Practical advice regarding the German corporate governance system

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Professor Bernd Schichold is one of the leading figures in all questions regarding the German supervisory board affairs. Regularly he is writing in his blog about the newest developments. One of the most important developments is the DIN SPEC 33456, since non German speaking supervisory board members often need a reference point and practical advice with regard to the German corporate governance system.

Below you can find an abstract of the DIN SPEC 33456 „Business Process Guidelines for Supervisory Boards and Independent Directors“, which might be helpful:

„The DIN SPEC includes guidelines for organizational processes and business processes in oversight bodies such as supervisory boards, advisory boards and boards of directors. The guidelines are set to impose a reference model and a process map of the supervisory board for routines that occur regularly as part of the monitoring work. Potential users and target groups of these guidelines are advisory boards of various companies, especially medium-sized companies, family businesses, foundations and public companies. The reference model provides sufficient degrees of freedom and thereby flexibility of an enterprise customization. The DIN SPEC primarily is supposed to provide a business perspective of the regular running routine work of supervisory bodies.“

If you need more information, please get in touch with Bernd Schichold (one of the idea generators and authors of this practical guideline for supervisory boards) directly – or send us an email.

We need more couragous Leaders!

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Intro

New Technologies, the international crisis and other factors has shown: We need more leaders, less managers. But what is the difference? A short, but great Synopsis, I`ve seen:

Boss vs Leader

Courage for Leadership

We don`t have a solution for all the Problems. A new Generation of Leadership, based on Courage and Integrity, can bring all of us the solution:

1. We Need responsible Leadership

  • the ability to encourage and motivate people, employees and customers
  • to guide and coach them in good and bad times on their way to the common goal
  • to be successful jointly and have better results as a team
  • The key factors are – trust of the people in the right leadership – adjusted approaches of „right“ leadership in different situations – a responsible guideline for social responsibility.
  • other important factors are personal qualities like charisma, willpower, trustbuilding, strenghth, courage and decisiveness
  • a responsible crisis management – i.e. to be cool headed in critical situations, but with authenticity and integrity

2. We Need the leadership of tomorrow!

  • after the age of number-oriented management decision making follows the era of business culture driven leadership
  • What is competence? today: fact oriented decision maker  tomorrow: enabler and engineer of decision making processes
  • What is character? today: compliance tomorrow: personal integrity
  • What is culture? today: apply the company values tomorrow: business culture creation and formation

3. New role of the business leaders

    • Ethical behavior not only as individual, but as well as institution
    • incentivation i.e. boni longterm and related to sustainable results
    • decision making processes adjusted to ethical values (i.e. no discrimination, „Red Flags“)
    • CEO and leadership team as „role models“ demonstrate christian values
    • appreciate human capital
    • fairness for all stakeholders
    • sustainable entrepreneurship
    • show responsibility and reliability
    • open and transparent communication
    • social engagement and common good-Engagement
    • Pope-encyclica „Laudato Si“ = „our planet is our common house“

Extro

This Blogpost based on a presentation by Stephan Werhahn, board member of the German IoD.

The challenge of the Borads to stand up against Trump

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The CEO’s and Board members of the leading companies of the US and the world do have a new challenge: how to deal with Trump who may be destroying your long-term company future. Going for the short-term win and submissively obey the presidents will? Or going for the long-term win and offer resistance?

In an interview with Harvard Business Review, former U.S. treasury secretary Larry Summers said: “If CEOs who employ hundreds of thousands of people are not in a position to speak truth to power, who is going to be in a position to speak truth to power?”

Harvard Professor Bill George recommends a strategy:

  1. Prepare for the jobs of the future.
  2. Stay focused on realizing your mission despite the uncertainty.
  3. Build on your strengths.
  4. Adapt your tactics, not your strategy.
  5. Don’t abandon globalization

For more details and to read his valuable guideline have a look at his LinkedIn post.

Board agenda 2017: Stop making lists!

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Intro

Yesterday I read the Board Agenda 2017, top priorities for boards and audit committees in Europe, published by  EY [Ernst & Young]. This Publication contains eight important items for the board in 2017:

  1. Geopolitical risks: About Trump, Brexit and another political things, changing the world.
  2. Digital Transformation: Is your corporation ready for the digital transformation?
  3. European Union (EU) audit reform: This part is exciting for european boards: Is your board ready for Audit Reform?
  4. Tax risk: About the risks, paying to much taxes.
  5. Corporate compliance and culture: How developed is your corporate culture?
  6. Talent Management: Where to find new talents? Does your corporation have a good will?
  7. Corporate social responsibility:  Does your corporation meet the regulatary framework, or are you working ethical?
  8. Investor Relations: How does your corporation comunicate with its investors?

This list is great work and has all the items, I would talk about, too. But I miss one (main) Topic, which has strategic implications: The relationship between all topics!

Stop making lists!

Lists can help: They make one feel, to meet all the topics. But they can pretend a wrong safety. The items, EY has correctly identified, must be in a relationship. In this case, a visualization could look like this:

Board Agenda 2017

When we take a look at the digital transformation, it is one of the main topics, the corrporations are concerned about. To reach new goals, they need an innovating company culture, which promotes individuals. Additionally a good failure culture would be helpful. No director is able to command creativity (They can…. but it wouldn`t help). It is only possible, to build up a correlated company culture.

The tasks are making a framework for surviving the changes, coming the next years. A list point like „Digital Transformation“ suggested, it would only be a release. Remember:

Digital Transformation is not a SAP Release

But there are more implications: the war for talents has already started. The companies can try, to hire them. But without the right support, the talents will not stay.

So the board has two main topics in the next years to work at: to handle the techniacally tasks (like the European Union (EU) audit Reform) and helping to transform the company in this way, that we have a culture, everybody wants to stay. And this culture must be live by the top management and not to be commanded.

German version can be found here.

Digital Transformation requires a new mindset

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I read often articles about the digital transformation and changes in Leadership. But why is this topic so important? In the moment, services and products are in change. The digital transformation dominates the discussion about the future of all topics of business.

Why is this important for Leadership? For understanding take a look for some newcomer: AirBnB and Uber: This companies don`t start with great techniques, Apps or Pages: They start with an idea. The services aren`t new. The ideas were bringing a value to the customers. This both companies doesn’t start with a complete new idea. They found business processes, which weren’t optimal and used them, to dig margins.

Leadership and business processes

No more bosses are needed: The age of Micromanagement has ended. New business models arises by creative employees. Managers but cannot command creativity. They have to install a framework, that supports new ideas. Failures are part of this new culture. This mindset has to be part of the common Leadership.