Navigating the Boardroom - An Exclusive Interview with Pablo Hafner, Governance Expert

Today, we delve into the intricate world of corporate governance with Pablo Hafner, a renowned governance consultant with years of experience advising boards across various industries. Pablo shares valuable insights on navigating board dynamics, the challenges of strategic planning, and the keys to effective governance.

?? Pablo, with your extensive background in governance consulting, what are the most common challenges boards face in today's business environment?

We live in a world of high uncertainty, may be the highest uncertainty since the 2nd world war. This being the case, the most relevant role of the board today is to assess this uncertainty, to properly evaluate the risks and opportunities of the business environment, and lastly to guide the company management in the right direction. As new global political and economic rules are being set, poles of power are shifting very fast and new alliances are established, the consideration of the “big picture” is -in my opinion- more important than ever. This is entirely a board responsibility.

?? How do you approach enhancing board dynamics and ensuring effective collaboration among board members with diverse backgrounds and expertise?

The composition of the board is very important, the members must be complementary in terms of expertise, geographical knowledge, gender and personality traits. Ensuring the right dynamics among all members is crucial for board effectiveness and decision making, here the role of the chairman is of utmost importance. Additionally, subdivision in committees, clear agenda topics, sufficient time to allow the preparation of the sesions, well defined timing during the meetings, promoting collegiality among the different members as well of consensus in decision making are key topics that must be considered to ensure the functionality of the board.

?? In your experience, how critical is the role of corporate governance in strategic planning, and what best practices can you share for integrating these two crucial aspects?

The two topics are interrelated and co-dependent: there is no effective governance without strategic planning. Shall the company have a “Strategic Planning Department” at executive level, the board must have direct counterpart at board level, and in my opinion, it should be the chairman. Of course, this all depends on the size of the company…in a mid-size company the strategic planning at executive level is responsibility of the CEO. In this case the CEO must have a seat at the board, and if not, the chairman must be his/her counterpart.

?? Can you share a memorable experience where you helped a board navigate a particularly challenging governance issue? What was the outcome?

Yes, at a global family-owned business in its third generation. The board was composed by family members except for the chairman who was an external member. Sometimes it was very difficult for the chairman to have a voice when family members were completely reluctant to listen to him. The chairman, never at the first attempt but with a high dose of patience and coolness, finally managed to find the way to make the family members reflect and evaluate other options that initially were off the table. The careful selection of the agenda topics, their allocation in the different board meetings across the year, and the prework with the different board members was crucial to bring the company to success.

?? With the increasing emphasis on ESG (Environmental, Social, and Governance) factors, how should boards adapt their governance frameworks to meet these new expectations?

The governance of a company cannot put its back towards reality, it must address all topics that nowadays matter society, being ESG an important one. Any company, both at executive and at board level, need leaders who understand and can respond to the growing regulatory demands for sustainable practices. Consequently ESG must be a priority in every organisation.

?? What role do you see technology playing in the future of board governance, and how can boards prepare to leverage digital tools effectively?

The digital tools already arrived to help board of directors’ efficiency and are here to stay. They help build agendas, record and track discussions, secure access to documents, secure distribution of encrypted information, etc. In my experience, family-owned firms are still in some cases very reluctant to use these kinds of tools, but I think it’s only a matter of time. The full digitalization of the governance system will be reality in a short time.

?? As a governance consultant, how do you stay ahead of the curve in a rapidly changing regulatory and business landscape?

Constant update and being present in the market are vital.

?? Finally, what advice would you give to new board members to help them make a positive impact in their governance roles?

Get very well informed about the activity of the company and its practices, research the market, understand the business, get along with the management and with your new colleagues at the board, be flexible and compassionate. Only fully knowing the company and its stakeholders, you will be able to deliver the impactful contribution you are asked for.

Thank you very much, Pablo, that is very insightful!