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Strategic thinking has long been viewed as essential for leaders of organizations. The ability to anticipate and plan for the future, to think critically and creatively about complex problems, and make effective decisions in the face of uncertainty and change, is more necessary now than ever. These capabilities will be dramatically augmented and magnified by artificial intelligence systems such as ChatGPT.

With the ability to process large amounts of data, identify patterns, and make predictions, AI will provide fresh insights and perspectives that were previously unavailable to company executives. This will enable them to make more informed and accurate decisions – and to anticipate and plan for the future more effectively. But it won’t replace the human element in strategic thinking, which remains critical.

Currently, AI can analyze vast data, spot trends, make forecasts, and help leaders identify and mitigate business risks. Soon, it will also simulate different scenarios and provide leaders with various options and recommendations for which path to take. In the near future, I expect to see symbiotic relationships between executives and AI systems, in which they both work together to enhance decision-making, problem-solving, and strategy development.

WHAT CAN CHATGPT DO?

ChatGPT has a plethora of use cases across the board including.

  • Solving mathematical questions
  • Producing proof of concepts
  • Writing long-form content like essays and reports
WHAT CHATGPT DOES NOT DO?

ChatGPT can be a great place to start, but it won’t solve all of your problems. 

  • It cannot think or make decisions independently. 
  • It does not distinguish or understand emotions and may respond inappropriately in certain situations. 
  • ChatGPT cannot understand the entire context of a conversation; it can only generate responses based on the input it receives at any given time. 
  • Even though ChatGPT has been trained on a large amount of data, it is still inaccurate and may occasionally respond with incorrect or illogical responses in certain situations. 
BENEFITS OF CHATGPT

Businesses can speed up response times and enhance customer service by using ChatGPT, which can handle a high volume of interactions accurately and quickly. In fact, the more you interact, the more ChatGPT can pick up on your tone and develop into an AI assistant.

ChatGPT can increase productivity by freeing up staff time for more complex and imaginative tasks by automating routine tasks like responding to frequently asked questions and creating a transcript from your most recent presentation.

ChatGPT can handle a high volume of interactions at the same time, making it an ideal tool for small businesses to large corporations.

I WANT TO CREATE MY STRATEGY, SHOULD I USE CHATGPT?

No. This is because:

  • Chat GPT will find it difficult to develop a thorough understanding of your environment because markets, rivals, suppliers, and a host of other factors have vastly different values and contributions to the success of your company.
  • An expert must compile, analyze, prioritize, and act on the data discovered during an internal SWOT or PESTLE analysis of your strengths and weaknesses. This is something ChatGPT cannot do.
  • ChatGPT is unable to develop a corporate, functional, or departmental strategy for your business due to a lack of situational understanding.
  • It won’t help you think strategically about how to use the information mentioned above to generate a clear path forward.

The goal is to use the tool as a support mechanism that provides leaders with basic-level strategic advisory services. It should be noted that the answers given will not be specific to the person who asked the question, but it can be useful for brainstorming ideas.

H. Pierson Advisory Team

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Economic cycles are nothing modern. Business leaders have constantly had to deal with things like unstable job markets, supply chain confinements, and cost changes. Concerns about a potential period of weak economic growth is however justified. The two most important factors are how long it will last and how much damage it will cause.   

Although no one can see into a crystal ball, there are some concerning signs that should not be ignored. For Nigerian businesses in 2023 for instance, they will continue to cope with several vulnerabilities including:   

  •  A high-cost environment. 
  • Challenges with the retention of talent with the increasing demand for migrant workers in the United Kingdom, Canada, and other developed economies. This is without prejudice to the rising cost of living in the aforementioned countries. 
  • Post-election political risks 

It would be short sighted for business leaders to not prepare for some kind of economic slowdown when you consider this along with the frail global forecasts and the pandemic’s ongoing effects. 

Despite the doom and gloom, businesses can take practical actions to lessen the effects of economic slowdowns. Instead of worrying about potential future events, this is the ideal time to check that your organization has the necessary systems in place to not only weather storms but to thrive in them. How? 

Pay Attention to your Business Relationships

Customer relationships are crucial regardless of the economy’s outlook, but they can become even more crucial during hard times. Understanding how the economy impacts your customers’ businesses is crucial, but it’s also a great chance to figure out how to help them and add even more value. 

Partner relationships can also be very important. Strong partnerships can help to stabilize or even increase revenue streams because they share the burden of acquiring new business, even though this may result in slightly smaller overall revenue pie slices.   

Diversifying your customer base is essential. When the economy is struggling, it’s crucial to evaluate your customer base and determine whether your business is overly dependent on a small number of significant clients. If that’s the case, think about how you can diversify your customer base and invest in forming new connections. Be cautious when adding new customers because you will want to make sure you can still provide excellent customer service. When every business is vying for a small pool of customer dollars, this differentiation becomes particularly crucial.

Motivate your Talent

Taking care of your team should always be a priority, especially when the economy is weak, as we frequently mention here at H. Pierson. When there is talk of a recession or weak growth, employees are concerned about their own finances and layoffs are a real possibility. It’s not simple to find talented, strong candidates, as we’ve seen over the past few years. 

Consider innovative ways to reduce costs without laying off your talent. Rather than making the decision to shrink your team right away, see where else you can cut costs, like overtime or scaling back some nice-to-have, but unnecessary perks? Also, you can offer employees a day off each week in exchange for lower pay? Or can the team collectively agree to a pay cut that ensures everyone keeps their jobs? 

Increase your Firm’s Agility

In order to become more agile, your business may need to invest in itself or increase spending in some areas. In a struggling economy, this may seem counterintuitive, but you might discover that enhancing technological or organizational systems results in longer-term resource utilization. As well as allowing for the introduction of new goods and services, it may also permit the diversification of income sources. 

Any department in your organization could benefit from agility. You can change how you interact with customers and assist them in discovering new value in the goods and services you provide by using agile marketing. Agile development may entail freeing up unused resources to give your team more time and freedom to think creatively and make the best use of their collective talents. Your human resources department’s agility may take the form of job-sharing arrangements to better utilize strengths and tap into your talent pool or cross-training staff to take on new responsibilities. 

We are aware that not all organizations can implement these ideas, and that there are times when difficult choices must be made. Transparency is key in those situations. Be clear about the needs and objectives of the business and try your best to make decisions for your employees with respect and gratitude. Take into account the significance of every position within your company as well as the effects on those left behind when positions are eliminated. Show that you have a plan in place to guarantee a fair and enjoyable working environment, even if the size of the team needs to change. 

When times are tough economically, having the right strategy and the insights required for effective strategy execution, is mission-critical. Reach out at strategy@hpierson.com and let us guide you through a free consultation to determine how your company can best develop a plan to remain strategy-protected both now and into the future. 

H. Pierson Advisory Team

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AUTHOR: JOSHBERSIN 

In today’s skills-based economy, people want to learn faster than ever. More than $200 billion is now spent on various forms of workplace training and the volume of content is massive. There are tens of thousands of videos, courses, articles, and tools dedicated to helping people learn. And more and more of it is designed to be “in the flow of work,” so you can learn where you are, when you have time, and when you need the help.In this mad flurry to put more and more content online (YouTube now has 23 million channels and gathers more than 5 billion views per day), we seem to have left something out. The most powerful and memorable learning actually occurs when we talk with other people.

