Editor's Note: In a first-of-its-kind study, CBM and AlixPartners partnered to use an approach that relies on the total shareholder return (TSR) of the companies they serve on the board of directors relative to their industry peers. We've identified the top 20 value-creating directors in the United States. Members will help guide you. See full list >
For Bill Easter, the essence of board performance lies in the relationship between the board and the CEO, and that relationship transcends whoever is currently in the corner office. “There's always change in the C-suite, and hopefully you guys can help move people forward,” says Easter, who ranks No. 16 on our list. “One of the things he does that I enjoy most is visiting with leaders and giving them encouragement, talking about ideas and issues that I'm thinking about, and letting them pick my brain.
“I take pride in building a level of trust that people feel comfortable doing so. “I don't think it's possible,” he says.
Easter says that in companies where the board-management relationship is successful, CEOs “embrace the board as a resource rather than a hindrance. CEOs are encouraged to come and share what they're thinking.” Do we all have a process to get feedback from the CEO, whether it's talking to the CEO, principal director, or chairman?”
For him, that could be a deciding factor in whether the current CEO joins the board. “I would never want to be on Tesla's board,” Easter said. “i don't like [Elon Musk] And the way he does it. ”
Being able to learn about a company, its industry, and its culture is one of the benefits of long executive tenure, which can help you manage your business. For example, “I've been on the board of Delta Air Lines for 12 years,” Easter says. “You can learn about the organization, people can get to know you, and you can get a broader view of the company.”
At the same time, he says effective directors understand the context surrounding their selection. For example, Emerson announced that long-time executive Lal Kalsanbhai will be replaced in 2021 by chairman and CEO David Farr, who succeeded iconic CEO Charlie Knight. Appointed President and Chief Executive Officer (CEO). Mr. Easter was appointed as a director in 2020.
“We had a new CEO and our goal was to refocus the company and transform the company, which was very exciting for me,” Easter says. “But I knew that my job wasn't long-term and would see a lot of change and would take relatively longer than other boards, but that's fine with me. It's important to be clear about how long you want to spend on the board, what you want to achieve, and whether those things align with the company.
Easter also believes that developing leadership skills and continuing education are important for optimal board service. “This is a skill set that you develop,” he says. “Most of us became directors because we were highly successful business leaders. But the skills needed to do those things are different from the skills needed to be a board member. ”
A good director “works hard to learn the business. You may or may not have served on a board in your industry. You are willing to travel extensively.” You cannot become a director from a high and powerful perch.”
For these reasons, Easter believes it is important for directors to be available. This also means, if possible, that you are not working full time. “You can't have two or three people on the board that way.”
Patience is also necessary for a board to function successfully, Easter said. Board members may become aware of functions or practices that appear to be in the wrong hands by management, but their approach to correcting them may not involve an immediate, head-on attack.
“At one board meeting, I didn't like the way they were managing corporate risk, so I joined that committee, ended up chairing it, and worked with the CFO, auditors, and general counsel to restructure the committee. ” he recalls. “You can guide something like that, but it may take time to develop. Once you plant a seed, it starts to grow on its own. I sat there like a proud coach, but the situation has changed. Sometimes all people need is a nudge.”
For directors to maximize their effectiveness, relationships with other board members are also important. “It needs to be collegial,” Easter says. “Don't be that person who sucks all the air in the room, or that selfish person, and it will catch up with you.”
“This is particularly important as not all boards are structured to provide feedback and coaching to directors,” he added. “If someone is 'off' and doesn't receive feedback on it, it's even more frustrating and they get voted off the island, when all they probably needed was a conversation on the front end.”
“Most [directors] “They're strong in some areas and not so strong in others, but the power of a board is a group of seven to 12 people approaching things with different perspectives,” Easter advises. So while unanimity is great, what's important is “consensus.” As long as everyone believes they are being heard, people with different perspectives are more likely to collaborate. However, you cannot leave the room and emerge in pieces. ”
