most often. But all boards could be better at other elements of how their boards work: improving induction training, for example, and conducting regular evaluations, which only a minority of respondents report—even at the striving boards.
  • Appoint an ambitious chair. Another important ingredient of improved board dynamics—and an improved board—is an effective chairperson, who runs meetings well, establishes a culture of trust and constructive discourse, and invests in training, development, and feedback. Good leadership sets the tone for the board as a whole and can set the stage for a more effective, value-enhancing board.

http://www.mckinsey.com/Insights/Strategy/Toward_a_value_creating_board?cid=other-eml-alt-mip-mck-oth-1602

 

 

Board members, a guide to get on board your CeO

Board members, a guide to get on board your CeO

a great post from pulse…..

MALTAway is for your governance and board  members

alberto balatti_murakami

When we work with boards of directors to help them prepare to interview CEO candidates, we develop an interview guide that will organize the conversation, which typically runs for 90 minutes.  While interviews are only one step in a CEO hiring process, along with in-depth referencing and executive assessments, it is not an over-statement to say that they are the lynch-pin in the process.

Boards and search committees will always put credence in analyzing track records and relevant experience, reviewing written reports, and talking to referees.  But it is in the interview where chemistry is established and essential intangibles like passion, energy, and fit are determined.  As a result, at the CEO level, as well as at every step in your career, being a strong interviewer is a major advantage.

In conducting CEO candidate interviews, many questions posed by a search committee are, of course, customized to the company’s particular situation.  But many of the questions are based on the essential areas in which a CEO needs to demonstrate capability: strategy and vision; growth, financial, andoperational management; leadership and team building; and Culture.

Here is the interview guide that we recently created for a board as part of a public company CEO search.

If you are an active or aspiring CEO candidate, it will serve you well to be prepared to answer these types of questions.  Even if you’re not yet at the CEO level, reflecting on these questions will give you an edge when you prepare for your next big job interview.

INTRODUCTION

The typical CEO interview begins with the chair welcoming the candidate, thanking them for coming and inviting the members of the search committee to introduce themselves.  He or she will then tell begin with what I believe is the best opening question:

“You have had a chance to begin to get to know our company.  Why do you think this could be the right opportunity for you at this point in your career and why do you think you might be the right leader for us?”

The best candidates will answer this with a crisp 4 to 6 minute narrative about their career, their relevant experience, their professional interests and aspirations, and a top-line assessment of the opportunity.  Often times this is the most important question of an interview, because as we all know, first impressions are lasting impressions.  It is in this questions, along with the hellos, handshakes, and introductions, where those all-important first impressions are made.

INTERVIEW GUIDE

From that point, each area of CEO capability are probed, with selections from the following questions (all of these questions would require several hours of discussion):

Growth, Financial, and Operational Management

  • Describe an instance where you have driven a company or business to accelerate growth, expand EBITDA and profitability, increase efficiency and enhance shareholder return. What was the vision and what needed to change?  How did you get the organization to respond?  What was the outcome?
  • Describe your experience managing significant budgets and P&Ls. How did you prioritize your investments?  What process did you use to gain support?  What have been your experiences with tough decisions regarding budget cuts, restructuring or reallocating resources?
  • With an example or two, tell us about how you have grown or changed a business or an organization through strategic partnership, joint venture or acquisition. What was the long-term effect on your business?
  • Have you ever created and/or launched a new product or business that resulted in a new revenue stream? 

Strategy and Vision

  • What do you think are the most-important strategic priorities for our company over the next three years? What would you do as CEO to achieve success against these priorities?
  • How have you developed strategy when your business faced new market entrants and competitive threats? What were the short- and long-term goals that you put in place?  How did you involve others in designing and implementing change? What was the result?
  • Describe your experience managing an organization as it creates new business models, products, content or initiatives that are essential to the company’s growth. How did you develop a vision and a strategy to support it?  How did you communicate and gain buy-in from key constituents as the organization evolved?  What were the results?

Leadership and Team Building

  • How would you describe your management style? How would your staff and peers describe you?  What would they say are your major strengths and/or weaknesses as a leader or manager?  Where do you think you might improve?
  • Explain some of the different environments that you have worked in. Where have you been at your very best?  Describe the environments in which your leadership style is most effective.  Where have you been frustrated and less successful?
  • With an example or two, tell us something about your communications style in the workplace with your direct reports, your superiors and your staff more broadly? Also with the external community – clients, and investors?
  • Tell us about a time when you took over a team that had been under the leadership of another person for a long period of time. What did you do to build support, rapport, trust and followership quickly?

