Every aspect of business is subject to notable change. This applies in no small measure to corporate governance. A current topic concerns board structures and the best choice to ensure they are equipped to deal with increased complexity and disruptive circumstances. The pros and cons of the one-tier-board system and the two-tier board system are widely debated. In the one-tier system the executive and non-executive directors form a single board and in the two-tier system the executive board and the supervisory board remain separate albeit with the same responsibilities.
We should consider whether something significant may be missing from the strategy that is applied to safeguard good governance. Will different structures, reinforcing formal governance rules or introducing new business codes and regulations be sufficient to prepare boards for disruptive developments in their internal and external environments? My answer to that is no.
This is where I see the greatest opportunity that, unfortunately is overlooked consistently. The requirement for executive leaders to adapt to new leadership standards should apply in equal measure to the board of directors. If the executive directors adapt their roles and approach to retain their effectiveness in a fast-paced digitalised world of disruption, how can they possibly thrive if the supervisory board brings a traditional approach to the table? Supervisory responsibilities need to be applied swiftly, decisively and wisely, using judgement that is based on a wider lens. Therefore, new leadership standards and selection criteria should also be applied to supervisory directors and leadership support should be provided when deemed necessary. Janet Poot and Caroline Allertz lead workshops for supervisory boards.
Written by Janet Poot