From the COVID-19 pandemic to climate change and cybersecurity risks, the challenges of the current economic environment have heightened the need for training and development for the board. The current era of upheaval has created a big market opportunity for business schools that run executive education programmes in corporate governance.
“The challenges facing corporations do underpin the need for boards to be agile, current and knowledgeable, so that they both question how management is addressing them and provide useful contributions to corporate action responses,” says Michel Magnan, professor of accountancy at the John Molson School of Business.
“In that context, directors need to be engaged in continuous learning and development.”
Such training is on offer in abundance at a throng of the world’s leading academic institutions offering executive education. Harvard Business School has its Making Corporate Boards More Effective program, Columbia Business School offers the Developing Exceptional Board Leaders course, and IMD Business School has the Digital Transformation for Boards program.
The John Molson School, at Concordia University in Canada, puts on an executive course called Issues and Challenges of a Value-Creating Governance. Magnan, the academic director of the executive education program, points out that companies are being called on to produce benefits for society and the environment as well as shareholders, something that is well covered in the course.
“Corporations’ long-term performance as well as their sustainability are increasingly dependent upon their ability to ascertain and address societal concerns about how they operate and affect the natural environment and the surrounding communities,” he says.
“Firms that can successfully navigate within this new reality will gain advantages in terms of their ability to attract and retain talent, stabilize their supply chain, establish long-term customer relations, interact with community and political players.”
Delving into executive programs in corporate governance
How can executive education support this shift away from shareholder primacy?
“Executive education can help managers and board members apprehend this new business reality, develop systematic approaches to engage the community and establish effective policies and processes that reflect these new goals,” says Magnan. “Moreover, executive education provides a non-competitive forum for managers and directors to exchange views and knowledge with other like-minded executives facing similar challenges.”
Over at the Kellogg School of Management in the US, another learning and development option for boards is Kellogg’s Corporate Governance program. Because governance plays a critical role in driving organizational performance, the program is highly outcomes-focused.
“The board’s main role is to establish the company’s strategic direction and provide oversight to make sure it is on course,” says Professor Rob Apatoff of Kellogg School of Management. “That means having the right leadership in place and appropriately incentivized to ensure the executive team can perform at its best and drive organizational performance.”
One enduring criticism is that boards remain stale, male and pale. What are business schools doing to address calls for greater diversity and inclusion in the boardroom? “Companies will always want the best, most experienced, and battle-tested board they can find to guide their future. However, it is encouraging to see the diversity of gender, culture and race in board composition,” says Apatoff.
“We are also experiencing this perspective in our Kellogg student body, which as they progress in their careers and play greater roles in the ranks of executives and directors, should only make their companies and capital markets stronger.”
Helping boards embrace the digital revolution (and deal with social movements)
On top of those concerns, the business environment is now characterized by digital disruption. Executive training can bring directors up to speed on the new digital landscape and support digital transformation.
“There is a wide and deep pool of expertise within business schools that can be tapped to offer executive education participants with a comprehensive and integrated picture of the whereabouts of the digital revolution, highlighting ways by which organizations can become part of it,” says Magnan.
A further option for executive participants is the Corporate Governance: Essentials for a New Business Era course, put on by the Wharton School at University of Pennsylvania in the US. Academic director Mary-Hunter McDonnell says that, as companies have become more centrally involved in the political process, they are “frequently implicated in large-scale social movements such as Me Too and Black Lives Matter”.
She adds that “activists see companies as necessary allies, and they are putting pressure on firms to demonstrate movement toward more diversity, not just in terms of individual employees, but also to address some of the unfair allocations of opportunities within organizations. Increasingly, companies must respond to some of these issues”.
But historically, these have not been issues that were at the top of the agenda for firms. That means many boards are simply not equipped to think through and manage them, she adds.
In addition, McDonnell says that employees are being more open with their political beliefs and social goals. “They want to see the company they work for as aligned with their values, and as a platform to enable them to progress their personal social goals,” she says.
The same goes for investors, who are now considering environmental, social, and governance (ESG) metrics when making investment decisions — another reason why executive education programs in governance are finding fresh relevance today.