Engineering Inc. - May/June 2015 - (Page 58)

Guest Column BY D O U G T H O M PS O N How An Outside Director Can Bring Value to Your Board A strong board of directors is a cornerstone of good governance, and adding outsiders is an important way to strengthen the board. Independence Outsiders can enter discussions and make decisions free of any concern about where they fit in the firm's organizational structure. That freedom provides a crucial perspective, for example, on the important job of reviewing the CEO's performance, establishing compensation, and planning for CEO succession when the need arises. Having independent directors (two is Doug Thompson better than one!) allows the entire board to perform its role at a higher level. Independent directors on the audit committee, for example, greatly enhance the board's ability to perform financial oversight since they are not part of the management system. Strategy Many business experts believe that strategy is the most valuable domain in which the board contributes to the firm-and strong boards are known for thinking strategically. While internal board members certainly bring crucial strategic thinking to the task, someone from outside the firm is more likely to see things differently, spot emerging facts, and challenge others to look at problems in a new light. By challenging the thinking of other board members, outsiders help the board rise above dayto-day operations to consider the bigger picture. This strategic thinking may shed new light on issues such as new markets to enter or competitive advantages to achieve through technology or talent acquisition/retention. Outside board members also may be less likely to nix innovative thought with the "we already tried that" refrain that too often fills boardrooms. Finally, adding outsiders to the board allows firms to tap into talent that may not exist within the organization. Such expertise may be in areas that are strategically important to the firm's 58 ENGINEERING INC. MAY / JUNE 2015 future, such as rapid growth and international projects, or it may encompass supporting competencies, such as finance, risk or human resources. Implementation To realize the potential value that outside board members bring to an organization, a firm's leaders must understand what they are looking for in a board member and ensure that candidates match those criteria and fit well within the organization. Board members also must understand what it means for an outsider to join them in the boardroom. In most cases, internal boards have been working together for many years and have developed long-standing relationships-adding an outsider can present a challenge. It takes effort from both existing board members and new outsiders to make the relationship work. One word of warning: Do not bring in an outsider to fix a broken board. If you have a dysfunctional board, you are better off resolving those problems before searching for an outside board member. To successfully bring on an outsider, boards should: * Have an open discussion about what they hope to accomplish with an outsider at the table. This discussion should include the pros and cons, and it should conclude with a decision about whether an outsider is right for your board. * Develop a list of talents you are searching for and criteria for how you'll evaluate the candidate. * Create a list of potential candidates. Many firms have found valuable board members from the leadership of noncompeting engineering firms. Diversity may also be a consideration. * Once the candidates have been selected, work hard to integrate them into the board. Integration should include an orientation to the firm's leadership and operations. Communicate with shareholders why you have decided to add an outside member. * Evaluate how well the new situation is working, and make changes as needed. Such changes may involve the director, or they may concern the culture in the boardroom. Doug Thompson has been providing management-consulting services to the A/E/C industry for over 20 years and specializes in governance. The website for Thompson Governance Solutions is www.thompsongovernance.com, and readers can contact him at doug@thompsongovernance.com or 616-288-6127. http://www.thompsongovernance.com

Table of Contents for the Digital Edition of Engineering Inc. - May/June 2015

Engineering Inc. - May/june 2015
Contents
From ACEC to You
Legislative Action
Market Watch
2015 Convention Wrap-Up
2015 Engineering Excellence Awards
Now You’re Connecting
Putting Minority Students on Engineering Track
ACEC/PAC Honor Roll
Guest Column
Business Insights
Members in the News
Mergers and Acquisitions

Engineering Inc. - May/June 2015