GovernanceLAB

Agility and flexibility in the boardroom

December 16, 2015

Agility and flexibility in the boardroom: one of the supervisor's biggest challenges. During the annual evaluation of the functioning and effectiveness of the Supervisory Board, its members often ask themselves if they have enough "distance" from their directors.

At first, it seems the word "distance" does not really cover the essence of their relationship with the Board of Directors. Indeed, we tend to associate the word "distance" with inefficient, behind-the-times, sleepy or even negligent Supervisory Boards, such as was recently the case at Meavita of ROC Leiden. However, there are major questions behind the word "distance." Questions concerning the relationship and interaction between supervisors and the directors: 

• Does the Supervisory Board adopt an independent position in relation to the Board of Directors? How independent are we?

• Is the Audit Committee or the Quality Committee sufficiently mindful of the guidelines or do we lose ourselves too much in the details of the administrative information? 

• Am I, as an internal supervisor, allowed to talk to the controller? Can we as a Supervisory Board invite the members of the management team or senior managers to come and talk about the strategy and policy? Or do we limit our contacts to the directors and the annual meeting with the Works Council?

Internal supervisors find that the answers to these questions depend on how and when they do their various supervisory tasks and roles. 

Conformance role and performance role

Internal supervision is expected to act as questioner, assessor, and watchdog; something that is called the conformance role in governance literature. It is then important to ask critical and sharp questions and probe further, sometimes a little more about the details in particular. An independent attitude is crucial to the conformance role, with room for critical "counterintuitive thinking," control and "playing the devil's advocate." Not to be dependent only on the information provided by the Board of Directors, it is useful to collect supplementary information from other parties within the organization.

A Supervisory Board also has to fulfill the so-called performance role. This means that the internal supervisors contribute their diverse knowledge and expertise as well as their own perspectives from their professional background and personal style. They can also use their external networks for the benefit of the Board of Directors and the company or organization. The performance role requires commitment and thinking along with and supporting the Board of Directors and to form a link between stakeholders, the Board of Directors, and the company.

Cruise control

The interpretation of these various tasks and roles highlights differences in the dynamics between the Supervisory Board and the Board of Directors, in the attitude of the internal supervisors and directors and also in the atmosphere during the meetings. The meeting can be inspiring, with the internal supervisors feeling very involved in the management and organization. The members of the Supervisory Board can ask critical questions which may provoke an uncomfortable situation. There may be a business handling of decisions and issues without too much broad social perspective. Or the meeting may turn into a brainstorming session. In short, the dynamics and atmosphere in the Board changes regularly.

It is a challenge for the Supervisory Board to evaluate properly which role or task fits the problem or issue and, in doing that, keep a watchful eye on the context within which the Board of Directors and the company operates. A good Supervisory Board never uses cruise control but is competent, agile, and flexible enough to switch itself.

 
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