Take a look at the research done on the Ebbinghouse Forgetting Curve, which essentially shows how quickly we forget what we learn. When you study alone, you typically remember 28% of what you learned after two days. When you repeat the material, you remember 46%.

But when you use it, answer questions about it, and interact with others, you remember 69%. The reason?  Actually conceptualizing, recalling, and using information is what creates the “memory pathways” that stick in your mind.

Why do you think we have homework assignments and work in groups in school?  Why do teachers give lectures and then ask students questions to discuss in a group?  It is a well-known fact that collaborative, cohort-based learning is the most valuable, useful, and memorable way to learn.

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And we must remember that the “teacher” is always a vital part of the learning process. This person may be a subject-matter expert, a renowned researcher, a lecturer or instructor, or a course facilitator. Through the process of asking questions, providing advice, giving context, and explaining specific examples and solutions, the teacher “brings learning to life” for each individual in their own important way.

Learning Platforms: How This Has Been Lost

The learning technology market is a fast-moving, somewhat fad-driven space. Whenever a new technology is invented, L&D professionals rush to see how it could be used for learning.

As I like to remember, in the early 1980s when the first PC’s came to market, one of the sexiest ideas was to use them for training – so technologists hooked up laser disk players and developed video learning programs that cost hundreds of thousands of dollars to build.

Since then we have “experimented” with social interactions in many forms of learning, and I have to say most of them have been somewhat limited, unimaginative, and more or less “bolted on” to content. In other words, what we’ve been doing is building lots of self-study content which has “some collaborative features,” but mostly focused on comments by learners.

I recently participated in a large online masterclass which I authored through a series of videos. The students loved the content but the interactions were limited because we did not group people into small groups and did not use a platform that truly facilitated group learning. I’m here to help you figure out how to fix this.

(When done well the results can be amazing. Hive Learning, a provider which focuses on designed collaborative learning, has proven through A/B testing a 50% increase in retention through their environment when compared with traditional classroom training. Nomadic Learning, who I discuss below, regularly achieves over 90% completion rate regularly in their cohort-based programs.)

Since building a collaboration platform is expensive, most vendors have lashed together off the shelf tools. The market has essentially evolved as follows, and in many ways, this represents an industry-wide exploration and learning journey we’ve all gone through together.

 

Learning platform vendors, of course, fall into various traps. They develop a platform that facilitates a certain type of activity (ie. The LXP vendors focus on the discovery of content, not the content experience itself), and then they sell their products as horizontal solutions. We as L&D and HR professionals have to buy these platforms and more or less “stitch them together” to build a total solution.

In particular, if you want to drive change, alignment, innovation, and relationships through your programs (as we do in the Josh Bersin Academy, for example), then you have to design your programs for group activity. And one could argue that this is also true for pure technical skills: coding academies and most technical certificate programs require group projects, design sessions, and “studios” that bring people together in small groups.

I know in my own career these group learning activities have been far more memorable in the long run, but that doesn’t mean “micro-learning” is also important. Group and cohort-based learning often fall into the “macro learning” space, while self-study and reading fall into the “micro-learning space.”

How Platforms Are Changing

As you consider all these issues, let me point out how learning platforms are starting to address this problem, and I’m going to talk primarily about two I know well:  360Learning and Nomadic Learning (the company I’m partnering with for the Josh Bersin Academy). There are many others (Intrepid, NovoEd, Hive Learning), and I will try to compare them briefly at the end of the article.

In the case of 360Learning, the company was founded six years ago by a passionate and brilliant engineer (Nick Hernandez) who realized that the most important learning that takes place is driven by an expert.  Over the last decade, he has built an amazing platform that enables any expert in your company to “teach classes online” without the burden of “building complex content” or even hiring an instructional designer.

Underneath all the technology is a simple concept: a human (teacher, facilitator, expert) is at the foundation of great learning. And as 360Learning calls them, they are “learning champions.” (We are all learning champions at different times in our lives.)

In the early 2000s I wrote a lot about this idea, and we called it “SME-authored content.” (We called it “from e-learning to we-learning,” which was a cute idea.)

At that point in time products like Presedia, Breeze, Brainshark, Articulate, and other “Powerpoint to Flash” tools become hot, because they let people take their PowerPoint presentations and quickly turn them into instructional programs. Today many of these products are gone (or evolved), and we need a new system that facilitates this “expert-led” approach that is easy for experts to use.

I won’t get into great detail about how 360Learning does this, but it’s quite an amazing system and the company now has more than 500 large clients and is used by Safran Group (global aircraft engine manufacturer) where hundreds of experts teach others throughout the company.

Every single company needs a platform like this, and in my travels, I have never found a system that focuses so well on letting an expert (L&D or line leader) author content, share it, certify experts, and create an ongoing collaborative experience with employees. The company’s concept is “teaching experts to author and teach” in a highly scalable way.

I know this works because I’ve talked with some of their clients. Companies like Safran Group have almost 5% of the professionals authoring courses which are consumed by others. Imagine what this model could do to unlock expertise in your company.

Initially, the company positioned themselves as an LXP but they’re really much more. So position them into the “program management” category in my model and really are creating a new category for expert-authored, collaborative content. (LXP’s are primarily tools for content discovery and aggregation.)

When you think about the problem in this “human” way, you find new features become important. 360 Learning, for example, keeps track of all interactivity by learner and gives instructors lots of data about what content people are using, where they seem to need more help, and how “engaged” they are with the programs. This is exciting proprietary stuff, which really makes customers happy.

Nomadic Learning, the company I partner with for the Josh Bersin Academy, is even more interesting. Matt Burr and Tim Sarchet, the founders, built a business called “50 Lessons” which created video-based stories from the world’s greatest CEOs around the globe. (Similar to BigThink.) The videos were amazing (I watched many of them), but what Matt discovered is that nobody ever watched more than two videos in a row and most people stopped watching after 3-4 minutes. In other words, there was very little “depth of learning.”

The problem he discovered, which is even worse now, is that people just don’t have time to sit down and watch videos for an hour or more at a time. My research with LinkedIn shows that we waste almost a day a week on distracting emails and the biggest “challenge” people cite about their learning and career development is “I don’t have enough time.”

So Matt and Tim set out to build something new. I won’t give away the secrets, but the whole idea of Nomadic is to build a learning experience that “draws you in” and continuously gives you surprises, videos, exercises, ideas, and interactivity – in a way that makes it easy to stay engaged. Matt likes to call it “semi-synchronous,” because you can stop and restart at any time – but you do have a “time-bound” program to finish, so over a period of weeks you’re expected to stay on track.

In the case of Nomadic, the platform, content, and collaboration are integrated in a designed way. Since Nomadic is a custom content and video storytelling company, the programs feel like carefully designed integrated experiences, and you keep “wanting to come back” whenever you can. In the case of cohort-based learning, Nomadic has learned that by arranging people into small groups (20-50 people) the learning experience is personal, collaborative, and innovative. So the “programs” in the Josh Bersin Academy are designed to take place in groups, and each exercise brings people together in innovative and novel ways.

What I’ve experienced so far is that Nomadic’s platform (and 360 Learning’s platform) are much more than “learning” platforms. Just like face to face events, they bring people together, let people share their challenges and ideas, and create alignment toward strategic solutions.  And Nomadic includes its own built-in LXP, so there are hundreds of curated resources available for micro-learning at any time. One of our clients, Medidata, is using the Josh Bersin Academy to drive their entire digital transformation. And this is the type of thing that 360 learning could do also.