Technology

  • Like many companies we are experiencing changes in our operating environment due to continued digital transformation, the shifting patterns of content consumption and aggressive competitors. What have you done to implement technology improvements, e.g., platform integrations, new enterprise management systems?
  • Can you share a time when you have had to expand a core product set through innovation, and particularly in a mobile environment?
  • How would you bring greater innovation to our company? What innovations have you led at other businesses that are most germane?
  • What business that has adopted new technology and evolved their business model do you admire most? Why?   

Culture

  • What is most important and valuable to you? What serves as a guiding principal in your life?
  • Think back and share a story about a personal life experience that defines who you are today. What was the value/lesson?
  • How have you changed cultures to facilitate innovation?

Other Questions (if not previously addressed)

  • What is your assessment of where our company stands today? From your vantage point, what is the company doing right and what needs to change?
  • What do you believe would be your biggest obstacles to succeed as the next CEO? What development needs and gaps in skill/experience will you need to pay attention to, and how will you address them?
  • Can you give us an example of where a gap in skill/experience led you to be less effective than desired? What have you done to ensure you do not fall into the same trap again?
  • Describe one or two specific accomplishments that you are especially proud of over your career and why.
  • How would you approach your first 100 days in the job? How would you learn the business, build trust, generate buy-in, and develop a plan?

And finally, the all-important concluding question:

“What questions do you have for us?”

 * * *

Be prepared to answer these types of questions and you will maximize your chances of acing the interview and getting a step closer to your next big job.

https://www.linkedin.com/pulse/how-boards-interview-ceo-candidates-james-citrin?trk=hp-feed-article-title-share

https://albertobalatti.wordpress.com/

FORBES, MALTA making Waves in Financial Services

FORBES, MALTA making Waves in Financial Services

MALTAway for your Board Members, Advisory and Governance 

The beautiful Mediterranean island of Malta covers 316 square kilometers and has a population of fewer than 450,000. Historically, its location between Europe and North Africa has given it great importance as a trading post and a naval base, but gone are the days when the island relied solely on tourism to support its economy, nowadays Malta is making waves for completely different reasons.

The Island making Waves in Financial Services – Forbes 2016

maltaway_windsurf

http://www.financemalta.org/publications/articles-interviews/articles-and-interviews-detail/the-island-making-waves-in-financial-services

Treat Employees Like Business Owners, do it basic, simple and straightforward.

Treat Employees Like Business Owners, do it basic, simple and straightforward.

The rest is boredom and noise, keep it far away

Employee loyalty and engagement are hot topics, and for good reason. Companies want to attract and retain talented people who really dig into their work. But most employers ignore two of the most powerful tools for making that happen.

MALTAWAY Board Governance and Business Advisory, a different WAY from Malta

Tool #1 is enabling employees to build real ownership in the business.

Of course, many public corporations offer stock-purchase plans or the like as part of their retirement benefit. And everyone knows about the options collected by a select few in Silicon Valley and other tech centers. But meaningful ownership — sizable grants of stock to rank-and-file employees year after year, to help them acquire a significant stake in the company — is all too rare.

It doesn’t have to be. Many large corporations manage to find big bundles of shares (and huge amounts of cash) for executive compensation, even though there’s little relationship between senior-management pay and financial results. A portion of those assets can be redirected to regular stock grants for employees. And companies — except for the very smallest — can implement an employee stock ownership plan (ESOP), often funded through borrowing. So long as it’s sufficiently generous, either approach gives employees the kind of stake that makes them feel like true owners.

Just look at the supermarket industry to see such ownership in action. H-E-B, the big Texas-based chain, recently announced that it would give up to 15% of company shares over time to 55,000 of its employees, distributed according to a formula based on salary and seniority. That’s a chunk of stock estimated at more than $1 billion. Publix, a large chain headquartered in Florida, is majority owned by its employees and regularly makes the annual “best companies to work for” lists. And there’s WinCo, a grocery retailer based in Boise, Idaho, with 14,000 employees and 86 stores spread across eight western states. Every WinCo employee is an owner. Cathy Burch, who has worked there for 20-some years as an hourly employee, now has close to $1 million in her retirement account.

You don’t think that kind of generosity builds commitment and passion? “We work our tails off,” an employee with 28 years at WinCo told Forbes. “We’re more of a team than just working for a typical company. There’s a carrot out there you’re working for, for the rest of your life.”

Tool #2 goes by different names: open-book management, economic transparency, ownership culture. Whatever you call it, it means encouraging employees to think and act like businesspeople rather than like hired hands.

