In a much acclaimed article by Gabor Steingart, the comparison begins with
“The doghouse is for the dog, the board of directors for the cat.”
Hermann Josef Abs (First member of the Management Board, then Chairman of the Supervisory Board of Deutsche Bank in the 60s and 70s of the last millennium). In fact, the function of the Supervisory Board is being given greater focus, currently around the personnel of Paul Achleitner.
We need more transparency
In fact, confidence in the function of the Supervisory Board is no longer at its highest. There are two reasons for this:
The Supervisory Board is often staffed by the old Management Board.
The function of the Supervisory Board was delegated more and more to voting rights advisors.
The most important function (of the many held by the Supervisory Board) is to seek and appoint a reasonable and well-functioning Management Board. As Gabor Steingart explains, this has not always been the case.
A decisive criterion: the search again for the supervisory board itself. And here it is time for a paradigm shift to take place in the large corporations as well. It should be the person on the supervisory board who has proven competence not only in the specialist area of the company, but primarily also management experience behind him: A retreat to a pure cuddling course with the company’s executive board should thus be avoided.
I am not only talking about keeping to the cooling off phase, which is often ignored, but also that it is often appropriate to fill the supervisory board from a third party. The competences to supervise the board can also be acquired elsewhere in the economy.
Especially in medium-sized and family-run companies such a rethinking has already taken place. Here the Supervisory Board is staffed according to other criteria than in large corporations. It is about time that the same applies to them as well: Away from uniformity with the Board of Management, towards a critical body that constantly questions the course of the Board of Management. It also helps that institutions such as the Anglo-American IOD help the function of the Supervisory Board to become more professional.
To this end, the Supervisory Board must be staffed differently. As long as the positions have the appearance of “supply posts”, trust will not be restored.
German version here.
In the last week there was an important decision for the continuity in German boards: The participation of employees in the German Boards is compatible with European Law. so the continuity of the German composition of boards is guaranteed.
Since 1965 in Germany are the half of the members of the board sent by employees. The German Konrad Erzberger saw in this very special law a discrimination: Only German employees are able to participate this law. Employees of other countries aren`t represented with this law. With this commencement the petitioner got the wrath of the German unions: They are often financed by the fee, their members got by participating the supervisory board.
In the case of TUI the law was called: Is this participation legal with European law? The German Courts sent this case to the European Court. Since Friday, the result is published: The German Law is compatible with the European law. The experts saw this in may this year in their report, and now the European court has followed this view: It is quit right, that different countries of the European Union follow different ways for stakeholders and law for companies:
In that context, EU law does not, in the field of representation and collective defence of the interests of workers in the management or supervisory bodies of a company established under national law, a field which, to date, has not been harmonised or even coordinated at Union level, prevent a Member State from providing that the legislation it has adopted be applicable only to workers employed by establishments located in its national territory, just as it is open to another Member State to rely on a different linking factor for the purposes of the application of its own national legislation.
The Association for German Leadership has appreciated this decision:
The cooperation with employee representatives in the supervisory boards has proved successful for the majority of specialists and managers in Germany.
explained the president Ulrich Goldschmidt. The German participation is a great advantage for the location of Germany and has proven in the past 52 years. Now the European Court has obtained legal certainty.
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:
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“
This Blogpost based on a presentation by Stephan Werhahn, board member of the German IoD.