What To Consider: Many Platforms Abound

There are many learning platforms and content providers on the market, and they are built by smart, innovative entrepreneurs. My point in this article is not to try to cover them all, but rather help you think through the importance of “group-based learning” and make sure you focus your energies on “what is being used for macro learning” and “what is being used for micro-learning” as you build your solution.

Remember To Focus On Culture

Finally, let me mention the importance of building a learning culture. Regardless of your efforts to build great content and hire the best instructors, the culture of learning always prevails.

Do people have time to learn? Do they feel a sense of empowerment and belonging in the program? Does the experience “meet them where they are?” And is there an expert, teacher, or facilitator to make sure employees can really get what he or she needs as they push themselves to the next level?

Nothing creates a learning culture more than groups of people activated to learn together.

New ideas, conversations, and talking about solutions create memorable skills we all carry for a lifetime. As you select your tools and build your strategy, make sure the focus on human supported, group-based learning remains at the core. You’ll be glad you did.

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Leadership Assessment is key at any stage of your career

Regardless of where you are in your career, leadership assessment can help you find your strengths and weaknesses as a business leader. It is important to know more about the leadership competencies because:

  • This will allow for utilizing one’s talents best
  • Understanding these skills also helps capitalize on opportunities in order not waste time or resources
  • A lack thereof could mean an inability of adaptiveness which would hurt company growth
The 4 benefits of leadership assessment:
  1. Leadership assessments can guide you in creating your career goals
  2. Leadership assessments can increase self-awareness
  3. Assessing your leadership can help you improve in all stages of your career
  4. Leadership assessments can help in improving the leadership development plan
1st Benefit: Leadership assessments can guide you in creating your career goals

Leadership assessment can give you an objective idea of your abilities as a business leader no matter what stage you are in your career. An effective leadership assessment lets you — and your organization — know in a constructive way just what kind of leadership skills you have.

Guiding your career goals
While gauging your capacity to handle different roles and responsibilities, a good leadership assessment can help you to define where you want to go as an executive and how to get there. Different leadership assessment tools offered by top international business schools can assess your performance in a variety of areas and situations.

But whether the leadership evaluation is focused on personal leadership or business management, it can tell you what your strengths are and what you need to learn to tackle new challenges. A detailed assessment can guide you on the experience and the leadership and management training required to achieve your career goals.

2nd Benefit: Leadership assessments can increase self-awareness

A high-quality leadership assessment will inform you about what kind of person you are. This is a critical factor on the journey to becoming a better leader. Self-awareness of your personal qualities and leadership skills can improve exponentially the way you lead organizations and deal with others. It can also help you build on your leadership strengths and confront your weaknesses.

Learning more about yourself can increase your leadership effectiveness in the process. You will be able to gain the support and trust of your team members if you have an honest assessment of your leadership capabilities. This in turn will boost your credibility.

You should remember, however, that leadership evaluation should not be seen as a way to provide a definitive picture of an executive’s potential capabilities. Leadership skills are continually developed and honed through experience and corporate training, rather than being innately acquired.

Good business schools offer one-on-one leadership coaching with experts who can provide a frank but sensitive appraisal of your management skills. When you are a leader it is often difficult for others to you tell you candidly how you are doing.

3rd Benefit: Leadership assessments can help you improve in all stages of your career

A lifetime of learning in top management means that you should be standing back to reassess your leadership skills at regular intervals. Leadership assessment can typically help you decide what training courses are right for you at different stages of your career. Leadership assessments are vital to ensure upgrading of leadership skills and competencies by the following people:

Functional Managers

An ambitious functional manager seeking management training courses to advance his or her career must first undergo a leadership assessment to find an appropriate leadership development program.

Mid-career Business Leaders

A mid-career business leader considering an executive development program  to boost his or her value to the company needs a leadership assessment to find a training program that perfectly fits.

Senior Executives & CEOs

A senior executive or CEO at the top of an organization, seeking ways to move the organization forward while seeking out opportunities and leading with conviction and authority, must first submit to a leadership assessment.

People Seeking Development Of Leadership Skills

People looking to develop strategic leadership skills to tackle specific challenges, such as business development strategy or sustainability through targeted business management training, must first take a leadership assessment. 

4th Benefit: Leadership assessments can help in improving the leadership development plan

Leadership assessment can play another critical role for your organization as part of a leadership development plan. It allows a company to appraise the abilities of business managers at different levels to lead teams and projects.

Leadership evaluation helps human resources departments to identify gaps in the talent pool, while establishing who is prepared to take on senior general management positions when vacancies arise. With the baby-boom generation reaching retirement age, companies need a solid succession planning process to ensure continuity of leadership.

That involves identifying the executive education needed to ensure your company has the right people with the right training in place at the right time. The process can get a healthy head start with effective leadership assessment.


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As companies prepare for another year of attracting, hiring and retaining employees, there are a few developments and trends in the HR and TA industry they should keep an eye out for, says Neil Costa, CEO of HireClix.

The world of work has changed significantly since 2020. Many organizations have adjusted their business strategy and approach, which has resulted in a change to their people strategy. More importantly, employees’ values have evolved. The “great reshuffling” taught us that employees are willing to move jobs for more balance, greater flexibility and growth opportunities. Many workers are no longer willing to stay with organizations if their needs and values are not aligned.

Sourcing the right talent continues to be a huge challenge for companies in the current labor market and will continue into 2023. And with the complex business environment of low unemployment rates amidst fear of layoffs and hiring freezes, Human Resource (HR) and Talent Acquisition (TA) leaders are getting mixed signals.

As companies prepare for another year of attracting, hiring, and retaining employees, there are a few developments and trends in the HR and TA industry they should keep an eye out for, including a focus on internal mobility opportunities, a consumer-like experience from career sites to attract employees, and creating and showcasing an authentic brand.

Prioritization of Internal Mobility

Companies will focus on providing more opportunities to internal employees by being more transparent about job openings and the internal hiring process. This is necessary to improve retention and provide the career growth employees crave. Recent data from the LinkedIn Global Talent Trends ReportOpens a new window  shows that companies that excel at increasing opportunities for internal mobility have better retention, as employees who make an internal move are more likely to stay at their organization than those who stay in the same role. It is often easier for an employee to find an opportunity outside their current organization than inside. Executives will realize that internal mobility processes that are not employee-friendly significantly impact their turnover. Companies should eliminate the “hidden job market” and post all open roles for employees to view and self-nominate. Hidden job markets perpetuate diversity, equity, and inclusion issues as they send the message that you must be “in” with the right leaders to find your next opportunity.

Return of Hiring Events and Job Fairs

Due to the distance created between workers worldwide at the peak of the pandemic, we anticipate everyone will want more face time when it comes to making one of the biggest decisions in life: getting a new job. We believe that both employers and candidates will want the in-person time to get to know and understand each other’s values. Employers will be able to screen employees for productivity ability, something that is crucial as they continue to offer flexibility and remote work accommodations. Job seekers will want to meet with their future employers in person as the demographics are shifting to a younger workforce that values a company’s mission, culture, and authenticity more than its predecessors. 

