STRATEGY

1
STRATEGY CORPORATE GOVERNANCE Presentation
to AICUM Chief Executive Officers Forum4
6 May 2003
Geoff De Lacy Managing Director Polaris
Consulting boardSEARCH
2
The Strategic Framework

• Competitive Strategy is about being different.
  It means deliberately choosing a different set of
  activities to deliver a unique mix of value
• Michael Porter

3
Strategy versus Operational Effectiveness

• Essential
• Embodies Continuous Improvement
• Ensures Maximisation of resources
• Focuses on Customers
• Contains competitor analysis
• But is NOT Strategy

4
The Strategic Framework

• Strategy is an intention of uniqueness in
  planning, service or product provision. It is
• Difficult to copy
• Economically sound
• Highly competitive
• Focused on the long term
• Embodies a vision

5
Strategy The Must Dos

• Sound Strategic plans
• Contingency Plans
• Being Change Ready

6
Strategy Corporate GovernanceCorporate
Governance from an HR Perspective

• Legislative compliance
• CEO executive succession
• Turnover, employee satisfaction, employee
  relations
• Alignment to organisations strategic plan
• Organisational performance
• Performance management
• Change ready culture

7
Strategy Corporate GovernanceChange Ready
Culture/Organisation

• Key indicators?
• How can you be sure your organisation is change
  ready?

8
Performance Management at Board Level

• The Board as a Whole
• Directors/Individual Level

9
Director Education Development

• Gaps from Performance Management
• Directors Individual Development Plans
• CEO Individual Development Plans

10
First Things First

• Key Issues
• What is the appropriate mix of skills
  experience for boards in todays business
  environment ?
• Is there a linkage between diverse boards and
  superior organisational performance ?
• Where can boards source appropriate candidates ?
• Does broadening the skill base of boards have
  gender implications?

11
Key Issues continued

• Are recent major corporate collapses related to a
  lack of diversity ( in skills thinking styles)
  at the boardroom table ?
• Are different skills needed for public,
  government and not for profit boards ?
• What performance metrics should a Board review
  and monitor?

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Key Attributes

• A background at general management level
• Specialist skills relevant to the Board
• Risk management skills
• Understanding of corporate governance
• Financial skills
• Business acumen
• Integrity

13
Board Diversity Organisational Performance

• Definitive research needed
• General consensus is yes
• UK research says
• much better return to shareholders
• higher profits if HR background on Board
• NFPs attribute success to diversity

14
Sourcing candidates

• Networks
• Specialist firms
• Advertising
• Succession Planning
• Observations from other Board experiences

15
Recent collapses linked to lack of diversity ?

• Many would argue yes
• The problem of Groupthink
• Dominant CEO
• Dominant Chairmen

16
Different skill sets for different sectors ?

• Again, yes and no
• In all cases, corporate governance awareness is
  crucial
• Skill gaps should be carefully monitored

17
Performance metrics to be monitored

• Strategic Review
• Financial Performance
• KRAs
• Corporate recognition
• CEO performance
• Boards own performance
• Legislative compliance

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Key Performance Management Issues

• Many directors have been CEOs/GMs et al
• Many have been invited
• Many focus on their appointment as an earned
  reward
• Group think/Dominant Chairman/Dominant CEO

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Performance Models

• A Strategically Timed Approach e.g
• Year 1
• Year 2
• Year 3

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Performance Management continued

• Peer Assessment (360o)
• Key elements
• Core criteria Peer expectations outlined
• Basics
• Attendance
• Research Preparation
• Task acceptance
• Task completion
• Issue identification/Idea generation
• General contribution original thought

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Performance Management continued

• Peer Assessment (/or CEO)
• Key areas of responsibility determined
• Key criteria developed peer group executive
• Assessment methodology constructed agreed
• Basics incorporated
• Alignment to
• Strategic Direction
• Strategic Intent
• Business Plan
• Alignment to
• Values
• Ethics

22
Conclusion

• 40 of Public Boards have a PM system
• Education challenges
• Major adjustments for many