Leaders’ Perspectives with Clara C. Streit: The Code Commission is more than the Code

Fabian Billing, McKinsey Managing Partner Germany & Austria

January 31, 2024

In a difficult operating environment, leaders are searching for new approaches to further develop and transform their company and strengthen the resilience “muscles”. Leaders need to deal with a higher frequency and intensity of external disruption, navigate the global geopolitical context, continuously challenge their organizations, inject innovative ideas, while personally provide a steady hand to avoid overreactions and stay confident. And they need to develop a next generation of strong leaders to cope with today’s difficult conditions.

My series “Leaders’ Perspectives” explores relevant themes through conversations with inspiring modern leaders.

Today, I’m pleased to share my conversation with Clara C. Streit, Chair of the Government Commission for the German Corporate Governance Code and Supervisory Board Member.

Clara, the overall economic climate as well as the overall geopolitical situation put quite some challenges on today’s leaders. What do you expect for 2024?

At the moment, it does indeed look as if the geopolitical risks will continue to increase. This is not a good basis for growth in the global economy. Nevertheless, the global economy has recovered and stabilized – admittedly still at a low level. Germany is currently a special case with major problems – both economically and politically. But it doesn't help to complain. The companies have to deal with circumstances and make the best of them. ???

Germany has strong foundations. But when it comes to economic competitiveness, the picture is not as bright anymore. What does it take to accelerate the growth and competitiveness of the German economy?

Here I agree with Kenneth Rogoff: You should never bet against Germany. And don't underestimate the country: Despite high energy prices, inflation and interest rates, the German economy has a surprising amount of substance and resilience. Admittedly: More needs to be invested in infrastructure and future technologies. And reducing bureaucracy should be a high priority. My impression is that politicians are starting to recognize that.

You have gained a lot of experience on international supervisory boards in recent years. Has the multitude of ongoing crises changed the way supervisory boards understand their role?

The role of supervisory boards has indeed changed a lot in recent years. This is now also noticeable in German companies. Good corporate governance – even in a two-tier system – is not just about control and supervision, but also about sparring between Management and the Supervisory Board. This is beneficial for all stakeholders. And there are now many CEOs who expect their company to benefit from the experience and expertise of members of their supervisory boards.

In March 2023, you became Chair of the Government Commission for the German Corporate Governance Code (GCGC). What are the three priorities you have to make Germany more competitive as a business location?

The Code Commission is more than the Code. This is the conviction shared by all members of the Commission. Our aims are to further develop good corporate governance in Germany and to spotlight on the relevance of the topic. We would like to discuss it in the right place with the right stakeholders. This is why we would like to focus on the following priorities in the coming years: Firstly, more entrepreneurial responsibility and less bureaucracy. Secondly, an even more productive dialogue between corporates and investors and last, but not least, further professionalization of supervisory board work.

Could you explain what this means in concrete terms for the Commission's work over the next few years??????????

Very gladly. With regards to cutting red tape, we want to lead by example and aim to further clarify, but also simplify the Code in future versions. We would also like to intensify the dialogue with investors and proxy advisors to create a better understanding of German Corporate Governance. We should ensure also smaller companies have appropriate access to investors and their advisors. And a matter close to my heart: We want to use international best practices to improve the work of German supervisory boards and make them both, more effective and attractive for top candidates.

The demands on CEOs are constantly growing. How difficult is it for a company and its supervisory board to find the right candidate?

This is probably the most important and difficult challenge of any supervisory board: attract and select great leaders and make sure they are successful as CEOs of German companies. This requires a very proper and thorough process that costs a lot of time and resources. Easy to say, not so easy to do.

What excites you most about the direction in which supervisory boards are moving today?

What excites me most is the opportunity to modernize the work of supervisory boards in a similar way that the work of management boards has developed successfully over the last two decades. The question is how successful team leadership and development methods can be transferred to the work of supervisory boards. I think that would be a lever to reach the next level of effectiveness when it comes to corporate governance.

You are a role model for many younger top managers and female leaders. What were the most pivotal moments on your journey?

Personally, of course, meeting my husband and having our children. Professionally, probably the choice of my university and my first employer.

What advice do you give young leaders for their journey today?

For all your ambition, you should never forget: You need a balance in the triangle of professional career, friends and family and your own health. It’s a bit like juggling three balls – if one is kept in the air for too long, it will fall and jeopardize your overall balance.

Thank you, Clara. This was wonderful. I so appreciate your time.

Clara C. Streit is the Chair of the Supervisory Board of the Dax 40 real estate company Vonovia. The financial expert also holds a supervisory board mandate at Deutsche B?rse Group. In addition, she serves on the boards of directors of the Swiss banking and investment management group Vontobel and the Portuguese food retailer Jerónimo Martins. Previously, she has been, among others, a member of the supervisory boards of European banking group UniCredit and Dutch insurance group NN.

On March 1, 2023, Clara C. Streit took office as Chair of the Government Commission for the German Corporate Governance Code.

Clara C. Streit was born in the USA in 1968, studied business administration at the University of St. Gallen, Switzerland, and started her professional journey at McKinsey & Company, where she worked in Germany and internationally for more than 20 years, from 2003 until 2012 as Senior Partner.