Revamp of Career Sites

The current employment market is dynamic, and creating an engaging candidate experience will be critical as job seekers expect more from big brands. The Fortune 500 job sites will need an extremely fresh user experience and operate more like retail consumer sites such as Netflix and Amazon, and we expect about 50% of these companies to do so. This means light and easy interfaces with smooth interactions. Finding a job used to be more of a transaction, but since changing jobs is a top life event outside of growing a family and buying a home, candidates will expect more from employers. Applicant rates are declining because of dismal candidate experiences and the tighter labor market, so organizations that move with speed and creativity will establish a competitive advantage when hiring.

Increased Employer Branding Budget 

Over the past two years, we learned that candidates are more selective about where and whom they work with—culture and values matter. Most employers invest little in employer branding but focus their dollars on directly driving applicants to jobs. With the evolving nature of the workforce and the challenging labor market, it will be critical for companies to create positive brand impressions across all media and marketing channels so job seekers associate a positive experience with the brand and take action to apply for a job. We will also see some organizations refresh their employer brands to address the new world of work and showcase how employers are adjusting to the needs of employees – offering in-person, remote, and hybrid opportunities. Candidates will be attracted to those companies that can be more thoughtful and make a connection using smarter strategies to get their brand in front of them earlier in their job search by authentically representing them through consumer advertising channels.

Hiring Freight Train

The looming recession will continue hiring needs in the healthcare, transportation, and retail industries. As older generations retire from the workforce and expect to travel more, dine out more, and need more healthcare services, the natural dip in the population of the younger generations will have plenty of opportunities in those industries to find great jobs. The main street storefronts and the logistics behind getting products to their destinations will generate countless jobs, even in a tight economy. Hiring opportunities remain strong within what I call the “Main Street Workforce,” as several sectors have only just recovered from the pandemic, leaving more flexibility to keep recruiting and avoid mass layoffs. It is also much easier to switch jobs within sectors on the main street because many skills are transferable. For those who may have left their job due to family obligations, COVID-19, etc., it’s easier to return to the workforce via the main street.  

As companies plan, budget, and prepare for 2023, these are some potential key trends to consider in their recruiting and talent acquisition efforts. Take the time to invest in your company’s career site, refresh your creatives and build brand assets to attract the right talent. Take advantage of renewed opportunities to connect with professionals and prospective employees at in-person hiring events. Highlight alternative career paths like internal mobility and the main street workforce. Overall, continue to pivot and adapt to the changing wants and needs of the workforce – or risk losing out on attracting some of the top talents in your industry.

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14 Talent Acquisition Skills Needed For Success In TA

What is one important skill needed to become successful at talent acquisition? To help you with Talent Acquisition Skills, we asked CEOs and CHROs this question for their best insights. From “Ability to Sell and Influence” to “Emotional Intelligence”, there are several recommendations that may help you with Talent Acquisition Skills in the future.

Here are fourteen insights for Talent Acquisition Skills:

  • Negotiation
  • Multitasking is Key
  • Ability to Sell and Influence
  • Reading Between the Lines
  • Emotional Intelligence
  • Get Your People Skills Up!
  • Look Forward and Behind.
  • Good Cost Management Skills
  • Organization With Scheduled Follow-ups
  • You Have to Be Able to See Beyond the Resume
  • One Skill to Become Successful at Talent Acquisition
  • Paying Close Attention to Detail
  • Aspiring Ta Pros Should Put On their Listening Ears
  • Industry Domain Expertise
Negotiation

Staffing is the toughest sales job on the planet because you have to illustrate to both parties that it’s the right choice. If you sell a product, service or even an idea, half the work is already done. A car doesn’t have an opinion. It doesn’t say, “thanks for the offer, but the dealership countered and I’m going to stay where I am.”People are tricky. Hiring managers and candidates each come with wish list of requirements that may not be realistic. Sifting the vital from the ideal, aligning needs, and earning the proverbial handshake all require the art and science of negotiation.

Multitasking Is Key

Multitasking is key for talent acquisition when you have dozens of people to interview to fill multiple roles. The key is to work quickly, but not too fast. How can you screen multiple people in a shorter amount of time? Take time to prepare your interview questions in advance and think about what red or green flags you’re looking for as folks answer them. Letting candidates self select into or out of the process will save you time further down the line.

Ability To Sell And Influence

If there is one skill that is important for talent acquisition, it is the ability to sell and influence the outcome. In order to be successful in talent acquisition, you need to be able to effectively sell the company, the role to potential candidates, and influence the outcome. This requires being able to articulate the company’s mission and values, as well as being knowledgeable about the role and the team. It also requires being able to pitch the company in a way that is attractive to top talent. This is not an easy task, but it is essential for success in talent acquisition.

Reading Between The Lines

Being able to read people or “read between the lines” when performing interviews is an invaluable skill for a recruiter. Sometimes it’s not what the applicant said but the way that they said it that either qualifies or disqualifies them.Being able to read someone through a voice or video call is an important skill, as it’s how many interviews are conducted now. Being able to discern if someone is telling the truth or withholding information is critical when talking about key skills required for the position. You don’t want to have your name on a candidate endorsed to a shortlist if they lied about their qualifications.Learning to read between the lines or becoming better at reading people will help you catch and hire the best talent while simultaneously culling those who aren’t qualified.

Emotional Intelligence

The most important skill to be successful at Talent Acquisition (and many other areas in HR and business) is emotional intelligence. As an executive coach and former talent acquisition director, I know firsthand the importance of emotional intelligence in being able to successfully attract, screen, recruit and onboard talent. Emotional intelligence is defined as a set of skills that collectively establish how well we understand our own and other’s emotions, how well we use emotions to cope with stress, solve problems, make decisions and interact with others. A high level of emotional intelligence supports talent acquisition professionals to navigate both internally and externally. Emotional intelligence is a skill and thus, can be built over time with the right support. As a strategic talent advisor, I recommend all TA functions I work with to invest in the development of emotional intelligence for all team members.

Get Your People Skills Up!

Someone who is planning to take on a talent acquisition role needs to know not only how to work with people, but how to work with many people at once. Internally, talent acquisition specialists often are required to work with multiple managers in departments outside of their own. Externally those working in talent acquisition need to be able to vet and onboard those applying to positions at their company with accuracy. This vetting and onboarding process requires people skills too like interviewing candidates and salary negotiation. When it comes to a career in talent acquisition there is no such thing as being too much of a people person.

Look Forward And Behind.

To truly become effective at talent acquisition, it is important to remember to look forward and behind. While we are always dazzled by the latest shiny objects in Talent Acquisition, be it AI, TikTok, digital retargeting or new tech stack, sometimes it pays off to go “old-school.” Tactics that have worked effectively in the past e.g. flyers, posters, radio and mobile billboards are still especially effective for disrupting your target audience; particularly a passive candidate who is not actively searching the job boards. And while it’s great to keep your pulse on tomorrow’s trends, sometimes you can distinguish yourself AND your talent acquisition results by honoring the tried and true recruitment marketing methods of yesterday.

Good Cost Management Skills

Good cost management skills are a must for talent acquisition team members. A bad hire can cost companies thousands in training and re-hiring. Satisfying the monetary requirements of both the applicant and the company is no easy feat too. Finding the perfect balance to appease both parties takes not just numerical prowess, but patience and steadiness as well.

