What Every Boardroom Needs in An Age of Investor Activism
Ilene Gordon, CEO and Chairman of the food company Ingredion, has served on eight corporate boards and she used to get a standard piece of advice: “Don’t say anything for three meetings.”
Not these days. “That’s outdated,” she said Wednesday at Fortune’s Most Powerful Women Summit it Laguna Niguel. “One of the most important things is getting oriented and up to speed quickly. You want to understand the company, the dynamics and economics. I ask for an orientation, even before my first meeting.”
Bonnie Gwin, Global CEO and Board of Directors Practice at the executive search firm Heidrick & Struggles, agreed with the advice, adding that at this moment of rising activist pressure, mounting cyber security concerns, and a more constant media spotlight, being on a board is harder, higher-stakes and more demanding than ever.
The role of the director has changed, Gwin says. “Boards are now deployed as a strategic asset.”
What’s needed in the boardroom given this new reality? “What makes someone extremely effective is EQ [emotional intelligence] — that collaborative, collegial gene,” Gwin says. “That doesn’t mean going along with everything. You need to have willingness to stand up.” The key, she says, is to be able to read situations and the group.”
Gordon looks for EQ, too, in potential board members. And watches out for big egos: “One thing I watch for: Do they have to be the smartest person in the room?” she said, noting that people who exude that sense end up “using airtime, not solving the problems of the company.”
That emotional intelligence is also critical for managing internal dynamics and the sometimes tricky issues that arise in the effort to maintain an effective and optimized corporate board.
Providing feedback to directors, or having conversations about its composition can be especially tough, Gwin said.
“The challenge that comes up is board members become friends, and it becomes social network, so knowing then when to flex or push, or step back can be harder. If you have a director that should exit because their skills no longer strategically map….those are really hard conversations.”