The role of the board continues to evolve at an unprecedented pace. Increasing complexity of the business environment – from cybersecurity and digitalization to higher expectations and scrutiny from shareholder groups and wider society – are changing the board’s priorities and demands on its time.

At our recent KPMG Belgium Board Leadership Center Seminar held on 12 November 2019, we had a conversation with Bert De Graeve, whom with over 30 years of board and C-level experience is one of the most seasoned board chairpersons in Belgium. One thing the majority of the companies he served, or still serves, on the board of have in common, is their variety of shareholders’, each with its distinct views and interests – family-owned, majority or reference shareholders, minority shareholders and even activists. Front and center in his board work in all these companies is relentlessly advocating long-term value creation, not only to management but evenly towards all types of shareholders. With this in mind, he shared his experience, top priorities and tips for boards. Please find below an extract of the key discussion items and thought provoking views.

People talk about ‘values’ but when the only value that seems to matter is that of the dollar, that is short-term thinking. Short-termism is increasing from all angles, even from family shareholders.

Values and thinking long-term

  • Organizations, through shareholders – not only reference shareholders and short term investors, but progressively also family shareholders – are pushed more and more to focus on short-term value creation. Counterbalancing this and getting companies to think long-term is a crucial task of the board chairperson. Otherwise, organizations risk not making the investments needed for their long-term sustainable growth. An industrial manufacturing company whose highest cost is energy will not invest in the ‘factory of the future’, run on alternative energy, if they are only looking at the short-term costs.
  • A major challenge for boards is getting the right composition of people with a long-term view, and one of the most difficult discussions is how to incentivize management for the long-term.
  • What can you do? Define your values – values are cultural though and tend to change over time and geography – what are your core values that will survive time and place? Then, live your values, rather than trying to work out the cost if you don’t.

To be successful, organizations and boards need integrity and transparency. These together build trust.


  • It’s increasingly important that boards “motivate” their decisions – i.e. that they know and document not only why a decision was made, but also why another decision was not made. This will help protect the board against future questioning from its (activist) investors/shareholders and also other stakeholders.
  • Boards and management both lose time when people aren’t transparent with each other. Rather than a 600-page report, a good ‘board pack’ will include a 1-2 page letter from the CEO and an overall presentation with the key points. Any additional information or detail can then be made available as an appendix.

The ‘must have’ for all board members is social capability, or ‘people skills’ – the ability to interact at board level.

Board composition

  • It’s not only how a person looks on paper that’s important, but how you interact as a board. That is not to say that everyone needs to think in the same way – boards also need diversity of competence, and therefore of people (gender, age, culture, expertise, etc.), which adds value to the board. Some boards have done personality tests to understand how they work together, how they work under stress, etc. so they can call out when someone is ‘acting too blue’ or when they need more ‘yellow questions’.
  • The skillsets each board requires are different – define where you are going in the mid-term and long-term (e.g. international growth) and ensure you have people on your board with the skills for that agenda. Remember though that it needs to be a workable board; boards that are too big do not work. So balancing bringing specific expertise on the board with having open lines to outside specialists is fundamental in achieving this.
  • When making any changes or planning replacements, think ahead to what profiles, competencies, diversity, etc. you will need and take caution in changing too much too fast.

Board evaluations

  • Board evaluations should be a virtuous circle of feedback and improvement, with the board evaluating itself and management, and vice versa. Good boards will evaluate not only the board as a whole, but also individual board members.
  • Generally, evaluations can be done internally, led by the board chairperson or audit committee chairperson, etc. It can be useful though to bring in an external party after fundamental changes.

The role of the Audit Committee

  • With increasing complexity and risks in business, the impact of making a mistake is huge. Organizations need systems in place that give comfort that things are working. There are built-in weaknesses at every organization (segregation of duties and ‘super-users’, for one). Boards as a whole need to take the role of compliance and internal controls seriously.
  • The Audit Committee cannot take care of all risk management, but it needs to have the comfort that it’s handled. Similarly, it needs comfort that there is an effective control system in place, and that appropriate levels of management are made explicitly responsible for each key area, taking full ownership in making sure adequate controls are in place and operate effectively.
  • Typically the Audit Committee is also the committee with the most finance expertise, so oftentimes boards look to the Audit Committee for financial decisions, compliance, etc. The responsibility of the Audit Committee depends on how the board sees it – if it’s the “Audit and Finance Committee” that’s OK but it should be clear.

Do not sit back thinking, “this won’t happen to us”, or you will be surprised.

Activist investors and hostile bids

  • In these situations, the Chairman has the lead, but agree upfront with the CEO who will play the frontline, and be sure you are giving the same message.
  • Be prepared! If you are reactive, they ‘win’. 
    • Look at the decisions the board has made over the past 12 months – were they sufficiently motivated, i.e. were they supported and documented? Were you aligned?
    • Have you discussed the value of your company? Even if you don’t plan to sell, there’s a price for everything – think about where that price point is and how you got there.
    • Dry-runs are fundamental in being prepared to face activists.

The CEO-Chairman relationship

  • As Chairman, the relationship with the CEO is crucial – there needs to be mutual respect and trust. You can have different opinions but at the end of the day you should be able to come to an agreement.
  • The moment you feel there’s a problem, others do too. As Chairman, you need to think: “Am I undermining them? Or should I be frank and address the problem head on?” You also need to be practical and factual: “Did we set objectives? Did he/she meet them?”

The transition from CEO to Chairman

  • There is a benefit in bringing the knowledge of a CEO to the Chairman role, but you need to keep that knowledge while staying out of the business.
  • Know what you have done well and what you have not, and expect the new CEO to make changes to things that they think have not been done well. It can be a humbling experience but the role of the Chairman is to support the CEO’s agenda.
  • The new CEO will likely change his/her team as well, and may select people to work with whom you could not have. You can raise your doubts but support the decision and keep your focus on your new role – the board.

Top priorities for today’s boards

  • Global supply chain. Brexit, China-US trade war, Iran sanctions, etc. – what if you suddenly can no longer work with a certain country in your supply chain? How do you manage that?
  • Understand that people are reacting differently today. There’s a new reality coming our way due to the divide we’ve created between the haves and the have nots. And there’s a generation asking different questions that we need to find the answer to: What’s the real added value of medicine? Does this car help us? Is this flight necessary? 


Enable trust through transparency! Be prepared! Think twice and motivate it!

About BLC

The Board Leadership Center offers non-executive and executive board members and those working closely with them (including CROs and Heads of Internal Audit) a place within a community of board-level peers and access to topical seminars and ‘lunch and learn’ Board Academy sessions, invaluable resources and thought leadership, and lively and engaging networking opportunities.


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