Organization With Scheduled Follow-Ups

Recruiting is a very fluid process with new applicants that need to be reviewed, scheduling interviews for other candidates in the pipeline, and making offers once you’ve found the right employee!When you’re managing the candidate pipelines for 15 or more jobs, you’ll see that some candidates can lag behind others and need a little nudge from time to time.My employer uses Greenhouse and many times our interview request emails and HackerRank emails end up in candidates Spam folders. I review the pipeline a few times a week and will set follow-ups on various candidates if they are lagging behind.Organization is key to keep up with a massive recruiting workload!

You Have To Be Able To See Beyond The Resume

To acquire highly-skilled talent on a consistent basis, you have to be able to see past the resume. While candidates should have polished resumes and CVs that showcase their experience and skills, there are other important things to look for. For example, if your company has a well-established culture, someone who will likely not contribute to that “vibe” may not last long. And with retention rates still dropping and onboarding becoming more and more costly, it’s more important than ever to make the right decisions.

One Skill To Become Successful At Talent Acquisition

I think one important skill needed to become successful at talent acquisition is communication. You need to be a successful communicator in order to communicate to your applicants what a great company you are recruiting for and the benefits that are offered at this company. Communication is also needed to write an effective job announcement to pursue applicants to apply for positions.

Paying Close Attention To Detail

When working with people, it is critical to recognize subtleties. This type of role necessitates someone who understands the value of accuracy and thoroughness. The ability to identify errors and potential weaknesses, as well as manage them until a satisfactory result is achieved, is critical to being efficient and professional. Candidates with high attention to detail are thorough and demonstrate the ability to focus on both minor and major details while completing a task.

Aspiring Ta Pros Should Put On Their Listening Ears

If you’re looking to get into talent acquisition it’s time to practice listening. While it may seem obvious, this skill is one TAs must perfect. This career requires sitting through multiple interviews each day. By the time you’ve hit your fifth candidate, all answers may sound the same. Truly listening allows a TA to pick out answers that best align with the open job and follow up with questions to dive deeper. Doing so makes it significantly easier to find the right fit for the role.

Industry Domain Expertise

The best recruiters understand the industry they practice in. They know the competitive landscape, who are the top players, the differentiators amongst them, and often the culture, pay and leadership within the companies. This helps on a number of levels, especially when it comes to candidate negotiation. If you know who they are likely to be interviewing with you can turn a mind quickly with the right insights and show your confidence behind the company/client you are representing.

 

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Talent acquisition is a foundational element of your organization’s success, and drives everything from company culture to profitability. The people you hire have a significant impact on the product or service you offer, the satisfaction of your customers, the reputation of your brand, and the atmosphere of your work environment.

Implementing an effective talent acquisition process to secure top talent is an investment that has the potential to improve every aspect of the way you do business.

What is talent acquisition?

Talent acquisition is a strategic approach to finding, identifying, and selecting qualified candidates for open positions. It’s usually the responsibility of human resources professionals and technically includes each step of the hiring process, including sourcing, interviewing, and even onboarding.

However, the most effective TA strategies have a big-picture perspective and include less obvious steps of the process, such as building a desirable employer brand, improving the candidate experience, and prioritizing relationship management in an effort to attract and retain high-quality candidates.

Recruitment vs. talent acquisition

Recruitment and talent acquisition may seem like interchangeable terms, but there’s some nuance that differentiates the two.

The recruiting process involves the tasks associated with hiring for open positions. Writing job descriptions, publishing job postings to job boards and identifying potential candidates are all examples of recruitment-related activities.

Talent acquisition involves implementing a strategy for long-term human resources planning and is designed to attract and secure the best talent with specific skill sets or experience and the ability to grow into bigger and better roles within the organization in the future.

Recruitment falls under the umbrella of TA, however, talent acquisition is an ongoing process of networking, outreach, and relationship-building versus hiring for a specific position.

The talent acquisition process

Creating an effective TA process requires more than crafting thoughtful interview questions. Get started by considering the following aspects of the Pragmatic Recruiting Framework:

  • Product: Understand your company, culture, and what a “good” candidate means to you.
  • Audience: Understand what motivates the right candidates and how your company can meet their needs.
  • Messaging: Craft an employer brand that positions your product as a compelling proposition for job seekers who are part of your intended audience.
  • Programs: Create go-to-market programs that place your opportunities in front of the right audience.
  • Readiness: Ensure your organization’s ability to execute on your selection process.

Once you develop a talent acquisition strategy, you need to build talent pipelines, create positive employer branding, and focus on talent relationship management.

An applicant tracking system can be a valuable tool to manage the logistical aspects of talent acquisition.

Benefits of talent acquisition

The primary benefit of creating and implementing this strategy is obvious: It optimizes the hiring process in a way that increases your odds of hiring top talent.

However, there are many advantages of having well-defined parameters for what you’re seeking in new employees. Creating a streamlined workflow that results in the best new hires available helps build the business you want.

Reduce time to hire, increase retention rates, improve talent management, and fortify company culture with an intentional staffing plan that prioritizes the core values of your organization.

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Use Leadership Assessments to Build Better Leaders

“You should measure things you care about. If you’re not measuring, you don’t care and you don’t know.”

– Steve Howard

We can all agree on the importance of leadership in a company. We can also agree that important things should be measured. Consequently, we could argue that everyone should use some form of leadership assessment to select, identify, and develop leaders. Below are just four situations when leadership assessments can help you build better leaders.

1. Hiring a New Manager/Leader

Whether you are filling a management position internally, or sourcing from outside the company, assessments can add a unique and objective perspective to your hiring process. There are a variety of types of leadership assessments that can increase the value of your management hiring process. For instance, you can measure leadership style, leadership personality, leadership character, and leader performance. The best way to ensure that you select the most valid assessment(s) is to enlist the help of experts. However, you can also follow a similar process to:

  • Assess your company’s future direction and where it is today
  • Define the requirements for the new leader (hint: this is about more than the job description)
  • Select the leadership assessment(s) that provides the most relevant data to support your hiring decision
2. Identifying Hi-Potentials

Similar to hiring a leader, identifying your Hi-Potentials should always start first with developing a clear understanding of your company’s current and future leadership needs. Second, create formal success profiles for each leadership position or family of positions. Next, once your success profiles have been established:

  • Choose assessments that best measure the criteria identified in the success profiles
  • Assess and establish a baseline of your current talent
  • Use the data from your baseline assessment to help allocate resources, and decide both who should be developed and what competencies need investment
  • Measure ongoing growth with periodic assessments like a 360-degree feedback tool

Figure 1 – GroupView Report from Leadership Skills Profile

3. Planning for Succession

A succession planning process requires you to create a structured approach for measuring your current baseline, predict your future leadership needs, and plan for how you will meet those needs. Therefore, leadership assessments can be a critical tool to help:

  • Establish a baseline for your current management team and use that data to shape future requirements  
  • Measure leadership strengths and development opportunities for those next in line to identify gaps, help determine readiness, and create formal development plans to prepare them
  • Identify Hi-Potentials in order to create a deeper roster of leadership readiness for the future
4. Developing Leadership

Leadership development is at the core of everything that we do to build better leaders.

Assessments offer a simple, yet effective, leadership development tool that helps your leaders:

  • Demonstrate a greater degree of self-awareness
  • Validate leadership strengths and opportunities for development using a variety of perspectives
  • Prioritize development opportunities with the best chance of success
  • Understand how strengths and development opportunities impact performance
  • Develop a formal Individual Development Plan (IDP) to set goals to enhance leadership effectiveness

In short, while you can certainly develop leaders without using assessments, it is near impossible to gauge their effectiveness without some form of assessment.

