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Water Newton, Cambridgeshire, United Kingdom, 2008/12/17 - Aspiring directors and current boards need to understand what the most effective directors do differently to cope with tough economic times.
Directors need to understand what the most effective boards do differently to cope with recessions and in the longer term benefit from them. Speaking in London to a British Accounting Association conference Prof. Colin Coulson-Thomas explains “Recession brings opportunities as well as challenges, and the better directors distinguish themselves in tough times. They are prepared to seize opportunities.”
According to the Adaptation chairman “While less capable boards focus on survival, cutting costs and laying people off the more effective ones look beyond economies and at ways of improving performance and building market share. The astute invest in gaining competitive advantage while interest rates and prices are relatively low. They position themselves to both weather the storm and take advantage of recovery.”
Adaptation’s research has examined the behaviour of directors at all stages of the economic cycle, including into and out of periods of recession. He believes “There is little excuse for the floundering about and panic reactions we see in many boardrooms. While a particular combination of circumstances may have caused the current situation, the impacts on many companies are similar to those directors have experienced in past recessions when clear winners and losers have emerged.”
Coulson-Thomas explains: “Effective direction is all about achieving a balance, for example between performance today and future prospects. Directors must weigh short term cost savings against the need to build future capability.” He showed how imaginative companies are cutting costs, reducing risk and lowering stress while at the same time speeding up responses, bespoking solutions and boosting performance.
Too often the Adaptation chairman finds “Training and development activities assume a benign environment and the time to assess all the options and select the best way forward. Yet directors can be prepared for the reality of responding when windows of opportunity quickly open and close as recession bites. In recessions there are often ways of securing large increases in market share that one could only dream of in better times. When boom turns to bust the canny are willing and ready to pounce.”
Coulson-Thomas feels “When directors are prepared for the boardroom they need company and board specific knowledge, but they also need to understand the business environment and the contribution they are expected to make to the board in good times and bad. This requires an understanding of what the more effective directors and boards do differently at times of economic hardship.”
One of the areas in which better boards distinguish themselves is monitoring and reacting to what is happening in the external business environment. Coulson-Thomas explains: “Smart boards read the road ahead and look out for what might be around the corner. They track trends and developments, and assess the likely implications for themselves, customers and competitors. Importantly they also consider possible responses, take appropriate action and prepare for contingencies and rapid reactions.”
Coulson-Thomas believes “Being prepared should be a motto for directors as well as scouts. Forewarned is forearmed. In a recession alert boards expect vulnerable competitors to go to the wall. As opportunities present themselves they are ready and waiting to cherry pick the best of what becomes available at knock down prices.”
Directors of over 4,000 organisations have participated in Prof. Coulson-Thomas’ Adaptation research programme which identifies critical success factors and successful approaches to the challenges faced by directors and boards. His books ‘Developing Directors’ and ‘Winning Companies; Winning people’ set out the different approaches of those who are most and least successful. Both are published by Policy Publications.
The research reveals practical ways of boosting performance in key areas while reducing costs, risk and stress. Examples of how support tools can be used to make it very easy for average performers to do difficult jobs and adopt winning ways are given in Prof. Coulson-Thomas’ book ‘Winning Companies; Winning People’ while guidance on preparation for the boardroom is given in his book ‘Developing Directors’. Both are published by Policy Publications.
Twenty five courses for directors and boards on particular activities that are vital for corporate success are also available. Further information can also be obtained from Adaptation Ltd.
The British Accounting Association conference on The Financial Crisis and Future Directions in Corporate Governance and Risk Management was held in the Lincoln Centre in central London. Prof. Coulson-Thomas’ presentation was on ‘Developing Directors, Creating an Effective Boardroom Team’.
Prof. Colin Coulson-Thomas, an active consultant and experienced chairman of award winning companies, is the author of ‘Developing Directors, a handbook for creating an effective boardroom team’ and ‘Winning Companies: Winning People’. He has helped over 100 boards to improve board and/or corporate performance, and spoken at over 200 national, international and corporate conferences in over 35 countries.