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A Political Meeting, Johann Velten, 1849 (Courtesy: The City Museum, Tier, Germany)

Why Boards of Directors Fail at Monitoring Their Companies

Idea posted: September 2017
  • CSR & Governance
  • Leadership & Change

New research reveals the 10 structural barriers, from board size to the complexity of a firm, that explains why boards of directors can fail to effectively monitor their companies.

Idea #667
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Cincinnati, USA. Photo by Jordan Andrews on Unsplash

In Uncertain Times It's Best to Have Fewer Industry Experts on a Board

Idea posted: September 2017
  • Strategy
  • CSR & Governance

Having domain experts on boards is often touted as an advantage. New research shows, however, that too many experts from a company’s industry can actually hinder a board’s efforts in times of strategic uncertainty.

Idea #672
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The Death of Caesar, Karl Theodor von Piloty, 1879 (Courtesy: Lower Saxony State Museum, Hannover, Germany)

Reducing CEO Power Can Undermine a Company’s Legitimacy

Idea posted: June 2016
  • CSR & Governance
  • Leadership & Change

A separation of power between CEO and a board of directors is often viewed as a sign of good governance. A new study reveals that reducing the power of a CEO may actually diminish rather than reinforce the legitimacy of a company in its foreign markets.

Idea #610
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Quotas to Gender-Balance the Board: Norway’s Drastic Action Worked

Idea posted: April 2016
  • CSR & Governance
  • Leadership & Change

Although perhaps a drastic move from the perspective of many businesspeople, the Norwegian government’s bold adoption of a 40% quota for women on boards, and its short 2-year implementation phase, had no significant impact — either negative or positive — on short- or long-term corporate performance. 

Idea #602
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An Indian Maharaja in a religious procession, about 1825-1830, (Courtesy: V&A Museum, London)

How Corporate Governance Impacts Human Resources

Idea posted: April 2016
  • CSR & Governance

Through the use of four archetypes, a team of researchers describes the impact of different corporate governance systems on company decisions involving human resources. The team also argues that a corporate sustainability mental frame can overcome the inherent contradictions and challenges in each archetype.

Idea #595
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Why the Chief Marketing Officer Matters

Idea posted: February 2016
  • Strategy
  • CSR & Governance
  • Leadership & Change
  • Marketing

The position of Chief Marketing Officer has come under fire recently, with some arguing that a CMO does not really add value to a company. A new research study counters this view; showing that companies with CMOs perform up to 15% better than companies who leave the CMO seat empty. 

Idea #581
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411_World War 2 poster. Wireless operators (Courtesy: BT Archives)

CIOs: Coach and Communicate with C-suite for Digital Innovation

Idea posted: January 2016
  • Strategy
  • CSR & Governance
  • Innovation & Entrepreneurship
  • Leadership & Change

European companies are losing innovation opportunities because C-suite executives fail to respond to information technology and digital-related proposals of the CIO and the information technology function of the company, according to a new survey of European companies in three countries. The problem: lack of communication between IT and non-IT leaders.

Idea #573
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Queen Nefertiti of Egypt, 1350 BC (Courtesy: Neues Museum Berlin)

How a CEO's Attractiveness Can Boost Shareholder Value

Idea posted: December 2015
  • CSR & Governance
  • Leadership & Change
  • Marketing

Personal appearance, from height to attractive facial features, has been shown to positively influence the financial and career success of individuals. New research links CEO attractiveness to shareholder value, demonstrating that the first impression advantage of an attractive physical appearance can have group as well as individual benefits.

Idea #575
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Pepin being crowned King of the Franks by St. Boniface in 751, engraving by Robert Gaguin, Paris, 1514

Why Previous Experience of New CEOs Makes Matters Worse!

Idea posted: November 2015
  • CSR & Governance
  • Leadership & Change
  • Learning & Behaviour

Newly hired CEOs who have held previous CEOs positions are more likely to fail than new CEOs who have never held the top position in a company, according to new research. The reason: they did what they did in the past, without paying attention to the new context.

Idea #570
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President Barack Obama in the Oval Office with daughters Malia and Sasha, 2009 (Source: Wikimedia Commons)

How a Daughter Might Shape the CEO

Idea posted: November 2015
  • CSR & Governance

Can having a daughter impact the decisions of a CEO? The answer is yes, according to new research that compared corporate social responsibility scores of companies whose CEOs had daughters to companies whose CEOs were childless — or only had sons. 

Idea #566
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Stoughton Wisconsin Tornado of 18 August 2005 (Source: NWS/NOAA, Wikimedia Commons)

The Connection Between Disasters and Less Risk-Averse CEOs

Idea posted: October 2015
  • CSR & Governance
  • Finance
  • Leadership & Change

CEOs who have lived through disasters resulting in significant loss of life are likely to be risk-averse executives. Those, on the contrary, who live through disaster that did not result in significant loss of life tend to be less sensitive to the consequences of risk — and thus more risk-tolerant than the norm.

