Supervisory board members do not talk about their remuneration. Too embarrassing. Despite the fact that legal responsibilities of supervisory board members have increased and more of them is expected than ever before, the topic is not on the agenda.

The rise in salaries and benefits of executive board members, initiated and approved of by the supervisory board members, has passed them by. Even now, when the number of board positions one may hold will be limited (law Bestuur en Toezicht, not in force yet), there is no upward pressure on the compensation of valuable supervisory board members in order to tie them to the company. Most supervisory board members, that entered this profession after their active life as a board member, are not in it ‘for the money‘. Living comfortably off their wealth, they want to contribute to the growth and success of the company, share their knowledge and experience and become part of a group of inspiring dedicated people. Some admit that exercising influence and being part of networks of powerful people are also reasons for them to accept a supervisory role.

The question now is if the increase in socalled professional board members, who derive their primary income from board positions, will influence this trend? It must be a clear sign things are changing that Dutch supervisory board members inreasingly accept positions at foreign companies since they offer better compensation than Dutch listed companies. It may well be better for the quality of supervision if board members are not only recruited from the happy wealthy few but also from those who decided earlier on in their careers that wealth creation was not the only purpose in life. Supervisory board members do not have a union or lobby group looking after their interests since ‘they don’t need it‘. Shouldn’t the debate on further professionalization of board members and the need for more diversity on boards not include a professional discussion about an adequate remuneration? Who dares to put this taboo on the agenda in the Netherlands?

Originally published in Dutch: http://www.ncd.nl/website/nieuws/ncd-leden-in-het-nieuws/ncd-leden-in-het-n ieuws-artikelen/beloningstaboe

On International Women's Day, March 8 2012, I was invited to speak at the Dutch Federation of Business Women event. Here are some extracts, but if you like to receive more details, contact me.

Upcoming quotalegislation in the Netherlands does not take into account the success factors of the Norwegian law, the successful Swedish and Finnish non-legislative approaches. Missed opportunity!

European Commission and Parliament have calculated that the current rate of change in the representation of women on corporate boards will result in parity being reached in some 50 years. Voluntary approaches deemed insufficient so an investigation is launched into legislative measures, either at European or EU member state level.

Research into Dutch listed companies (2012) shows that even if women reach executive board level more than 60% still 'takes care' (support roles) instead of 'taking charge'(line management, profit and loss responsibilities).

My article on Inclusive Leadership in Dutch was published on the website of Managementboek and JUMP:
http://www.managementboek.nl/magazine_artikel/2850/unknown-unknowns

Here's the English translation:

Unknown unknowns: Leadership after the crisis

Leadership before the crisis was relatively clear-cut. Management revolved around preventing and resolving problems: no surprise management. Authentic and new leaders even left room for their employees to make mistakes, provided it happened transparently. Cash was King and the cashflow spreadsheet sacred. Structures and systems ensured command and control. Until the crisis hit…..Cause: unknown unknowns, unknown events that were unthinkable and unimaginable. What will be the impact on leadership after the crisis?

Unknown unknowns differ from known unknowns. Many people knew that the overheated holiday housing market in Spain would eventually collapse, but the question was when. Well-informed investors withdrew from it on time and amateurs paid the bill for it. Entrepreneurs are managing these types of events, known unknowns, on a daily basis.

How different are unknown unknowns. The impact of these events is unimaginably large, like the collapse of the complete world economy. The pace in which these events are unfolding is unthinkably high, due to the complexity of the system. Nobody could foresee that the fall of Lehman Brothers in 2008 would lead to the current sovereign debt crisis, the euro crisis and the political leadership crisis…. The whole system proved to be unstable. Unthinkable and unimaginable!

The ability to manage unknown unknowns will become the differentiating factor between sustainable and unsustainable organizations after the crisis. Going for financial profits alone is no longer sufficient. Products and services need to be future-proof and lasting. Management teams face the task to actively develop scenarios that are unthinkable and unimaginable. Instead of only mapping their known competitors, they need to search for the unlikely ones that may have an unimaginable influence on their company and the sector they operate in. Take Google. It was granted a banking license for the Netherlands in 2007, but has so far not made use of it. You don’t have to be a banker to sense how enormous the impact could be if Google became serious about banking. This might well be an unknown unknown for banks, their clients, local and world economy?

