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MARCH 25, 2006:
Dear Ram,
We were delighted that your wife and you could join us for dinner
last night. It was wonderful getting to know your family and we hope
to meet often now that you will be taking charge as CEO of Xyant.
Once again, on behalf of members of the Board and as Chairperson, I
welcome you and look forward to your long and successful tenure at
the company.
You had asked me what I thought was the role of directors and
chairperson with respect to top management of the company. Since I
didn’t get a chance to respond to you in detail, I thought it best
to pen down my perspective.
The approach to managing and working with each other is influenced
by behaviour, attitude and emotions. In my opinion, relationships
evolve and are an outcome of a process. It is essential to recognise
the relationship between the Board and the CEO:
•
Colleaguial or hierarchical?
Atmosphere of trust, honesty and straightforwardness: We seek
information to obtain nuances of the company culture and climate.
Apart from comprehending explanatory information sent to us, we work
in teams to meet with key people of the company. The committees
occasionally visit development centres, operational sites or
divisional offices. This has helped tremendously in opening lines of
communication and creating a culture of candour and faith in the
organisation as well as the boardroom.
Allowing open non-concu- rrence: Our directors are open to
disagreement or dissent with each other as well as with the CEO.
This is not to be construed as disloyalty but a way of creating
opportunities to learn from one another. Healthy debate and
discussion allows input from various viewpoints. Directors justify
their stand and don’t succumb easily to the pressure of conformity
to the majority. This can sometimes be a source of pain to you as a
CEO, but you will realise that resistance helps you grow!
•
Supportive or controlling?
Exchanging roles and positions: Espe cially when caught in a
strategic decision dead lock, I encourage our Board members to
analyse the issue from someone else’s perspec-tive. This helps the
CEO and directors to develop alternatives and cha- llenge their own
thinking and assumptions.
•
Collaborative or antagonistic?
Give specific responsibility: Fourteen months ago, we had a complex,
potentially threatening, marketing issue. Directors distributed
among themselves individual tasks as well accountability to the rest
of the board for providing information pertaining to that area. Some
board members met with custo -mers, some visited the field while
others collected external data. The process was a success and a
critical issue was resolved through the active participation of the
board.
•
Developing or curbing?
Minimise territorial encroachment: The Xyant board would like the
CEO to leverage its collective knowledge. We believe that what is
operational and strategic in business is management decision while
vision related matters and macro business policies should be the
board focus. We dissociate fact from assum ptions, discuss the
obscure and present alternatives.
“Timely observations and constructive feedback is one of the best
ways to make a good CEO better!” As acclaimed business advisor Ram
Charan puts it, “Make it an ongoing process and not a special
event!”
Areas where we guide the CEO:
•
Focus on specific business: In 2004/5 the service business has
grown much faster than the product sales business. The board has
supported the previous CEO to focus on and develop this business
unit.
•
Defocus: At times the top management gets overinvolved in
problem areas that do not significantly impact business. The board
often cautions the CEO and his team that they need to spend less
time on those.
•
Point out pet peeves of business and people: We noticed that our
previous CEO had a bias to the product sales business and many a
time protected actions, justified or not, of the head of sales. The
board gave him formal and informal feedback in the spirit of
constructive criticism to help reduce the slant.
•
Development of people: From time to time we work with the CEO on
planning growth for high potential managers, succession within the
orga nisation and advancement of star performers.
•
Technologies: The CEO and head of operations present issues and
possible solutions to the board and we assist them in making
decisions for the future.
•
Financial resourcing and equity structure: While the CEO and CFO
make many major decisions on financial resourcing as well as
recommendations for equity structures, the directors and I get
involved at various levels and sometimes use our personal network
and contacts to open doors for them.
•
Compliance: We have a vigilant audit committee that meets
regularly and painstakingly goes through information, both apparent
and hidden, to identify issues. The rest of the board is then open
to check and raise pertinent questions on them.
•
M&A: Often, the board has been faced with acquisition proposals
by the CEO. Apart from the due diligence information obtained by
him, we inquire and examine various aspects of the deal and its
impact on Xyant.
• Top
management remuneration: As you know we did help in designing
your compensation package. We do this for other members of the top
management team as well. We use input and data compensation
specialist consultant.
Finally, we have a self-evaluation mechanism. We have previo- usly
retained a consultant to help us improve and distinguish bet- ween
operations and governing. You will agree, that both parties need to
work on the relationship.
Experts say you can make the position at the top “lively” instead of
“lonely” through collaboration and development of trust. My advice
to you, Ram, would be to give the board a clear picture of business
and its external context. Information must be intelligible to help
directors sieve the inessential. Spend less time dwelling on the
past and more on the challenges ahead of us.
I hope this helps clarify the role of the board for your future
interactions and growth of Xyant.
Best regards,
Ms Romila Das Chairperson, Xyant Inc |