Idea #561
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Deferred Compensation Helps Retain CEOs

Idea posted: August 2015
  • CSR & Governance
  • Finance
  • Leadership & Change

Researchers exploited a U.S. accounting rule change to prove the power of deferred compensation. The rule change pushed many U.S. firms to significantly accelerate vesting of deferred compensation plans. Of the firms that chose to accelerate vesting, a large majority quickly lost their CEOs. During the same period, most firms that did not accelerate their vesting did not see any significant CEO departure.

Idea #536
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Napoleon at the Battle of Wagram 1809, Horace Vernet, 1836 (Courtesy: Palace of Versailles)

Ensure the CEO Gets the Right Information at the Right Time

Idea posted: July 2015
  • Strategy
  • CSR & Governance
  • Leadership & Change
  • Learning & Behaviour

CEOs must be informed at all times about all internal and external facets of the company relevant to his or her performance as leader of the company. A personal knowledge infrastructure, based on the right practices, relationships and tools and aligned with the needs and personality of the CEO, can make the difference between leadership success and failure. 

Idea #532
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The board of directors of the Leipzig-Dresden Railway Company in 1852 (Source: Wikimedia Commons)

Non-Executive Board Members More Risk Averse than Executives

Idea posted: June 2015
  • CSR & Governance
  • Finance
  • Leadership & Change

When it comes to investment, CEOs are perceived to be the most risk tolerant, followed by CFOs and non-executives. However, recent research, measuring risk perception and return demands, shows that CEOs and CFOs are more aligned than previously thought, while non-executives are consistently risk-averse. CEOs will perceive more risk in an investment than CFOs, but don’t act on this perception: they don’t demand a higher minimum return on the investment, contrary to the minimum requirements demanded by non-executives. 

Idea #524
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Foreign Office Minister Henry Bellingham meets NGOs to discuss the situation in Sudan, 2012 (Source: Wikimedia Commons)

Nonprofit Boards Need Better Skills and Resources to Do Their Jobs

Idea posted: June 2015
  • CSR & Governance

Most directors of nonprofit organizations do not have the required skills, resources and experience to be effective, according to a new Stanford survey of directors of nonprofit organizations.

Idea #525
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Investors Complain Proxy Statements Unclear on Executive Pay

Idea posted: June 2015
  • CSR & Governance
  • Finance
  • Leadership & Change

Proxy statements are often unclear on major issues, notably executive pay questions such as the appropriateness of compensation size and structure, according to a new survey of major asset managers and owners. They also lack clarity on pay ratios, corporate political contributions, corporate social responsibility and sustainability and CEO succession planning.

Idea #528
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Composition VI, Wassily Kandinsky, 1913 (Courtesy: The State Hemitage Museum, St Petersburg)

A Symphony of Agency and Stewardship Values Ensures Family Business Success

Idea posted: May 2015
  • Strategy
  • CSR & Governance
  • Innovation & Entrepreneurship
  • Leadership & Change

Agency theory describes a contractual relationship between managers and shareholders who have divergent interests. Stewardship theory describes a collaborative relationship between managers and shareholders toward shared goals. Which works best for family businesses? New research reveals that a combination of the two, changing as the business moves through its lifecycle, offers the best recipe for success. 

Idea #518
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Amsterdam Gay Pride 2013 Vodafone boat (Source: Wikimedia Commons)

Corporate Political Advocacy: Support Non-business-related Causes

Idea posted: April 2015
  • CSR & Governance

Some companies are unequivocally supportive of controversial political causes that are not even related to their industries — gay marriage, for example. Is corporate political advocacy, which goes beyond the responsible practices and community involvement of corporate social responsibility (CSR), appropriate in a business setting?  

Idea #508
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A Meeting of the School Trustees, Robert Harris, 1885 (Courtesy: National Gallery of Canada) 

Corporate Governance: The Power of Outside Directors on CEO-Only Boards

Idea posted: April 2015
  • Strategy
  • CSR & Governance
  • Leadership & Change

Once packed with company insiders, corporate boards are filling up with outside directors, theoretically resulting in greater independent oversight. New research shows, however, that paradoxically having the CEO as the only insider on the board actually enhances the CEO’s power and undermines outside oversight.

Idea #506
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Margaret Thatcher, 1925-2013 (Courtesy: Associated Press)

A Lower Voice Can Take You Higher Up the Leadership Ladder

Idea posted: February 2015
  • CSR & Governance
  • Leadership & Change

When it comes to success in business, a man’s voice can make a difference — especially if he hopes to become CEO. New research reveals that men with deeper voices manage larger companies, make more money and stay in their positions longer. (Women were not included in this research though Margaret Thatcher’s rise to power was supposedly helped by coaching that lowered the pitch of her voice.)

Idea #483
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High CEO Pay Leads to Overconfidence and Poor Results

Idea posted: December 2014
  • CSR & Governance
  • Finance
  • Leadership & Change

A new study shows a negative correlation between high executive incentive pay and company performance: the higher the pay, the worse the future results. This study also pinpoints the culprit behind the negative correlation: CEO overconfidence. The overconfidence of higher-paid CEOs leads to poor investment decisions and unsuccessful M&A initiatives. 