What do we need to develop this new competency in leadership? It starts with the realization that leaders cannot lead alone anymore. The era of hierarchical command-and-control leadership styles has already long passed, but now for sure. The very nature of these unknown unknowns make it impossible to figure out by yourself what their impact might be: you need others to jointly unravel the complexity of the components. The interdependencies and connectivity between various parts of the whole system and the accumulation of impact of one process on the other have become decisive factors. Leadership needs to embrace the concept of co-creation at the highest managerial levels.

Secondly, leaders need to realize that corporate governance has failed and will continue to fail. More rules and regulations will be insufficient. After the crisis the focus should be on the implementation and the application of rules, not only when the economy is booming, but especially in times of crisis. Leaders need to shift their focus from corporate to human governance; valuedriven behavior, aimed at creating equal relationships and respectful communication.

Thirdly, leaders need to realize that co-creation and human governance can only thrive in organizational cultures characterized by inclusion, openness in communication, transparency in decision-making and a climate in which differences of opinions are sought. Instead of confrontation and separation, led by old fashioned thinking that ‘they’ should be more like ‘us’, leaders need to strive to create a ‘new us’ in the belief that the added value of team work lies in the diversity of thoughts of its members. Only in such a culture it will be possible to openly and frankly discuss unthinkable and unimaginable scenarios with sustainability as the guideline. It is not unthinkable that these new leaders are among us already. Have you met them yet?

On September 20 2011 my paper was presented at the European Commission's Gender Equality conference (with over 400 participants) in Brussels. The title was 'Advancing gender equality in economic decision-making'. It covers facts and figures on the current situation and good practices and strategies for improvement in organizations. It also provides a table with details on all current legislative initiatives for women on boards across EU, so Italy, France, Netherlands, Belgium, Spain, and outside EU Norway. An overview of EC policy on this topic to date, new policies for 2012 and recommendations for EU member states to achieve gender balanced boards form part of the report.

Some of the conclusions from the report are:
• The many initiatives taken to date have created awareness and increased pressure on companies and governments to improve women’s access to the decision-making power in the corporate world. However, progress has been glacially slow and more action is needed to reach gender balance in economic decision-making positions.

• By far the most effective instrument has been the Norwegian quota law, but other relatively effective strategies can be found in Finland and Sweden. These strategies contain elements of effective corporate governance codes, leading to transparency, accountability and peer pressure, an active role of the government (in the form of target-setting for state-owned companies’ boards), a constructive role of the media and global policies in favour of gender equality.

• The major challenge in most countries is how to overcome resistance from the public and the corporate sector against quantified voluntary targets and legal quotas for board positions. The Norwegian experience has learned that after the implementation of quotas the resistance fades away and boards ‘just get on with business like before'.

If you want to receive the full report, no charge, send an email to info@mv-imc.com.

Letter to the editor of the Economist

As a long time subscriber to the Economist I take special interest in their views on the lack of women in the boardroom. Two weeks ago a few articles were published, and again the Economist connected flexible and teleworking opportunities to the presence of women on boards. I could not help reacting. Here is the(edited version of the) letter I wrote to the editor that was published on August 6th in the print edition:

"SIR - Research shows us that women leave senior positions before they reach board level because of a lack of rewards (unequal pay), lack of interesting opportunities (being sidelined into supporting and staff roles) and lack of access to informal networks. Flexible working arrangements and teleworking are useful in creating a pipeline of qulaified women, and men, at middle-management level, but the impact is limited when it comes to boards. This is because the work of board members and other senior management does not involve executing tasks sitting at a desk. Rather it is about influencing decision-making, being connected to the right networks and creating visibility for your leadership style". See http://www.economist.com/node/21525341

My message is simple: only if we are able to differentiate between the needs of 'all women in management' and those aspiring and able to reach board positions, we will start developing programs addressing the right needs for the right women at the right time, instead of continuing to go for this 'one size fits all approach'. Still lots of work to do, and the letter in the Economist proves that it is very necessary.

Again the Netherlands is champion in doing things "part time". Already at the far end of the spectrum on part time work for women (76% in 2009, against the European average of 32%), a similar position at the far end is looming looking at the recently adopted 'quota law' for women on boards.
Indeed, after Norway, Spain, France, and just before Italy and Belgium, the Netherlands has taken legislative steps to improve the underrepresentation of women on boards: companies are encouraged to strike a gender balance, meaning at least 30% of either gender on the board.

