In a business environment in continuous debate there is a common and indisputable premise: the role of the board is today more crucial than ever. After guiding companies through one of the periods of greatest complexity and uncertainty that we all remember, it is time to look to the future. In addition, in a context that emanates optimism, but in which uncertainty accompanies us at every step, and in which it is necessary to respond to regulatory requirements and greater scrutiny by stakeholders.
In its exercise of supervision and advice, the council requires exceptional skills, ranging between experience and intuition. And that were analyzed in the IX Councilor’s Forum, organized by KPMG and IESE in collaboration with the Spanish Association of Directors and Forética, and that, as every year, allowed to reflect and share experiences on the relevant role of this key body for companies and from which conclusions of value were drawn.
First, the acceptance that no leadership model is more valid than another. Under the premise that the board must be agile in its response to a changing environment, success depends on having an efficient model adapted to the reality of the company. To ensure rapport between the members of the council and the management committee. That guarantees the ability to listen, that allows the contrast of opinions and decision-making. And, above all, that it be diverse in its broadest sense, to guarantee the wealth of knowledge.
We must not forget that, given the importance of decision-making that companies face —with an impact on the growth of the economy and its competitiveness—, no council can be sure of knowing everything. It is a position with a demand and relevance before which, as Rodrigo Buenaventura, president of the CNMV stated, perhaps an “expectation of supermen and superwomen who lead, control, manage and inspire organizations that are already in themselves extremely complex ”.
That is why talent is a fundamental pillar in the board and it must be continuously reviewed that all the skills required by the environment, the sector and the organization’s strategy are available. Updating knowledge, through the continuous training of each of its members, and having diversity in its composition is crucial to ensure a vision based not only on experience, but also on the perspective of the managers and entrepreneurs that make up the board. .
Another substantial reflection has to do with the three acronyms that lately resonate in every business meeting: ESG, the letters that frame sustainability, responsibility and good governance and that can be perceived by the most skeptical as a kind of “green bubble” that overstates its relevance. Nothing could be further from the truth, since in the IX Councilor’s Forum it was possible to verify, once again, how these factors really are part of the strategic vision.
The importance of ESG responds to the confluence of three factors: increased regulation, in response to the increased scrutiny by all stakeholders on the positive impact of companies on the environment and on society; the awareness of the organizations themselves, which seek to join forces towards the joint objective of achieving a more sustainable economy while addressing an increasingly worrying risk such as climate change; and the certainty that sustainability is synonymous with growth, something that capital markets are thus valuing.
However, this transformation is not without an adaptation effort, given the increased demand from investors and proxies, of society and employees, and that regulation accompanies these demands. The directors, in their due diligence work, devote more and more time and attention to ESG issues, factors that cross the entire company that require experience and knowledge. Proof of this is the vertiginous increase in recent years in the creation of committees dedicated to this matter, with the aim of giving it adequate importance and additionally launching a message of credibility, both towards stakeholders as with all business units.
Another relevant reflection came from the hand of the complex balance between the short and long term. The board must act as a guarantor of the survival of the company in a complex environment, but without neglecting its task of identifying opportunities. Especially in terms of corporate operations, since, despite the necessary coexistence with uncertainty, the truth is that expectations are for growth and optimism.
For this, the diligence of the board is essential, having an industrialized process that ensures that each of the corporate operations that are valued contributes to adding to the company’s strategy. The directors must assess in each case whether the operation will result in the growth of the organization, being sensitive to the environment and analyzing its implications in detail. A whole game of balance that adds, if possible, greater demand to the council.
To achieve all of their objectives, organizations must also pay particular attention to their audit committees. This body, with a fundamental role as guarantor of the adequate supervision of risks, has seen its functions evolve from the analysis of the financial statements to an exhaustive review of all the risks that may affect them. An aspect in which, once again, having a diverse body, with knowledge and experience in different areas, will allow a greater and better analysis and control of all the risks that affect the business model.
In this sense, and as a consequence of the momentum of digitization that we have witnessed in the last year, cybersecurity once again occupied an important part of the analysis. And it is that, although total security cannot be guaranteed, it is possible to have an adequate reaction plan, which ultimately guarantees business continuity. And for which it is necessary to have the appropriate information, which allows precise decision-making.
In short, one more year, the IX Board of Directors’ Forum was a meeting that highlighted the relevance of a body that not only ensures that the decisions of companies promote their growth and competitiveness, but also respond to regulatory requirements and meet to the growing demands of interest groups. A guide in the midst of uncertainty, a guarantor of stability in times of change.
Hilario Albarracín is president of KPMG.