Source:
 SIGMA Assessment Systems


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There’s a lot of discussion going on these days about board service and why there aren’t more women on boards. Over the next few weeks we’ll discuss that and look at some strategies that might help you if you aspire to board service.

A seat at the corporate board table is an aspiration for many leaders and for good reason.  Board service bundles together a host of rewarding experiences: The opportunity to be an “insider” and view, first hand, how another company works at its highest levels and the privilege to work beside and soak up the wisdom of the brightest, successful and most articulate professionals who will ever cross your path.

But there’s more. It is prestigious to serve on a corporate board, particularly when the firm is publicly-held and directors are elected by shareholders, rather than appointed by the CEO as in the case of private corporate boards. Another feature of boards of directors in large public companies is that the board tends to have more “de facto” power. Many shareholders grant proxies to the directors to vote their shares at general meetings and accept all recommendations of the board rather than try to get involved in management, since each shareholder’s power, as well as interest and information is so small.

How Boards Work

The board consists of individuals that are elected as representatives of the stockholders to establish corporate management related policies and to make decisions on major company issues. Every public company must have a board of directors. Some private and nonprofit companies have a board of directors as well.

In general, the board makes decisions on shareholders’ behalf and has a legal duty to act solely on their behalf. The board looks out for the financial well-being of the company. Such issues that fall under a board’s purview include the hiring and firing of executives, stock dividend policies, and executive compensation. In addition to those duties, a board of directors is responsible for helping a corporation set broad goals, support executives in their duties, while also ensuring the company has adequate resources at its disposal and that those resources are managed well.

 

My Board Experience

Over the course of my 30-year business career, I’ve been blessed with a host of “highs.” In looking back, the pinnacle experience has been (and still is) the opportunity to serve as an independent director of a NYSE, micro-cap company, Luby’s/Fuddruckers Inc. (LUB).  

Here are ten reasons why I relish my corporate board seat:

  • What I learn in a year of board meetings is equivalent to “renewing” my M.B.A.
  • I get to contribute to corporate strategy at its highest level of complexity.
  • I’ve stood shoulder-to-shoulder with my fellow board members, and our shareholders, to win a hard-fought proxy fight with a hedge fund.
  • I’ve come to appreciate each of our business units’ unique corporate cultures.
  • I‘m blessed to work alongside principled and accomplished fellow directors from whom I’m always learning.
  • I’ve come to be comfortable with “productive conflict” even when I’m the sole voice on an issue.
  • I’ve become a better listener and to be open-minded to differing perspectives.
  • I’ve learned that my job as a board director is to coach and mentor the executive team. At the end of the day, they run the company.
  • I’ve come to truly prize the individualized passion, wisdom and wit of my fellow board directors; and to deeply appreciate how our skills sets and idiosyncrasies unite us and keep us strong.

Fact is, serving on a corporate board has made me a better business person and matured me as a human being. I want the same for you!

Truths To Think About

For too many decades, America’s corporate boards have been filled by a chosen few.

I’m passionate about helping level the playing field and make board seats obtainable to a wider, more diverse range of talent. As I see it, the future success of our corporations and our country’s free enterprise system, depend on it.

Here’s the reality: Corporate board seats are scarce and competition is fierce.

But you don’t have to sit passively just wishing and hoping. There are actions you can take. In fact, the “right” initiatives can immeasurably increase your odds of landing a seat.

But here’s the tricky part: Joining a corporate board is by invitation only. (Sometimes board recruiters build the candidate list. But many times, the board works independently.) While the landscape is changing, direct solicitation is still considered taboo, so your actions should be carefully choreographed so that the board finds you and determines that you are just the right person for the seat. You’ll want to rely on your sponsors and supporters to do the initial canvassing for you.

Your Time Is Now

In my opinion there is no better time than today to start working on earning a board seat. For one thing, most all of the information that you’ll need is online. Instead of hoping you serendipitously hear about a recently vacated board seat, that information will be readily available on the internet. You might  even be able to glean what they are looking for in a replacement and who else on the board you may know or be a degree or two separated from.

The most important thing is to determine if you are board ready. If you are, then let’s learn together how to earn that seat that you think would be the best fit for you. 


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The topic of “Corporate Governance 2030” might encourage wild speculation in this period of great, some would say, epochal change. Some might see the demise of the corporation; others, the emergence of new organizations with intelligent robots playing the role of boards. And so on and so forth. The truth is that 12 years is not such a long time. Heuristically turning to the past 12 years, one sees that the changes in corporate governance have been relatively limited. Only in the banking sector have there been any truly significant changes. These were not the result of a huge technological disruption but of a crisis: the most common reason to change corporate governance expectations, regulation and practice. One should therefore expect limited change. But change there will be, and it will be mainly driven by four key drivers: diversity, disclosure, data and Development Financial Institutions (DFIs)

 

Context

Many commentators and pundits have been making predictions about a radically different corporate landscape than the one we are facing today. These predictions have been around for a while: the information and communications revolution was supposed to usher an era of smaller, more nimble companies with very few employees scattered around the world, facing millions of very well-informed rational consumers who buy on the web and can manage endless choice. These nimble supply players can change game plans at the speed of light. Their strategic decisions are not the result of hierarchy-bound iterations as in classic corporations. Rather, they emerge through some sort of networking osmosis.

This has not happened yet, and it might take a long while before it is really upon us, longer than 12 years. It might be true that companies in the ITC sector employ fewer people than old world companies, while enjoying vastly higher valuations and therefore market capitalizations. It might also be true that the information revolution has brought about a significant change in the pecking order of sectors. And AI is already changing significantly the tasks of human workers—and replacing many of them.

But wholesale corporate decentralisation has not happened: industrial concentration levels, if anything, have increased, largely as the result of powerful network effects, facilitated by an efficient merger “food chain”; which, in its turn, is efficiently intermediated by the capital markets. There are still small, medium and large businesses, and there is no indication that they will use boards less or in significantly different ways than their predecessors. The only thing that has probably changed is the funding of it all—the “food chain” works differently: it is now less about public equity markets and more about private flows of capital.

Where there were once IPOs now there are efficient private markets. The UK has now only about half the listed companies it had twelve years ago.

Much of the what this blog discusses is about emerging markets (EMs) and the often smaller, private companies that populate them. For them, the development of private markets is actually a very good thing. Most of these enterprises will benefit from the fact that capital markets are more comfortable and can more efficiently fund privately-owned businesses. The new “food chain” might present an opportunity to smaller, private businesses wherever they may be. For EMs this might translate into a chance to leapfrog developed economies.

Like everywhere else, technology might create significant, and disruptive opportunities in EMs, especially in sectors such as banking and payment systems. But EMs’ key competitive advantages will still be driven by traditional sectors where labour cost advantages are more important than opportunities for labour substitution. But even in those sectors where technology will play an increasingly significant role, the key issue of trust in a company and its institutional framework will not disappear. So, do not expect a change in the role of corporate governance as a generator of trust.

