How To "Ask The Tough Questions"

The failure of Silicon Valley Bank (and Theranos, General Electric and others before it) has inspired a lot of corporate soul searching—and not just at banks. In C-Suites, boardrooms—and front pages—everywhere, this latest banking crisis has spawned questions about how to monitor risk, who should monitor risk and what’s the most effective way to go about it.

For the cover story of our latest issue of Corporate Board Member, I talked with Fred Hassan, the former chair and CEO of Schering-Plough and Pharmacia who has served on the boards of Time Warner (before its $85 billion acquisition by AT&T in 2018) and Amgen (until 2021). He presently serves on the boards of Prometheus, BridgeBio and Precigen.

Few people have faced as many challenging business situations as has Hassan, who got to run not one, not two, but three global pharmas, and serve as chair at two more, Bausch & Lomb and Theramex, all of which he rescued from turnaround situations. Besides moving big dials, he also founded and scaled up a family business that he sold to Nestlé in 2020. Over the years, he’s coached numerous CEOs, including leaders of portfolio companies of Warburg, where he continues as director after a stint as managing director.

While the conversation took place before the SVB wobble, I’m struck by how much of what Fred had to say is so spot-on applicable. That’s probably because the kinds of uncertainty and risk we’re now seeing is turning out to feel like the new normal, not an aberration. And that’s exactly why the board is there.

“We, as board members, like to drift toward the comfort zone, which is to play the roles of advisers, coaches, buddies to the CEO, and that’s perfectly fine,” says Hassan. “But boards have to understand that they have other roles to play under different circumstances. Sometimes, you will have to ask the tough questions.” How to do it? Hassan has plenty to share. I hope you find it useful. Read the full interview >

— Dan Bigman, editor, Corporate Board Member.

ON YOUR RADAR: Other Headlines Worth Reading

Board confidence retreats. After significant back-to-back increases in January and February, directors’ outlook for business 12 months out slipped this month amid growing signs of economic headwinds, according to our March poll.

Preparing for pay vs. performance. A long time in the making, the SEC’s final rule on Dodd-Frank’s disclosure requirement poses some questions for comp committees. FW Cook’s Dana Etra and Michael Kenney take a deeper dive.

Getting past tokenism. “The biggest obstacle to diversity is lack of true buy-in—as I call it, ‘true believers,” says Ford director Kimberly Casiano, also a founding member of the Latino Corporate Directors Association, who notes that, for real change to happen, decision-makers must buy in to the business case for diversity.

Saved by profits. In a rare retreat by an activist investor, Elliott Management has scrapped plans to nominate directors to the board of Salesforce after the software group delivered better-than-expected earnings. (Financial Times)

Work-from-home ending? Some 72.5% of business establishments—compared with 60.1% in 2021—said their employees teleworked rarely or not at all last year, according to the most recent DoL report. (WSJ)

Getting educated on cyber. Boards are, or should be, seeking out the expertise of CISOs to better understand cybersecurity risk. Here’s how CISOs plan to be helpful. (Dark Reading)

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UPCOMING EVENTS:?

19th?Annual Boardroom Summit

September 13-14, 2023 | New York

Featured Speaker: Fred Reichheld, Author, Winning on Purpose, Net Promoter 3.0 and The Loyalty Effect

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