Idea #469
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The Syndics of the Amsterdam Drapers' Guild, Rembrandt van Rijn, 1662, Rijksmuseum, Amsterdam

Board Diversity Improves Corporate Results: Lessons from Singapore

Idea posted: December 2014
  • CSR & Governance
Institutions: NUS Business School

Singapore lags behind other nations in diversity on its corporate boards — while evidence mounts that diversity leads to better results, according to a 2014 National University of Singapore (NUS) Business School report on diversity. 

Idea #467
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Wrestler Frank Leavitt, Chicago, 1924 (Source: Wikimedia Commons)

How CEOs Strong-Arm Their Compensation Consultants to Get What They Want

Idea posted: November 2014
  • CSR & Governance
  • Leadership & Change

While previous research has never shown a direct link between the hiring of compensation consultants and increased CEO pay, a new SEC requirement allows academics to test more rigorously for a link: and they find it. According to the research, compensation consultants are used by CEOs as the means to justify higher pay.

Idea #457
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Stock trading on the New York Curb Association market, with brokers and clients signaling from street to offices, 1916 (Source: Wikimedia Commons)

The Impact of Ideal Vs Problematic Shareholders

Idea posted: October 2014
  • Strategy
  • CSR & Governance
  • Finance

In an ideal world, companies would spend significant time managing their shareholder base, striving to attract the ideal shareholder: a shareholder with a long-term investment horizon who will allow the company to make long-term investments and not push for short-term results. Shareholders with short-term investment horizons drag down share prices or increase their volatility by focusing on short-term results.

Idea #447
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Richard Long, Edward G. Robinson, Loretta Young, Martha Wentworth, Orson Welles, Philip Merivale, Byron Keith, in The Stranger, 1946, directed by Orson Welles (Source: Wikimedia Commons)

Succession Planning: Boards Need to Know Their Senior Managers

Idea posted: October 2014
  • CSR & Governance
  • Leadership & Change
  • Learning & Behaviour

When a CEO leaves, his or her successor will be chosen from among internal and external candidates. Research shows that a board of directors will know surprisingly little about internal candidates, since directors have minimal interaction with executives below the CEO level — often limited to formal board presentations. Effective succession planning requires directors to become more directly involved in the organization’s talent development program.

Idea #443
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Lion tamer in cage with two lions, a lioness, and two tigers.  Chromolithograph, Gibson & Co. (Cincinnati, Ohio), published c. 1873 (Source: Wikimedia Commons)

Coaches Needed to Help CEOs and Senior Managers

Idea posted: September 2014
  • CSR & Governance
  • Learning & Behaviour

Nearly two-thirds of CEOs do not receive any coaching or leadership advice from the outside (e.g. from mentors, coaches or consultants), says a Stanford survey on executive coaching. Yet the CEOs would welcome the help. The survey shows that nearly 100% would welcome outside advice and coaching — especially on issues such as sharing, leadership delegation, and conflict management — the major developmental areas of concern for CEOs.

Idea #442
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Committee of the French Art Exhibition in Copenhagen, Peder Severin Krøyer, 1888, Hirschsprung Collection, Copenhagen

Small Vs Large Top Management Teams and the CEO's Workload

Idea posted: September 2014
  • CSR & Governance
  • Leadership & Change

The larger a CEO’s top management team or direct reports, the more time that CEO spends interacting with internal staff on internal operations issues and the less time he or she spends working alone. Thus, CEOs seeking more time for strategy and individual work, and less time for collaboration and team consensus activities, might opt for smaller top management teams instead. 

Idea #437
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Holy Roman Emperor Charles V, enthroned over his defeated enemies, Giulio Clovio, mid 16th century

What Boards Think of CEOs

Idea posted: September 2014
  • CSR & Governance
  • Leadership & Change
  • Learning & Behaviour

The greatest weakness of CEOs is their lack of people management and talent management skills, according to a Stanford Graduate School of Business survey of Boards of Directors. However, the directors themselves must shoulder part of the blame: the survey also shows that when evaluating their CEOs, boards place significantly more value on financial metrics than any other factor. 

Idea #439
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Hedge Fund Activism Can Help, Not Hurt, in the Long Run

Idea posted: August 2014
  • CSR & Governance

New evidence disputes the general consensus that institutional shareholder activism has a long-term negative impact on the results of a corporation. A team of researchers from Harvard, Duke and Columbia argue, based on their empirical research, that on the contrary shareholder activism leads to improvement in both short-term and long-term results.

Idea #428
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Robert Maxwell, media tycoon and owner of Mirror Group Newspapers, 1991 in London. Maxwell died in November 1991 (Copyright: Shutterstock)

The Curse of the Narcissistic CEO

Idea posted: June 2014
  • Strategy
  • CSR & Governance
  • Leadership & Change
  • Learning & Behaviour

In theory, strategic decision-making is a democratic process in which the knowledge and previous experience of all executives is brought to bear. In practice, it doesn’t always work that way. A recent study finds that more narcissistic CEOs fail to pool knowledge effectively, putting themselves and their own experiences first. This underlines the importance of checks and balances on CEO power.

Idea #404
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