If you work for a conventional organization, your job is to show up at the appointed time and perform certain tasks. At open-book companies, it’s part of everyone’s job to contribute to the success of the business. Managers help employees understand, track, and forecast key numbers. They welcome ideas for improvement. They reinforce the ownership mindset by sharing profit increases with everyone, usually through bonuses funded by the increase itself. Many of these businesses also have a stock plan in place.

The approach is easiest to understand in a small company. The Paris Creperie, a Boston-area restaurant that’s about the size of a McDonald’s outlet, recently adopted open-book management. Creperie employees learned the basics of the restaurant business, including determinants of profit such as cost of goods sold (COGS). Then, last summer, they launched an initiative to reduce COGS, cutting food waste, reconfiguring some dishes, and coming up with ways to operate more efficiently. COGS dropped from roughly 30% of revenue to 26.5% over a four-week period, and continued to hold in the mid-20s. Operating profit rose by more than 10 percentage points in just four months and has stayed in the 18% to 20% range, compared with a restaurant-industry average of less than 4%.

This year, employees there are on track to get bonuses averaging $6,000. “Any other restaurant, I would just be scraping by,” shift supervisor Amanda Norton told theBoston Globe. “Seeing those bonuses really helps me breathe easier, knowing that it’s not the end of the world when I have to pay bills.”

You can imagine what all this does for employee loyalty and commitment. “Actually,” says Harvard Business School professor Leonard A. Schlesinger, “when employees know more about the business and have an economic stake in the outcome, there’s a high probability that turnover rates would go down exponentially.”

These tools also address two fundamental challenges of today’s free-enterprise system. An ownership nest egg helps mitigate inequality by putting more money in the hands of rank-and-file employees. And open-book management teaches people the basics of business, so they can thrive when they have to change jobs, as most inevitably will in our fast-changing economy. “People are learning what it means to run a business,” says Joe Grafton, a consultant who works with the Creperie. “That’s something they can take with them as they move forward with their careers.”

Both measures give people a stake in the system and the wherewithal to live a more secure life. A company that puts these tools to work helps its community while helping itself.

https://hbr.org/2015/12/treat-employees-like-business-owners

MALTA skilled workers, what’s next

Visa programmes to attract skilled workers?

MALTAway for your Board Members and Governance

To compete in a global market Malta has to compete on the skilled workers as well, rewarding them to move here, taxation is just a way

The KPMG’s biennial financial services conference questions ‘what’s next?’ for Malta’s financial services industry

woman

The financial services industry is finding it hard to recruit skilled workers because Malta’s education is preparing “robots” and not independent thinkers, speakers taking part in a financial services conference said today.

In a day-conference at the Hilton organised by audit firm KPMG Malta, senior partner Tonio Zarb said Malta had to work harder to reach the level of sophistication of other countries in the financial services sector.

“One way of doing this is to import expertise. Innovation is closely tight to education and we need to encourage a change in our education system to produce independent thinkers, and not robots,” Zarb said.

Malta Financial Services Authority chairman Joe Bannister drew attention to the fact that, despite the complaints of the industry, very few came forward to help with training prospective workers.

He explained how last year, only 90 placements were granted down from a 120 the previous year. Bannister went on to state that students were attracted to the financial services industry because of the high salaries. He went on to warn of risks of creating a wage inflation.

One way of bridging the gap resulting from skills shortage was through the setting up of visas programmes, such as those employed by the United Kingdom, FinanceMalta chairman Kenneth Farrugia said.

The UK brought in a 20,700-a-year cap on skilled workers from outside the EU in 2011.

KPMG partner Juanita Bencini went on to suggest that the solution could be closer to home: increase female participation. 60% of University graduates are women but less than half of the full-time working population are women.

“We have to tackle the defeminisation of the workforce and we [financial services sector] should be at the centre of increasing female participation.

It’s also translated into how employers look at it,” Bencini said.

“There is a huge mismatch between what the industry wants and what comes out of university. We have not shown enough courage to ensure that this talent doesn’t drop off and we cannot afford to have them disappear of the face of the earth.”

Bencini added that what the government did with the universal provision of free childcare centres had helped a lot but the private sector needed to do something different too.

“Can we see our males working four days a week? We really need to start thinking to ensure female participation is there and this will make the industry grow,” she said.

Labour MP Charles Mangion also highlighted the country’s stability as a key attraction to investors. He noted, that the cross-party consensus that existed for years allowed the sector to flourish.

The financial services sector contributes some 12% to the country’s GDP.

http://www.maltatoday.com.mt/business/business_news/59845/financemalta_chair_suggests_visa_programmes_to_attract_skilled_workers#.Vl7N8nYvfIW

Why, when and how to hire a non-executive director; All Board Members “black dressing” is just Risks’ Concentration

 

Why, when and how to hire a non-executive director;  All Board Members “black dressing” is just Risks’ Concentration

A seasoned veteran can be a big asset on the board of a growing business.

