LESSONS LEARNED OVER 30 YEARS
As Kaplan Partners celebrates our 30th Anniversary this year, I’ve been contemplating how best to mark this milestone. It is hard to fathom how our firm has grown and evolved from those early days when the business launched in the second bedroom of our townhouse in downtown Philadelphia. We’ve learned and seen a lot since then, so I thought that I would share some of the most critical lessons we’ve learned about leadership and governance over the past three decades.
There is no doubt that the business environment will remain challenging for the foreseeable future. However, I have observed that the most successful organizations over time—regardless of industry—are those whose Boards, CEO and senior leaders place the highest value on human capital across their institution. Here are five areas where our lessons learned may be worth pondering for the future:
- Talent Matters: Everyone knows the old saying “people are our most important asset”. Yet given today’s workforce dynamics, historically low unemployment and demographic challenges, the issues of employee attraction, development and retention need to be taken to another level. Boards and CEOs should be questioning their Chief Human Resources Officers about their plans to tackle these challenges, and CEOs need to take the lead on people issues. If your human resources leaders are not bringing strategic thinking to the human capital arena, it may be time to revisit this area, as talent management is not going to get any easier in the years ahead. The variable on plan execution always comes down to talent.
- CEO Succession: The decision of organizational leadership is a board’s most important responsibility. Yet many boards do not emphasize this adequately, often allowing a long-tenured and well-liked CEO to dodge the questions of succession or their own retirement plans. For a firm with viable internal CEO successors, the lack of a planned succession timeline can breed extreme frustration for internal contenders, perhaps even causing some to depart for a perceived better opportunity. In addition, many boards also have little real experience navigating the challenges and dynamics of leadership succession, and may benefit from outside assistance of some sort for this most important decision.
- Board Performance: Boards today will benefit from taking a closer look at how they operate, what topics they mainly discuss, and how everyone behaves in the boardroom. As Bill McNabb, former Chairman & CEO of Vanguard has emphasized, most boards acknowledge that they would like to spend more time on key subjects such as talent, strategy and risk. The need for boards to add more strategic thinking, business sophistication, technology savvy and financial acumen remains urgent. Forward-thinking boards should also put in place director education requirements to ensure that board members remain current on key technical, governance and industry best practices. It is difficult to be a high performing company without a high performing board.
- Board Succession: Many boards are aging and slowing the pace of board refreshment by raising or even eliminating mandatory retirement ages. Boards need to take a hard look at director longevity and tangible contributions, especially for long-tenured directors. In addition, boards are generally striving to get younger and more diverse while elevating the level and scope of the board’s knowledge base. Nearly all boards today conduct some kind of general evaluation or self-assessment on a regular basis, but moving towards “performance based assessments of directors for continued board service” has become the gold standard. Many directors fear individual peer evaluation, as they view this as a means to drive non-renewal, but often those same fearful directors are usually on the weaker end of the spectrum. Proactive board refreshment has proven to be a hallmark of highly effective boards.
- Lead From the Front: People do not want to be managed as much as they want to be led. Successful leaders have the ability to lay out a vision for an organization, communicate that vision, and create the “followership” which drives execution. Leaders who are authentic in their approach leave employees feeling that their contributions—however small in the grand scheme—really matter. As Maya Angelou eloquently stated, “…people will forget what you said, people will forget what you did, but people will never forget how you made them feel.” This is a defining characteristic of great leaders.
Leading any organization today is more complex than at any time in history, and leading with authenticity and intentionality is vital. Boards will benefit from redefining their approach to governing while remembering that they are not the managers of the business. At the end of the day, success in business always comes down to talent—executive leadership, high quality directors, and the folks just trying to bring in business or serve customers every single day. As our firm has learned, maintaining and elevating the focus on human capital across the board is the surest way to long term success.
Alan J. Kaplan is Founder and CEO of Kaplan Partners, a Philadelphia-based retained executive search and board advisory firm celebrating its 30th Anniversary this year. You can reach Alan at 610-642-5644 or alan@KaplanPartners.com.