The Role of the Supervisory Board in Times of Transformation
The current disruptions and transformation processes, as well as socio-economic volatility, also mean significant changes for supervisory boards. Implemented processes and procedures, as well as the supervisory board’s tasks and the current German corporate governance structure are being questioned to an unprecedented extent due to the changes in the economic, technological, and political landscape. The transformation has led to a broad public discourse on how supervisory boards should operate in the future to pursue their activities as effectively as possible regarding the challenges of today and tomorrow. Therefore, the work of the supervisory board has already evolved rapidly, also in view of increased public attention. However, the heterogeneous discourse on the "Board of the Future" shows the desire and necessity for further change.
ECBE Governance Perspectives: Objectives and Approach
In our current Governance Perspectives 2023, we have asked the central question: How must the work of the supervisory board continue to evolve to meet the future requirements and expectations that we place on the supervisory board today?
To answer this question, ECBE analyzed and compiled qualitative and quantitative data from various sources in cooperation with the University of Göttingen:
Formulated theses on the role and work of the supervisory board were discussed and questioned in personal conversations with selected supervisory board and committee chairs of German listed companies.
Using publicly available data from supervisory boards collected by ECBE and reviews of scientific studies, the theses discussed with supervisory board and committee chairs were mirrored with empirical findings.
The results were additionally classified with ECBE's experience gained from evaluations or self-assessments of supervisory boards.
Our results show: Supervisory boards are on the right track – and should continue to implement the following overarching themes.
UNDERSTANDING OF THE ROLE
The supervisory board will intensify its role as a counselor and sparring partner to the management board. Many supervisory board members wish for a greater involvement in strategic issues and the strategy development process. Therefore, the management board should increasingly rely on the expertise and best practice evaluations of supervisory board members.
COMPETENCE PROFILE & TEAMING
The supervisory board will invest more time, thought, and commitment in creating candidate profiles and transitioning from reactive to strategic long-term succession planning. Besides professional expertise, the personal characteristics of the new appointments will be crucial.
AGILE WORKING METHODS
The supervisory board will be able to react faster to changes and incidents in the company through more agile working methods and a diversified information supply. The interaction of members between meetings, the involvement of external experts, and the establishment of ad hoc committees will play a crucial role in the future.
ENGAGEMENT & COMMITMENT
Due to the increased variety of tasks and (regulatory) requirements, the time commitment of supervisory board members will continue to increase. The supervisory board compensation must be adapted to the expectations placed on supervisory board members. The supervisory board members’ terms of office will become increasingly individual in the future to enable constant renewal and regular changes in perspective (staggered boards).