There is an important caveat. My thoughts are based on, some will say, bold assumption that the long-standing trend of global economic and regulatory convergence will continue. This convergence started a few decades ago and was framed by an international cooperation framework established after the second world war. As we all know these arrangements are now facing significant headwinds, probably stronger than at any other time in the last 80 years. My assumption is that what we are currently witnessing in geopolitical and international economic relations is a backlash, not a total collapse of that framework. If it is the later, then many of the points raised in this blog post might become irrelevant.

So, there will be changes in governance over the next twelve years in EMs and elsewhere; and sometimes they will be significant, albeit not earthshattering. Their drivers can be summed up under four broad headings: diversity, disclosure, data and DFIs.

Diversity

Diversity of all kinds and at all levels, is one of the most pervasive trends of the new millennium—a child of globalization and convergence, but also of deep structural change in Western societies.

In the governance sphere, we speak about diversity mostly in the gender context. This is a very important subject and we are probably just at the beginning of a new social paradigm. What is happening in the West is setting the tone elsewhere—almost everywhere. This trend will increasingly impact private businesses across EMs, even in the most conservative places. Increasingly more young women in the elites will be educated just like their brothers. This will probably accelerate changes throughout society.

But diversity is much more than gender. And I will use it in this very broad sense of maximizing the number of different perspectives around a decision-making table—the board.

In fact, boards were invented for diversity purposes: we want different voices around the table, not one king (or, rarely, a queen) who takes all decisions unchallenged. The wise drafters of 19th century company laws did not have mental categories for “group think” and formulation or availability biases; but they could see that managing other people’s money (as Adam Smith put it) required more than a king-like powerful individual, no matter how honest or intelligent.

Of course, a basic common understanding of the business at hand is required around the table, and the more complex the business, the more this understanding comes at a premium. But the more diverse the people around the table are, the more likely the board is to avoid the trap of such biases when delivering productive, challenging, rounded, and balanced guidance.

Until now typical public company (Plc) boards were populated by executives of other companies, a distinct group with a lot of business and organizational experience but often facing perverse incentives. Family companies were often crowded with (what else?) family members. And start-up boards were often an incest ground for a few, very experienced and influential VC representatives with extensive cross-directorships.

I truly believe that we are entering the age of diversity, in this broader sense. Even the patriarchal families of the most conservative of EMs are beginning to understand this and invite outsiders to counsel them. Founders of small businesses understand that access to capital comes from inviting others to the decision-making table: these others bring diversity and diversity brings comfort all around.

But who are these others? In the core OECD markets a new breed of director is emerging and they are all about diversity. In fact, diversity is at the core of their career path. I call them the “portfolio directors”, some call them professional NEDs. Portfolio directors will increasingly be used in all types of companies, from the large PLCs (where their presence is already significant) to the small EM family businesses, often with the help of DFIs, the fourth driver. This latter trend is still in its incipiency but will grow significantly over the next 12 years.

The currency of portfolio directors will be their proven capacity to challenge constructively, which would be demonstrable through a successful track record as NEDs, not as executives in other businesses. Demonstrability will be based on the availability of data—the third driver. Discoverability of past performance will make NEDs less prone to being lapdogs of the controllers. We are not there yet, but this is an area where 12 years might make a lot of difference.

Currently, a phenomenon that is common in both the new age tech companies of Silicon Valley and the traditional family businesses in EMs is the presence of a King—an ultimate controller who can take decisions at will and for whom the board is either a legally imposed nuisance or a bunch of cheerleaders. Indeed, how is a Malinois or Peruvian business patriarch different from Mike Zuckerberg or Elon Musk? Well, their boards are full of the great and good and they are diverse, but only in terms of gender and, possibly, ethnicity. This is a step above than the patriarchs’ board of children, cousins and personal lawyers/consultants. But the reality of Big Tech leaves a lot to be desired: armed with multiple voting rights the Silicon Valley “kings” want boards to be “story tellers”—rather than drivers of challenge. Each one of these directors is hand-picked by the king and serves at the king’s mercy.

A better example of public market governance in the tech sector might come from the largest emerging market, China. Jack Ma has eased himself (and many of the first-generation executives) out of the well-known company he created less than two decades ago, Ali Baba. A couple of years ago, he relinquished the CEO position keeping the chairmanship. Now he has announced that he will be leaving the board all together. Compared to the Silicon Valley kings, he looks more like the Good Shepperd.

Reassuringly, most founders of tech start-ups that IPO in the US show the behavior of Jack Ma rather than that of the “kings”, as recent research suggests. Most of these companies have already lost their founder from their board when they went public—not everyone wants to be king forever. This might however also be because companies take longer to IPO in recent times. The private part of the “food chain” is, these days, longer and often permanent. Let us consider one of its great constituents, the “unicorn” Uber.

In many respects “King” Kalanick was like the rest of his Silicon Valley peers—a big, intelligent ego, armed with significant multiple voting rights. But when he fumbled, he was driven out. His nemeses were not “independent” directors but representatives of significant shareholders, other than himself. Their voice was backed by the credible threat of loss of market confidence and impaired access to capital. I do believe that the private investment “food chain” that we discussed earlier, as opposed to the public route, has delivered such powerful, engaged shareholder directors, and will increasingly do so in the future. Unlike the public markets where boards essentially co-opt themselves, in the private equity context it is the shareholders, often several of them, who appoint the board. The principal-agent problem is less pronounced; hence governance risk is less acute. And as private finance becomes more and more ubiquitous in both core OECD and EM markets, the delivery of challenge in the private company board room will grow.

There is one more aspect of board room diversity that I would like to touch upon. Like in the case of multiple shareholder representation, it is more about the diversity of interests that the board focuses on rather than the diversity of its members. In other words, the importance of stakeholders is increasing and will increase even more in the coming 12 years. In some countries, like Germany, this has long been the status quo. But stakeholder power is now a prominent feature of corporate governance reforms in many countries. Germany is becoming a beacon for some important corporate governance reforms in other countries. Even the UK, the European bastion of shareholder value, has this year revised its venerable CG Code, the oldest of its genre in Europe, to include specific responsibilities for the board with regards to stakeholders. Boards now must consider employees and other stakeholders views when developing strategy and compensation plans and need to establish communication lines with their workforce. The era of unadulterated shareholder value that started in the 80s seems to be behind us. The markets are acknowledging this, albeit quite clumsily, through the rise and “mainstreaming” of Environmental, Social and Governance (ESG) screening and integration, and of “impact” investing. The pressure from investors will only encourage boards to consider stakeholder perspectives, even worker participation looks now like a distinct possibility in the UK.

But none of these trends could be sustained and become the future without disclosure.

Disclosure

First, I believe that, the core OECD public markets suffer from a saturation of disclosure requirements —there is too much, not too little of it. The number of pages in the annual reports of UK FTSE 300 companies have on average more than trebled in the last 20 years. Investors have probably more information than they can use, and often the forest is lost to the trees.

But the focus of this post is not about disclosure in the public markets, where we might in fact see some retrenchment over the next twelve years, first and foremost on the need for quarterly reporting. The focus is rather on two different issues: changes in governance disclosures in EMs; and the beneficial impact of disclosure practices in OECD public markets on disclosure trends and culture in private markets. The gist is that the amount of disclosure in OECD public markets as well as the corporate and investor cultures that have developed around these disclosures are generating positive externalities for EMs and privately-owned companies in all markets. These two directional trends can be demonstrated by developments in two areas.