That was the good news. Now, is it going to work?
Probably not. For three reasons: first of all, there is no penalty or sanction, so it is a law without teeth. In case of non-compliance the company needs to include a statement in its annual report about the causes for failure and the plans to correct it.
Secondly, the law is a temporary or, in line with the part-time work culture, 'part time' law: the quota clauses will be rendered void per January 2016. Regardless of results...
Thirdly, it will not work because the law applies to ALL companies with more than 250 employees and for ALL board positions (supervisory and executive); this is too much of a leap forward and at danger of not being taken seriously...
Just to paint the picture: in the largest 5000 companies only 3.4% of executive board seats are taken by women. The situation is better if you look at the largest 100 companies and only at their supervisory level: 15%! But again at executive board level again around 3%. The vast majority of companies will seriously struggle to meet the requirements in just three years.

But then, why should they bother?
Well, here are some incentives. First of all, shareholders and investors could hold boards accountable to comply. Simply because it is good for business. New leadership acknowledges that diversity is the first ingredient for innovation, next to inclusive leadership and culture. Institutes, universities, women's groups, statistical bureaus will be monitoring and reporting on progress and failures. If government does not apply pressure through legal penalties, the public and press will have to.
Last, but not least, it may well be that we just have to wait until the European Commission will use legal instruments to drive change:'fulltime legislation with sharp teeth'!Time for CEO's and Chairmen to act now.

Already 265 registrations for the launch on June 3rd! Questions from the audience keep pouring in. It will be a challenge to answer all of them in just over an hour. But I promise I will answer each question in more detail in this blog for the next couple of days - so keep watching this space!

How did I experience the book launch on May 24th in London?
It was simply overwhelming to see so many familiar and new faces attending the launch - truly overwhelming! But the best part was undoubtedly the debates, questions and interaction before and after with the audiences. Especially my call to start becoming really serious about leadership, and about the role women need to take up in creating a sustainable future, in finance, facilities mgt or public roles, sparked a lot of debate. I shared my leadership statement (which can be found in my book): "I am responsible because I am part of the system; I am the system; therefore I am serious about change, of myself first and foremost and of society, by striving for a more balanced leadership". When women become serious about leadership, I am convinced the world will see a change. Therefore I called on women to take their leadership talent seriously and to share their thoughts about female leadership with others. Almost all leadership books are written by men and describe a generic style of leadership. Female leadership is a sub chapter, if at all. Women are now discovering their own style, their own criteria for succes and - most importantly - their own motivation for wanting to lead. We need more women willing to take the lead and more women authors to describe this new paradigm!

One of the most fundamental challenges of our time is restoring trust in the financial system. This is not a 'nice to have' but a 'need to have' since we all, individuals - families - companies and governments, rely upon the system to live our lives and conduct our business. Being part of the system, and therefore being responsible, I took the initiative last year to write a consultation paper to the European Commission, with 10 recommendations. The title of our advice was "From Checks and Controls to Changing the Core Culture".

Already much has been said about the perceived arrogance of some CEO's of financial institutions who refuse to apologize for the mess they created and the bail-outs by taxpayers. Many critized the prevailing corporate culture in some institutions in which dissenting opinions were not heard and risk taking behaviour was exponentially rewarded by bonuses. But very few could imagine the turn of events we are witnessing now at the IMF. As a lawyer I very much uphold the principle of 'assumed innocence before proven guilty'. But again as a lawyer, I am aware that even the smallest hint or suggestion could cause reputations to be destroyed in the public eye.

How come a leader of such a highly regarded institution finds it acceptable at such a pivotal moment in European history (saving Greece and the Euro) to take high risks in his private life?

It is time for the financial sector to appoint leaders that uphold the highest standards of personal integrity and respect towards their employees and clients. Since there is a large untapped pool of female talent, it should be much easier now to find the right persons for these jobs!

Last week I was interviewed by newspaper Kathimerini, based in Athens. Needless to say that leadership (or the quality of it) is an issue attracting lots of attention in Greece right now. And yes, the journalist asked me the multimilliondollar question: Shall we have to wait for a female prime minister in Greece - or in any country - to see things radically changing?

There is no black and white answer here, of course, no 'yes' or 'no' based on facts, figures and research. There is only a 'maybe' answer, since in general among both men and women we find excellent leaders. Or a 'hopefully' answer, expressing confidence and trust in the change of culture that might follow a change in leadership if that leadership is so hugely different from the past - even if it is in the 'gender component' only.... Maybe the best answer is a question again: why not? It does not take an academic education to see that the old recipe has not been working well lately, so why not change and see what happens? I am confident it will be an improvement although I cannot prove it.... it's simple not black and white, but more colorful....