Leading the Evolving Boardroom – NACD BoardVision
As governance demands and challenges evolve, the lead director role is becoming more prevalent in corporate America. NACD Directorship magazine Editor-in-Chief Judy Warner sat down with Paula Loop, leader of PwC’s Governance Insights Center, and Ronna Romney, lead director of Molina Healthcare, to discuss the nuances of effective board leadership skills.
Judy Warner: The role of the lead director is becoming more prevalent in corporate America. I'm Judy Warner, and this is BoardVision. I'm joined today by Paula Loop, the leader for PwC's Center for Board Governance. And by Ronna Romney who is the lead director of Molina Healthcare and also a director for Park Ohio Holdings. Thank you for being here. I really want to talk about how the role of the lead director is evolving in the boardroom. But, first, so, Ronna, I'm curious as to how you became the lead director.
Ronna Romney: I went on the Molina Board before it was a publicly traded company, it was a private company. So we grew that company to a certain size and took a public. At that point, my fellow directors elected me as lead director. I don't think anybody really knew exactly what a lead director did, including me. But [laughs] it's true. But the great thing about starting with a clean slate is that we looked at what the rules were. And we looked at how things were done, best practices, and we tried to do that.
Judy Warner: What skill sets do you think it's important for a lead director to have?
Ronna Romney: The job of a lead director is to be the liaison between management, CEO, CFO, and the other independent directors. We try to optimize everything that we do for the company and for the shareholder. And that's a very interesting line, and I hate to use a male metaphor, but I'm always calling audibles.
Judy Warner: So the role of the lead director requires some flexibility.
Ronna Romney: Absolutely.
Judy Warner: And I would also.
Ronna Romney: And we keep change. And one of the things when I started was four board meetings, that was it. We said, you know.
Judy Warner: Four board meetings a year.
Ronna Romney: A year. I said this isn't working. Now this year we're going to start something different where I'm actually going to fly out in between every board meeting and meet with the COE and chairmen and talk about what we're trying to accomplish as a board throughout the year. So that takes a lot more. I take a lot of time, and I take it very seriously as the lead director in the company. It's very nuanced.
Paula Loop: Right. So you're sort of planning and laying out the agendas and the schedules. You've got broader.
Ronna Romney: With along with the chairmen and the CEO.
Paula Loop: Yeah, exactly, the broader overside. And in a way I kind of like that analogy. There is a lot of quarterbacking going on. So I think that is what a lead director does.
Judy Warner: So what do you look for in fellow board directors as you think about refreshing your board?
Ronna Romney: I look for the it factor. Because you have people who are very skilled and very successful in corporate America. That's great. Does that translate to a board? Not necessarily. I need somebody who has skills and has been accomplished, but I need beyond that somebody who can work with a board in a collegial fashion. But who also is strategic, who is always looking further down the road for the company and for the shareholder. Where are we going to go? I want somebody who really is strategic and brings their skill set into the strategy for the company. So that's very important for me. Now, specialist. What I say and we pretty much do this at our company. We hire the experts.
Paula Loop: And they can provide insights to the board as well as the managing team.
Ronna Romney: Absolutely.
Paula Loop: So you benefit from that.
Judy Warner: So what does the future of directorship look like? Are there any specific trends that you're seeing right now that are really going to effect the composition of boards?
Ronna Romney: The fact that corporate America is becoming so diverse, you will see that leech into the boardroom as well. And the diversity is going to happen when anybody who's different in the boardroom who's different and acquits himself well. They've set the table for the next generation which is what I hope I am doing right now.
Paula Loop: Yeah, so I'm with Ronna in that I think diversity of age, of gender, of ethnicity, of background, of experience is going to continue to evolve, and we're going to see more and more diverse boards. Which I think is going to be terrific. And then I think what's going to really play out is that the succession planning of board members is going to take on a life much like the CEO succession planning process.
Ronna Romney: I agree.
Paula Loop: It's going to be huge, and that's really what's going to help drive what the future looks like. So it's going to be more planned, there's going to be more active refreshment that goes on in order to line the skill sets with the company's strategy. So you're going to continue to see that, and we're going to get better and better at the succession planning, I think.
Ronna Romney: And the world of directors are going to be, we're going to see more and more unorthodox backgrounds, I believe, for directors.
Judy Warner: More unorthodox backgrounds.
Ronna Romney: Yeah, yeah.
Paula Loop: Nontraditional.
Judy Warner: Nontraditional.
Ronna Romney: Not the traditional background, and that's good because they look at the world in a different way. And I look at the, I'll tell you as a lead director but as a mother of five children, I look at the board in a different way. When I walk into that boardroom, I look at their faces. I look at the faces because that gives me a lot of information. When my children used to walk in from school, I looked at their faces. They never had to say a word. Do you find that, too?
Paula Loop: Yes, yeah.
Ronna Romney: So there's a skill set. I actually think a female lead director is a great thing to have in a company.
Judy Warner: So any final thoughts? Ronna?
Ronna Romney: Well, one, thank you for including me in on this discussion. Because I think it's a very important discussion. Corporate America is a dynamic place with so many things happening instantaneously. In the old days, the board was not that big a factor. Management ran the company, the board came, pretty much said okay. Now we take very seriously the fact that we represent the shareholder, and we have to do it with integrity. There has to be mutual respect between management and a board. And I think that all the things that are happening with boards are good, and I don't mind the oversight. We grow and we get better.
Paula Loop: You know, I agree with you, Ronna. I mean, I think this is a very interesting time to be even thinking and talking about corporate governance. And I'm very, I consider myself very lucky to be able to be working in this base now. So it'll be interesting looking forward to seeing the next five to ten years, and I think a lot will happen. Change is coming quickly, it comes every day. So it'll be very interesting to see where we land.
Ronna Romney: And as I said to my daughter, I am here because I stand on the shoulder of many men who had faith in me. The next generation will be our daughters who stand on our shoulders, and I'm very proud to be one of those people who is going to help that future.
Judy Warner: Thank you both for being with me today. For me on the role of the lead director, I would encourage you to visit the websites of either PwC or the NACD. I'm Judy Warner, this is BoardVision.
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