jordi channelsStrategic Management Professor IESE Business SchoolFrom 2001 to September 2016, he was the general manager of this business school, one of the most prestigious business schools in the world. He published ‘Transform to the End’, a roadmap that defines where companies’ boards should go. key to good governance.
You compare a company to an airplane with two wings.
Yes, a company that wants to have a long-term trajectory and survive incidents and disruptions needs these two wings: a good management team and good corporate governance.
And as he writes, if management has improved a lot in 70 years, the evolution of good governance has been more recent.
In the 1950s, tools for good management began to be developed. Thanks to the education given in business schools, its quality has also increased a lot, which does not mean that mistakes have not been made. By comparison, a theory of boards and how they should act only began to develop until the 1990s, with the backing of the Cadbury Report from the UK-based private sector. The council emerges not only as a counterweight to the CEO (CEO or chief executive officer), but also to help manage.
Who forms the management of a company?
This is a triangle. There are different kinds of shareholders and investors. Citizens can become direct or indirect shareholders through the funds. These investors appoint a board of directors to represent them, and it is this board that is responsible for ensuring that there is a management team and a CEO who make sure everything runs smoothly. There is a fourth factor that will make the triangle square: the sliders. You have to find the perfect balance between these parts.
He mentions that the council has determined the purpose of the company, its long-term strategy with all its results; But what is your most important decision?
Appointment of chief executive: whether named CEO or CEO (English meaning: chief executive officer). All work in the development of the CEO, evaluation, support, accompaniment, training of the management team. If that works, the rest will. In short, it is to create a culture that permeates the entire organization.
While reading your book, it can be interpreted as claiming the existence of a super counselor who can handle anything. Really?
They are not super consultants, they are professionals with relevant experience. In many cases, they have been executives who have transformed companies and implemented plans in the past. It is not so important for a manager to have all the capabilities, but the board as a whole adds those capabilities. Like an orchestra. Each plays different instruments and is led by the president. Their role is critical in setting the meeting agenda, setting the tone, and allocating time. You have to look for efficiency. It is a work in progress.
Should the recommendation be more diverse? If we examine Spanish boards of directors, the profiles of the vast majority of executives are very similar.
Variety of sounds is important. Managers’ competencies must be meaningful in the context of the company. For example, scientists in a pharmaceutical company should be international managers in a highly internationalized company. Consultants are needed who understand the business and how to best deliver customer value. Efficiency is what they’re looking for, that is, it’s also socially profitable.
Does age matter to be a consultant?
What matters is experience. While it does not determine whether a director will be good or bad as a structural feature, it also means having age.
The professional consultant figure gives the impression of being created.
Nothing happens if a professional takes part in several councils. There are senior executives of companies who also get authorization from their own companies in order to become a manager in other companies. It is an opportunity to learn from other organizations.
But do you think there should be a minimum number of presences on councils?
Institutional investors in the US don’t like having one person on more than three boards. Conflicts arise and in the end you have to be available to do a good job.
And time as a consultant?
The regulation specifies a maximum of 12 years and eight recommendations that can be renewed. If there is an ongoing project, it should be like this.
“The diversity of voices in assemblies is important. Like company-related capacities”
Who should appoint administrators?
Good practices in the process are essential. The board nomination committee, which must be made up of independent directors, has to investigate headhunting companies or entrust the research to them. This commission makes a proposal to the board of directors and the board presents it to the shareholders meeting for final approval. The chairman of the council should refrain from intervening except in the final vote.
An independent executive living off the salary of a small independent Board of Directors…
If a director earns a high salary, he does not have the necessary independence. The consultant should be able to leave freely if he or she disagrees with some important decisions. A dependency relationship cannot be created. However, pricing cannot be edited either. The size of each company is different. There should be no variable compensation for entering the manager game. There must be absolute transparency. The director must ensure that the management team executes and also make sure that things are done well. Being a consultant means taking great responsibility. They have legal and moral responsibilities. Being a manager is not being an outside consultant.
Should there be ex-politicians in the assemblies?
If they have experience in a particular field, this shouldn’t be a problem; but only because they are politicians…
Is there an ideal number of directors?
It depends on the complexity of the company. 8 to 12 is a good number for councils to be manageable and useful, as most meet once a month for just over eight hours.
Should the president and CEO be separate?
Yes, although there are companies where this does not happen due to their typology. This is the Naturgy situation where shareholders want one person to be in the same position. [se refiere a Francisco Reynés]. In family businesses, I suggest leaving with a CEO who is not part of the owning family.
What relationship should the board have with the management team?
The manager cannot speak freely with the management team. You should talk to the CEO and he will approve. Ideally, the council will hold meetings where the team or part of it is invited to interact and present issues.
Have we made any progress in managing the company in Spain? 1 to 10, where do we stand?
There are companies that thrive, it’s a matter of education and learning. We are between 5 in public companies and 6 to 7 in family companies. Like Spain, it’s the same in other countries. Only the UK is further.
“We should be proud of Ferrovial”
Over the years, the former IESE CEO has become a top consultant and expert in Spanish and international business. However, his usual common sense and common sense doesn’t stop him from diplomatically avoiding the Ferrovial case. Learn about the history of the company and its president, Raphael del pino. She is stunned by her reaction. “This is very surprising. A company that announced Ferrovial should make us proud as Spaniards. It is an international leader and wants to be listed in the United States as it needs to grow more and be better funded. It also intends to eliminate anything in Spain claims that it is not and that it will maintain the level of occupation,” he argues.
channels Take the opportunity to recall the French Schneider, who moved his senior management to the United States, that Europe has a not very integrated network of local financial markets, and several British companies also decided to relocate their headquarters and move to the United States. Hong Kong. “Ferrovial wants to attract new shareholders, capital. They have shown that they have a good strategy and are able to adapt to it. As Spaniards and Europeans, we need to analyze how we can create mechanisms to have two corporate headquarters.” To defend its role in this case, Ferrovial’s board of directors must approve the decision to move at its shareholders meeting on April 13: “This is a private company and consists of eight independent members, with the addition of two representatives of the family, a director and a former director, that the decisions of the board of directors must be followed” and He adds: “Maybe it’s true, they could have conveyed that a little better”.
Purpose: create value for the community
From the omniscient power of the executive to a more college-educated power. Those defined as stakeholders, from acquiring all value for the shareholder to providing value for society as a whole. In the last two decades of the last century, commanded by General Electric Jack Welchwas an example of a disappearing scene. Executive crises at major American companies such as IBM, General Motors, Sears, and most recently GE were ending the president’s absolute power.
Boards, previously made up of men (and some women), whose task was to reaffirm the executive’s executive decisions, were reorganized after reports and academic recommendations of various kinds. After examining the development of forty national and international companies together with their closeness to company presidents and managers, jordi channels In his latest work, he proposes the map to arrive at the perfect advice. It delves into the functions of the “wise men” that should be heard and heard by the management committee: company purpose, strategy, transformation, appointing and overseeing the CEO and team, culture, relations with shareholders and interest groups, and evaluating impact.
A complete skills guide on tours that analyzes the impact of decisions made not only on shareholders and business value generation, but also on the society around us. It is the responsibility of these super consultants to reach and evaluate.