The Globalization of Today's Boardroom
Having worked 24 years for Adidas and Reebok, including as President and CEO of Reebok, I witnessed the evolution of modern sporting goods and a global industry expansion. Each new market brought distinct characteristics, including consumers, work-force and distribution channels. I also saw how a global boardroom excels in identifying and capitalizing on new opportunities. As an executive, the ability to receive advice and counsel from directors with international business expertise is invaluable, yet I’m surprised to see how many corporations in this growing global economy have been slow to emphasize recruiting directors with such backgrounds.
In last year’s PwC Annual Corporate Director’s Survey, the top attribute sought in corporate directors is industry expertise. The report confirmed the dramatic shift in boardroom recruitment over the past several years. In the immediate postSarbanes-Oxley era, the leading criterion for recruitment to a public company board was often current service as a public company officer or director. This limiting paradigm, however, holds little value in a modern economy that demands industrial proficiency on a global scale.
Indeed, the proliferation of board diversity initiatives validates the value of industry expertise. These efforts to date have doubled-down on gender diversity, an absolute necessity as women only account for 15% of board seats. However, diversity in the boardroom should also consider and account for international experience.
Multinational corporations in particular have an acute need for diverse boards. Despite a sluggish economic recovery, profits for U.S. companies are rising as a percentage of GDP. U.S. companies are making greater profits abroad, and it isn’t just the Apples, Microsofts and Googles of the world. To survive, most corporations must expand beyond U.S. borders to new and non-traditional markets.
The PwC survey ranks international expertise as the fifth most sought-after attribute in new directors. Intrepid corporations, however, understand that competing in a global economy requires directors with international business experience. Companies want directors who appreciate foreign markets and have connections to help sustain growth.
Consider how Twitter came under fire during its IPO for having an all-male board. Twitter responded by appointing Marjorie M. Scardino to the board. The move quelled growing criticism regarding gender diversity and eased shareholders’ concerns regarding management’s understanding of the need to grow its international user base to fuel the social media giant’s expansion. The appointment of the London-based Scardino, the former CEO of education and media conglomerate Pearson PLC, helps resolve several issues at once.
The importance of a global boardroom is underscored by the emphasis foreign corporations place on recruiting directors with international expertise. Santander, one of Europe’s largest banks, recently added former U.S. FDIC Chairman Sheila Blair to its board of directors. Blair brings international clout to the Madrid-based lending institution as it seeks to expand operations in the U.S.
Of course, not every company can recruit a board candidate with Scardino or Blair’s qualifications. Nevertheless, candidates with international expertise can give corporations competitive footing in the growing global economy.