Part 1: Culture and Digital Transformation - the two hot topics for 2022 at Boardrooms

Every year, shareholders attend board meetings with questions and concerns that, if not well handled, may undermine their trust in a company's ability to manage risk and create long-term value. After a two-year cycle managing covid crises, companies and their senior managers will face new structural challenges regarding long-term strategies on culture and digital transformation in their boardrooms.

What drives corporate growth and risk are equally represented on the list of challenges on board members' radars in 2022. This year's primary shareholder concern areas will be digitalization and data protection, people and culture, market movements and regulation, and reporting and reporting. Here are a few ideas for how boards can deal with these issues.

PART 1: CULTURE

Great talents and culture are all your company needs

Shareholders are paying closer attention to how corporate boards foster a healthy culture within their companies and if – and how – they can keep their top talents in all areas. Communication, talent management, executive compensation, and general corporate culture is no longer just a best practice. This topic is critical for the future.

With shareholders becoming increasingly interested in supporting socially responsible businesses while also becoming more aware of the influence these issues have on a company's bottom line, it's wise to be prepared to tackle social and cultural concerns at annual board meetings.

Leadership diversity is one facet of business culture that will receive particular. According to McKinsey & Company, companies in the top 25th percentile for female representation in managerial positions are 21 percent more likely to have above-average profitability, according to McKinsey & Company. At the same time, two of the world's largest proxy advisory firms, Institutional Shareholder Services (ISS) and Glass Lewis, have recently updated their policies to prioritize board diversity, particularly in terms of gender, which will impact their executive compensation disclosure evaluations and consequent strong shareholder suggestions.

Organizations and their boards are encouraged to evaluate the effectiveness of their present board renewal and recruitment practices, as well as relevant proxy disclosures, to broaden talks about board diversity beyond gender and ensure a broader range of perspectives.

Boards are more than ever responsible for attracting outstanding leadership

During our professional lives, we hopefully will get to know great CEOs and bosses. A fantastic leader can change our careers and the way we will evolve and impact the world around us. Fortunately, I have had the opportunity to meet a few of those leaders in my journey. I know how important this is for those at the bottom of the ladder. However, exceptional leaders are not easy to find.

When you have had the significant effect of being led by a truly exceptional leader, then it is time to ask yourself, "How will I attain that level of leadership?" A leader sets forth with a clear objective and with clear goals in mind. Those who work for and alongside the leader motivate everyone across and down their organization's food chain to join in. Leaders who can follow a process through to success in the corporate hierarchy understand that they must systemize the process to make it work at all levels of the corporation.

The essential component in being an impactful leader is related to how much you genuinely care about your people and how deeply you devote yourself to make them better.

Genuine leaders wanted

Expanding on what it means to reveal your vulnerabilities to others, opening yourself up to the scrutiny of your team so that they see that you are opening yourself up to them in decision-making can go a long way toward cultivating trust and loyalty. This structure is quite different from the traditional structures of yesteryear, which is a mark of the Industrial Revolution as it's an inverted pyramid. Because of this, the CEO sits at the bottom, thus giving everyone on the infrastructure level the authority to fulfill their tasks, which gives rise to a more substantial structure where everyone is empowered to serve the company's mission.

For all viewpoints to be heard, a positive mindset must be established at the CEO level. There is a high bar for being modest and challenging the norm, yet this is where you'll find cutting-edge innovation and adjustments in thinking that reshape the industry. Although we may not want to admit it, we're just searching for an environment where we can be confident enough to freely offer ideas and be noticed, listened to, and respected in return.

Have a strategic HR

Never have the agendas of the CHRO (chief human resources officer) been more challenging than they are in 2021. Aside from their daily responsibilities, CHROs have also been presented with a tremendous amount of additional obstacles that directly impact a company's ability to recover and expand.

What we think will happen when the worst of the pandemic has subsided is that HR professionals will have to confront the fourth challenge: Recharging employee engagement and productivity in a remote, hybrid, or otherwise transformed workplace environment. Burnout—not simply "Zoom Fatigue"—is all too typical among remote employees, who are increasingly confined to their seats for 12 hours a day with no regular breaks and casual interactions, as was the case before the development of Covid. The next potential difference is likely between teams that can work mainly from home and frontline personnel who do not have that option. Another gap may be between those who work from their offices at home and others working at kitchen tables.

Rather than a structured or practical performance management approach, firms select and haphazardly reward their most productive people, resulting in stunted growth (weed out the least effective). While everyone is evaluated and compensated on the same terms, weak or nonexistent performance management cultivates a culture of mistrust, uncertainty, and favoritism where employees feel marginalized, don't know what they need to do to succeed, or don't understand why one person got promoted and another didn't.

Recognizing the critical need to focus on diversity, equity, and inclusion

The conclusion of George Floyd's life catalyzes increased importance on diversity, equity, and inclusion (DEI), a critical component highlighted by the current cultural milieu and set to rise to the forefront due to the death of George Floyd. Before the racial turmoil began in the summer of 2020, several organizations publicly proclaimed their dedication to DEI. Those events were a seminal moment. They made companies realize they must develop a more strategic, integrated, and comprehensive approach. Moreover, and perhaps more significantly, the use of Covid-19 itself and its responses (which included school closures and layoffs) have affected women and minorities disproportionately.

Approaching the Challenges

This guide will show you how to approach the challenges.

1. Does your board of directors have an HR/nomination committee? Where corporate culture is being discussed?
2. With the current level of resource constraint, how can an HR leader manage such a broad agenda? Based on our own experience, here are ideas you can follow.
3. No one can do it alone. It's also likely that natural friends will back these activities. On the other hand, workforce optimization is something that both you and the COO can profit from. Try to recruit that person as a co-sponsor, source of funds, or the like.
4. Ask for help from peers. When we discuss these topics, we are speaking to a corporate audience. And as such, we can safely assume that the vast majority of the content focuses on corporations and will therefore be too expensive, complex, or "process-y". The beautiful thing about peer networks is that they are a terrific source of advice and are excellent places to connect with outside advisors that are better suited to work with businesses the same size as yours.
5. Invite new, external knowledge and horsepower to the project. Outside aid is required since more significant initiatives can't be tackled well or quickly unless someone is hired to help them. However, even with the support of outside resources, massive projects will still fall through the cracks unless people are employed to manage them. DEI is an example: Small to medium-sized businesses are unlikely to have the specialist knowledge needed to begin a DEI program independently.

Above all, make use of your company's strategy addresses CULTURE and TALENTS as priorities for the board's agenda, the CEO and others in senior leadership. Despite making critical decisions around the long-term plan, it's pretty standard for effective HR initiatives to be viewed as afterthoughts ("nice to have") until priorities such as growing the top line, improving margins, and improving operational performance have been addressed. However, believe me, nothing is as critical as CULTURE and TALENTS for the next years.

READ PART 2 HERE.