Shared values are also of key importance as they create the foundation. Ultimately, a board needs people who stay curious, keep learning and training, and understand the ways new technologies can be applied. They do not have to be experts on every topic, but they should be open-minded and ask critical questions.

While diversity makes boards more effective, it also creates potential for conflict. This increases the demands on the chair of the board with regard to leadership and crisis management.

How are directors’ responsibilities evolving?

Directors are committed to responsibility, both individually and for the board as a whole. On the one hand, directors have to take individual responsibility and show curiosity and courage. This has to start even before they take up a directorship: they should carry out due diligence and make sure the board’s members are diverse but still have enough in common; it should look at how the chair leads, how the board operates as a group, and whether its members also match on a cultural level.

On the other hand, directors are jointly responsible and collectively liable for the work of the board as a whole. Sitting on a board is no fair-weather pursuit. As we’re seeing at the moment, directors have to take particular responsibility when things get rough.

What character strengths do board members need?

Besides the appropriate training and education, skills and abilities, each member needs to show integrity, independence, curiosity, the ability to give and take criticism, and the courage to ask the right questions – independent of the group. The person chairing the board should also have leadership experience, credibility, emotional intelligence and natural authority.

We’re seeing boards of directors get more professional. What’s your take on this?

I see a similar development. More and more non-executive directors are treating the role as a profession, not just an honorary post. For one thing, that’s reflected in the amount of time they spend on each directorship. It’s also reflected in the intensity with which directors prepare for the variety of topics that are relevant for the board.

Boards are getting younger. It’s not unusual for younger executives to switch from the operational to the strategic side. People aged 50 or younger are opting for a portfolio of non-executive directorships, often in addition to an operational role. With organisations requiring different skills and abilities depending on their life cycle and strategy, we’re going to see more frequent changes, with directors spending shorter terms on the board.

Given the increased professionalisation, the work directors do, the effort they put in and the risks they have to bear, directors should be rewarded accordingly.

Where do you see differences between a directorship for a family business and for a business with no family ties? How would you describe the optimum composition of the board in each case?

Both family and non-family businesses face the challenge of finding capable, skilled and motivated directors that function as a board, challenge and support executive management, set corporate strategy, and make sure the organisation develops.

By definition, the fiduciary duty of boards is towards the company. A representative of the family will feel particularly bound to the family. This means that in family businesses there’s greater tension between the company’s strategy and that of the shareholders.

External directors can give family businesses valuable input and ideas from outside, mediate, and serve as sparring partners – provided, that is, that their questions and suggestions are taken seriously. For diversity to have an effect there should be more than one external director.

If the majority of the shares are in family hands and there are also minority shareholders, the minority shareholders should be represented by external members of the board.

What’s your view of the dual chair/CEO role?

You often find this dual role in family businesses, where the chair/CEO can often be the principal shareholder as well. Personally, I basically view this as a missed opportunity. Separating functions adds greater value to the business. A dual role can be appropriate in special circumstances and for a limited time. But then the company should establish a strong, lead independent director who conducts part of the board meeting without the chair/CEO.

What’s your view on the independence, financial and otherwise, of directors?

Directors have to ask challenging questions. This requires a critical basic attitude – in other words openness, the ability to give and take criticism, and courage. Personal, business or financial conflicts of interest can influence people’s ability to think independently. Organisations should establish processes for identifying, disclosing, minimising and avoiding such conflicts. This can lead to a situation where a member of the board of directors has to leave the meeting when certain matters are discussed. Given the increased personal, business and financial relationships between companies, this will happen more often in the future.

When it comes to a director’s financial independence with respect to individual directorships, I assess this to be similar to the question of the executive’s financial independence. Both have a duty of care and loyalty towards the company, which they have to exercise regardless of the financial circumstances.

What are the keys to successful interplay between the board of directors and management?

Information asymmetry between management and the board of directors remains a challenge. But transparency, open communication, the ability to give and take criticism, and powers appropriate to the role all strengthen collaboration. In his or her capacity as sparring partner to the CEO, the chair can encourage dialogue between the CEO and the rest of the executive board. Formal and informal meetings and discussions are a great help, as is appropriate interaction based on mutual trust, even though the chair of the board has a control function. Discussing rather than simply presenting, keeping to the relevant issues and fostering a culture of open discussion lead to more effective collaboration. Setting a specific, systematic agenda, making clear documentation available in good time, thorough preparation and good minutes will also help ensure successful interplay between the board and management.

How can a board of directors reconcile its control and advisory roles?

The board of directors has to trust and verify. To perform these apparently divergent tasks it needs expertise, and the right skills and capabilities. Only then can the board add value to management and the company, and challenge and advise them. Here, the level of trust, the culture within the board of directors is crucial. Is the board able to question management’s assumptions and have its own or divergent views? Are directors willing to address behavioural problems and risks at the highest level?

Can you say something about the optimum size and ideal composition of boards and their committees?

The more people are involved in making a decision, the greater the risk of relying on others. In my experience, boards with five to seven members work well, although this depends on the size and complexity of the company. If required, specialist knowledge can be brought in from outside or on a temporary basis. The size of the board of directors should reflect the capabilities and size of the executive board.

When putting together board committees it’s important to take account of complementary skills and experience, including basic things like industry knowledge and experience, management experience, knowledge of strategy, finance, corporate governance, IT, HR, marketing or international experience. Technical know-how in areas such as digital transformation or other special topics can also be crucial.

How important is self-appraisal for boards, their individual members and chairpeople?

The Swiss Code of Best Practice for Corporate Governance recommends that boards conduct an annual self-evaluation of their work and the work of their committees. If the board and its members regularly assess their own performance, it helps identify and close gaps, whether by further training, reinforcing the board or other steps.

In practice, this self-appraisal is often done pragmatically, in most cases in the form of an evaluation of the board as a whole. It’s often difficult for members to express criticism of each other or of the chair. Here, an evaluation from outside can help.

What should the chair of a board bear in mind when it comes to choosing new members?

They should look at the company’s strategy to see what skills and capabilities are required, available, or lacking. They should focus on the personalities and values of the members, which have to match the organisation and its strategy.

In addition to evaluating the replacement of a departing member, it’s also worth regularly asking whether everyone on the board, including the chair, is adding the desired and requisite value.

Where and how are the right members for a board of directors to be found?

There are special executive search services and online platforms dedicated to non-executive directors. The various directors’ personal contacts, and recommendations from investors and management, are also important. Directors’ networks such as swissVR (see box), the SwissBoardForum and the Swiss Board Institute can also help. Last, but not least, every year there are new, motivated candidates graduating from training courses for directors.

Are directorships more onerous than they used to be?

Yes. In the highly dynamic market environment and with the megatrends that currently prevail, directors are having to meet more demanding requirements. The time involved is increasing and will continue to increase.

Not only that, but regulators and investors are constantly presenting new issues and challenges. With businesses playing an ever-more important role in society, stakeholders increasingly expect them to be measured by environmental, social and governance standards. This brings us back to a common culture, values, and the aspiration that companies should not only be operating profitably, but also be making a contribution to society.

Many thanks for the interview!

Article overview