The first area is that of corporate governance codes, more specifically the structure and implementation mechanisms for these codes in emerging markets. All corporate governance codes claim the UK Code as their ancestor. But many of them, especially in EMs, do not possess one of its core features: the comply-or-explain mechanism, which allows companies to comply with quite specific provisions of a factual, binary nature; or to explain why they do not comply with such provisions. The primary purpose of the comply-or-explain approach is to increase disclosure of governance practices in the market. By asking companies for a simple “yes” or “no” on their compliance with a very specific provision and by making their response an obligatory disclosure item, the Codes render governance arrangements of individual companies transparent to the market.

In contrast, in EMs one would all too often find Code provisions that are ostensibly comply-or-explain, but in practice yield little transparency about real governance practices among the local listed population. There are at least two reasons for this: first, their provisions are often too general with a response requiring a judgement rather than a statement of fact. For example, if the provision is that “the board has to function effectively”, everyone can and will respond in the affirmative, and such an affirmative response cannot be realistically challenged. Second, provisions are often synthetic and cannot be effectively answered in a binary fashion: for example, “a majority of directors should be independent and competent”.

Until now, the objectives of policy makers in many EMs (and several OECD countries) was primarily to educate local companies on best practice through CG codes rather than to increase transparency in the market. This has started to change. My company, Nestor Advisors, has been involved with the support of the EBRD in efforts in Russia and Turkey to restructure Codes towards more disclosure-friendly formats; and to ensure that there is an efficient, user-friendly disclosure system to effectively get the information out to the market.

The many enemies of transparent markets have been saying that disclosure-focused CG regimes are fit for only those markets that have an able, sophisticated buy-side population. This is, nonsense. More transparency in the public market benefits first and foremost lest developed EM and frontier markets; it attracts investors who might not enter without some platform that provides credible non-financial information. Such a platform might in fact make all the difference. What is more, it provides the right signal; good CG information underpins credibility of financial information, and vice versa.

Coming to the same directional trend, the adoption of public market CG disclosure norms by private companies has been increasing in several “core” OECD markets. I believe this will become a growing trend in the next 12 years as private markets continue to attract more and more diverse investors, with some private companies becoming effectively quasi-public. This is a trend that is likely to reach EMs, especially if DFIs actively support it. In EMs, the emergence of a culture of disclosure generates significant positive spill-overs on the rest of the economy, boosting the goodwill of various stakeholders on whose good faith companies often depend.

Moreover, disclosure usually begets more disclosure. As disclosure becomes richer, boards, shareholders and stakeholders want a more holistic understanding of the business they are involved with. Propelled by failure and crises, the knowledge and understanding of the “culture” of the individual companies is increasingly coming within the sights of boards and stakeholders.

Starting with the financial sector, understanding the culture of a company is becoming increasingly a best practice requirement for boards. I am convinced that within the next 12 years, cultural “audits” will become the norm for larger companies.

So, are boards, shareholders and stakeholders interested in culture for the same reasons that Claude Levi-Strauss was interested in the culture of the Yanomami tribe in the Amazon? Maybe not exactly, but their reasons might not be not be as different as one would expect. Culture is important in companies because, apart from policies and procedures, it influences the way people understand their surroundings and, most importantly behave towards them. Just like Levi-Strauss, corporate leaders are interested in what drives people (in corporations and in tribes) to do things in certain ways; in what way “structure” may underpin behavior that in its turn produces goods/artefacts but also, ultimately a perception of the world, values.

It is said that culture is how people do things when no one is looking.

A related reason that culture is important was eloquently stated by the eponymous Peter Drucker. He famously said that “Culture eats strategy for breakfast”. Meaning that organizations, inhabited by humans, will always do what they feel comfortable with instead of what they planned and documented on a piece of paper.

Cultural audits, as increasingly practiced by banks in the UK and elsewhere, depend on the availability of various pieces of information about governance practice and process, but also on other indicators such as customer and employee satisfaction surveys. All of these constitute elements of an elaborate system of internal and external “disclosure”. Cultural audits will not only be relevant to banks and large listed companies: some banks are already reflecting on how to develop “red flags” for their clients, often SMEs. Indicators might include things such as big differences in pay between the boss and the employees, high turnover of management, “staleness” of boards (age, same people around the table for a long time). Whether as an element of credit assessment or of an inevitability/due diligence test, these cultural audits will depend on the availability of data.

Data

Data, the third driver, will increasingly fuel developments in the other three areas discussed in this post. As noted above, a key element of technology-driven disruption in many sectors is the availability of “big” data allowing companies to find niches and price their products with unprecedented precision. Such data will also help identify risks with a granularity that was not hitherto available to providers of equity and debt capital.

In the governance space, work is already under way. And while today data provision is focused on governance of banks (such as in the case of Aktis, a data provider that I chair) or large listed companies (such as in the case of Sustain analytics or ISS) all existing data providers are considering ways to acquire, aggregate/anonymize and serve back governance data from and to private companies, providing benchmarking but also measurable “rankings” to potential investors.

The availability of data will also have a profound impact on the way boards work: for example, as compliance becomes automated, compliance data and logs will become a source of oversight for audit committees. Expanded use of board portals which are becoming the norm in many OECD core markets, will also provide board directors with better opportunities for deep dives into a company’s policy and control environment.

DFIs

I truly believe that in EMs, especially in frontier markets, the recent DFI commitment to actively seek better governance, a “conversion” of almost of Damascene proportions, has become a significant driver of change and will become more so over the next twelve years. IFC was certainly a trailblazer in this respect but others have followed closely.

A few years ago, the governance departments of most DFIs (some of them still nascent) started coordinating their approach to the governance of their investees. The IFC, the EBRD, the IDB, the ADB, and bilateral DFIs, such as DEG, FMO, IFU and Proparco, decided that they needed a common approach. Based on the IFC methodology, a DFI approach to governance was developed and endorsed. And DFIs now cooperate in continuously improving the methodology, in sharing experience from its implementation and even in carrying out individual investee engagements.

In 2018, KfW DEG, the German development bank, produced what will be considered a high water mark in the DFI space: The new Nominee Director Handbook. In my view it provides extensive ammunition in dealing with the still rudimentary governance in many of the boards its nominees sit on. By upping the game at board level, DEG nominees will produce significant results in many individual investees. But the most important impact is the positive externalities that might benefit all companies in the investee’s immediate ecosystem. These externalities will be multiplied significantly, because now DFIs “sing from the same hymn book” and collaborate on fostering governance changes.

Conclusion

One can sum up the perspective of this post on the future of governance in the following 10 points:

  1. Diversity at every level and of every kind will continue to grow.
  2. Private companies will increasingly have outsiders on boards, who in many cases will be “professional” challengers, instead of lapdogs.
  3. Stakeholders will figure frequently on board agendas—and on boards themselves, possibly as a result of regulatory changes.
  4. While public company disclosures in the OECD might be streamlined…
  5. …private company boards will become more demanding on regular disclosures, and so will their shareholders.
  6. A more holistic view of the firm will emerge through systematic cultural audits.
  7. Diversity, disclosure and interactions between principal and their agents, as well as stakeholders will increasingly require high quality governance data…
  8. …which will increase demand for data platforms at every level.
  9. The DFIs ‘weight in the EM governance area will continue to increase; they will become an important source of demand for diversity, disclosure and data…
  10. … thus becoming themselves an important driver of change.

 


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