Governance

Select the right members and agenda items for your Leadership Team

Dirk VerburgLeave a comment

Most leaders leave the composition and agendas of their leadership teams to chance. This is a waste of time, energy, and focus.

Almost all senior leaders choose the members of their leadership teams almost by default: all their direct reports, as well as a selection of participants from staffing and back-office roles ‘in the matrix’ (Finance, HR, IT, Regulatory, Affairs, Communications, Quality Assurance, etc.).

The advantages of composing leadership teams in this way are that:

✅ Representatives of all functions are aware of every topic that is discussed (information and awareness)

✅ Participants from staffing and back-office functions feel they (and their functions) are taken seriously as true ‘business partners’

✅ The leader avoids difficult discussions about the composition of their leadership team

Although this sounds great, this typically results in:

❌ Large teams

❌ Long meetings

❌ Meeting agendas that lack a clear focus

Let me explain.

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Why reducing corporate overhead costs is not a ‘Get Out of Jail Free card’

Dirk VerburgLeave a comment

It is tempting for CEOs to try to appease their shareholders by reducing corporate overhead costs. It seems to be the corporate equivalent of a ‘Get Out of Jail Free card’ in Monopoly: it is free and can get a CEO out of a tricky situation.

The reason is that everyone loves the notion of lowering corporate overhead costs, and especially reducing the number of people in corporate roles.

Whereas the supervisory board occasionally might call for caution, you will never hear shareholders or analysts complain and Business Unit leaders usually love the perspective of lower corporate charges and more independence. Most often, corporate functions cannot count on a lot of sympathy from the rest of the workforce either. They are seen as overpaid ‘bureaucrats’, ‘paper pushers’, and ‘PowerPoint wizards’ in ‘back-office’ roles.

Reducing overhead is also not very difficult. Usually, there are plenty of young runners-up in large organizations dying to prove themselves to corporate leaders. If not, consulting firms are happy to line up for beauty parades to show off their capabilities in this area.

It is also not that hard – at least, I have never seen a corporate cost savings initiative not achieving its short-term financial objectives.

So eliminating or reducing these corporate functions is a great idea, right?

Unfortunately, it depends…

Eliminating or reducing corporate functions poses risks for CEOs in three areas:

  • Compliance
  • Shareholder activism
  • Boardroom dynamics
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