Driving for Performance from the Board

HUMAN CAPITAL LEADERSHIP INSTITUTE
A collection of insights from HCLI’s Directors-in-Dialogue series
DRIVING FOR PERFORMANCE
FROM THE BOARD

Copyright © Human Capital Leadership Institute
ABOUT DIRECTORS-IN-DIALOGUE
Debate. Discuss. Discover.
2
Boards today face a range of complex challenges as
stakeholders demand greater transparency and accountability
across decisions that affect the success and sustainability of
enterprises.
As thought-provoking as it is insightful, the Directors-in-
Dialogue is a series of highly interactive forums that facilitate
robust, in-depth discussions and debates on topical subjects of
high relevance to board directors today.
Specifically tailored to address the evolving needs of board
directors in Asia, participants are provided with the most current
thinking on board effectiveness from global thought leaders and
subject matter experts, blended with valuable insights and
practical “usable” knowledge from some of Asia’s most
renowned boardroom leaders and practitioners.
The discussion themes for each forum vary and are continually
refreshed to reflect subjects that are top-of-mind for board
directors in Asia today.

Boards are known to focus their attention on ensuring
effectiveness and preserving value but not on driving for
performance – a task that is often delegated to management.
With intensified global competition and business cycles
accelerated by digitalisation and other forms of disruptions,
boards are increasingly expected to take the lead in orchestrating
and driving for performance. Boards that cultivate a
“performance” culture are more likely to unlock performance
potential, pre-empt activist attack, reduce risk and competitive
threats, and enjoy greater strategic independence.
Facilitated by Professor Ludo Van der Hayden of INSEAD, HCLI’s
Directors-in-Dialogue session on 4 July 2017 discussed what
boards could do to achieve a “performance-driving mandate” –
defined as one that resolutely drives out “satisfactory
underperformance.” Professor Ludo was joined by Dr. Edward
Krubasik, an active Chairman with more than 20 years of
turnaround experience, to address the following topics:
• How performance-driving boards search for signs and
causes of non-performance
• How such boards prevent their companies from sliding into
crisis
• How boards build a sustainable performance advantage by
combining better practices from global competitors
• How the drive for performance makes companies more
robust and reduces the surprise of “sudden” market,
technological or competitive threats
This slide deck captures the key insights presented and
discussed during the session. HCLI hopes that the collection
of bite-sized insights here will contribute towards knowledge,
such that more in the business community will benefit.
DRIVING FOR PERFORMANCE FROM BOARDS
A Synopsis
3

LET’S BEGIN WITH A
QUESTION
What do you
think is the
role of
boards?
4

Are these your
answers?
5

HERE’S ANOTHER
QUESTION
Do such
actions help
companies
and people
over achieve?
6

After all, overly risk-
averse companies will
do well in “smart to
avoid” situations.
BUT they will also
miss out on the “false
negatives” that could
have lead to
exponential growth!
Turnsout
Right
Wrong
Decision
Avoid
project
Pursue
project
Smart to
avoid
False
negatives
7

NEXT QUESTION
How can
boards go
from risk
avoidance to
driving
performance ?
8

There are five
steps for board
members to
consider
Select relevant
measures
Benchmark
against
industry’s
best
Identify
required
competencies
and nurture
talent
Ensure
enabling
organisational
structure
Invest in
understanding
and shaping
strategy
1
2
3
4
5
9
Adapted from the work of Edward G. Krubasik, “Board
Roles: Driving for Performance | Lessons Learned”, 2017.

Step 1. • If you have irrelevant measures, you will
focus on the wrong things – performance is
the result of what you measure.
• So, select measures that will ensure value
creation, and not value preservation or
worse, destruction.
• Some examples to consider:
• Return on capital employed (ROCE)
• Continuous productivity improvement rate
• Customer satisfaction
• Response time to external changes
Select relevant
measures
10

Step 2. • Benchmark against industry competitors
instead of the company’s historical results.
External benchmarking sheds light on the
gaps between the company and the
industry’s best performers.
• As the board, actively and systemically
review results against benchmarks.
• Demand management to bridge the gaps.
11
Benchmark
against
industry’s
best

Step 3. • Listen to and discuss talent issues.
• Identify the competencies required for
current and future performance.
• Identify and nurture talent at all levels,
especially those critical to the execution of
strategic plans.
• If there are performance gaps, ask if this is
due to people’s underperformance or
issues with earlier two steps.
12
Identify required
competencies
and nurture talent

Step 4. • Review organisational structure – is this
the optimal set-up for performance? Is it
better first by functions, market/region, or
business units?
• Is the organisational structure too
hierarchical, stifling innovation and a
competitive spirit?
• Initiate company-wide improvement
initiatives and get regular reporting on
them.
13
Ensure enabling
organisational
structure

Step 5. • Do you deeply understand the company’s
strategic issues? What kind of comments
do you make during board meetings? Do
you feel you have fully leveraged your
experience to contribute?
• Hold board meetings on the frontlines
(plant locations, R&D centres…) – and not
in posh but sterile board rooms.
• Have divisions present their strategy.
• Organise an annual full-day strategy
retreat for the board, where they come
together to discuss critical strategic issues.
14
Invest in
understanding
and shaping
strategy

THE FINAL WORD TO
BOARDS
Go beyond
compliance.
Don’t be
distant. Drive
performance.
15

The Human Capital Leadership Institute is a centre of excellence
that facilitates the acceleration of leadership development and
strategic human capital management capabilities in Asia. Through
its efforts, HCLI aims to develop global leaders with a strong
understanding of leading in Asia, as well as to build Asian leaders
with the ability to lead on the global stage. The institute achieves
this by driving Asia-specific research and insights, creating
industry-relevant executive development programmes and
fostering rich networks between thought leaders in business,
government and academia.
HCLI is a subsidiary of Temasek Management Services, which is
wholly owned by Temasek Holdings (Private) Limited, and is
supported by the Singapore Ministry of Manpower and the
Singapore Economic Development Board.
For further information, please visit www.hcli.org
ABOUT HCLI
16
For Asia, From Asia

Driving for Performance from the Board

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