 

Sharing  experience and thinking is creating value for growth, Many thanks to the author to support our way, in Malta with Maltaway, we advise and deliver Boards’ Member and NED tailored solutions, because having all the Board Members “black dressing” is just Risks’ Concentration
In a business’s early day, it’s often up to the founders to do everything – from accounts to HR, sales and marketing. Roles become more specialised as the company grows and eventually there comes a point when you need to beef up the board as well.

WHY TO HIRE A NED

Entrepreneurs know their business, and their market, inside out; there’s often nobody better equipped to handle the day-to-day management. But it can be difficult to step back and look at the bigger picture. A non-executive director (NED) can bring a fresh perspective and a less emotionally involved standpoint to the business, helping its leaders identify long-term threats and opportunities.

‘The check and balance a non-exec can bring to a business is hugely valuable, and can help prevent some of the mistakes that a lot of business leaders will undoubtedly make during their journey,’ says George Heppenstall, a director at the executive search firm Directorbank. ‘It’s not a case of bringing in somebody to tell [entrepreneurs] how to run the business, because invariably they have done a very successful job of that already. But there are those out there who can spot the fine margins that can make an impact.’

‘When I join a business it can change the whole dynamic,’ adds Jo Haigh, an experienced non-exec and author of The Keys to the Boardroom: How to Get There and How to Stay There. ‘It can professionalise the board, because if you’ve got a lot of execs who are running the business on a day-to-day then they can be very introspective. It can also bring good practice, because governance practice is something that very often execs don’t have a lot of experience of.’

WHEN TO HIRE A NED

There’s no absolute answer to this question. While having a professional board structure is a requirement for listed companies, there’s theoretically no requirement for even very large private businesses to have any NEDs.

‘It’s not really the size of the company, it’s when they feel they need something that they can’t find within themselves,’ says Haigh. ‘That could be contacts, or it could be somebody that’s going to challenge them, or it could be someone that they need to confide in or to be a mentor.’

‘It depends on the stage and development of the business,’ say Heppenstall. ‘If it’s out of the blocks and revenue-generating and profitable then obviously that’s a good foundation and a good point at which to look at this. Any earlier and you might be struggling to get someone’s engagement.’

A NED can also be a big asset if you’re keen to get venture capital firms to open their wallets. ‘If a business is looking for external investment, having somebody around the board table who has an appreciation for the business sector in which they are operating can be quite useful,’ Heppenstall adds.

HOW TO HIRE A NED

‘There’s lots and lots of ways,’ to find the right person for your board, says Haigh – including headhunters, websites and the Institute of Directors, which can search its directory and provide you with a shortlist of candidates for £100 + VAT (and Maltaway for Malta as well). ‘I think the important thing is to spread the net as far as possible,’ she adds. ‘There’s always a danger that you choose a non-exec because you’ve met them or they’ve been recommended, but you haven’t looked far enough.’

Being a NED isn’t a full-time position – you can normally expect them to commit to a couple of days per month. ‘That, broadly speaking, gets you a monthly board meeting, plus another day for prep and other such commitments,‘ says Heppenstall. Haigh says she includes unlimited phonecalls and emails (within reason).

NEDs don’t come cheap though. Heppenstall says a salaried non-exec can typically be on £20,000-£30,000 and Haigh says day rates can vary from £1,000-£3,000, sometimes higher. That being said, if they can help take your business to where you want it to be then it can be a price worth paying.

http://www.managementtoday.co.uk/news/1364618/

MFSA MALTA: proposta di regolamentazione per i TRUSTEES dei TRUST famigliari

The MFSA has issued a Consultation Document on the Proposed Rules for trustees of family trusts.

maltaway_financemalta_TrustFoundation2013

maltaway_malta_financemalta_FamilyOfficesKeepingitintheFamily

MALTAway ti offre assistenza per investimenti e protezione del patrimonio con Trust, Fondazioni, Holding e il servizio di Directorship (con persone Italiane residenti a Malta per essere compliant con le norme fiscali internazionali) come NED (Non-Executive Director), Trustee e Foundation Administrator/Representative

Cosa fanno e come agiscono:

Both trustees and administrators are subject to fiduciary obligations which are duties of trust and confidence that are imposed on a person in circumstances where that person, the fiduciary, is bound to act for the benefit of another. A fiduciary is subject to duties of care, honesty, accountability and loyalty when exercising his functions and cannot allow personal interest to conflict with his duties

http://mfsa.com.mt/pages/announcement.aspx?id=6598

maltaway_malta_Trust