Board leadership through transformation

Intro: Welcome to the Corporate Director Podcast, where we discuss the experiences and ideas behind what's working in corporate board governance in our digital tech-fueled world. Here, you'll discover new insights from corporate leaders and governance researchers with compelling stories about corporate governance, strategy, board culture, risk management, digital transformation, and more.

Dottie Schindlinger: Hi, everybody, and welcome back to the Corporate Director Podcast, the voice of modern governance. My name is Dottie Schindler, executive director of the Diligent Institute, and I'm joined once again by my fantabulous co-host, Megan Day, strategy leader here at Diligent. Megan, how are you doing today?

Meghan Day: Hey.

I'm good, Dottie, and I'm looking at your name in print, uh, in- ... uh, the most recent Agenda newsletter. Does that, does that get old yet being such a governance celebrity?

Dottie Schindlinger: You know what? It, it, it's very funny to say that, right? Because governance celebrity, those are two words that don't usually go together- Correct

and is so niche that maybe one person every year- It's my niche

Meghan Day: though.

Dottie Schindlinger: That's right. It's true. Yeah, no, it, it was really great to have an opportunity to speak with Lindsay Frost. She and I have spoken before. She's the, uh, reporter at Agenda who wrote the article. And, um, you know, she was really interested to have a conversation about CEO and C-suite succession planning because there was this interesting report that came out from Pearl Meyer that, um, seemed to indicate that boards are feeling a little bit uncertain about whether or not they've got the talent they need for the future, not just in the CEO chair, but across the entire C-suite.

So we had a, we had a really good conversation about that.

Meghan Day: Yeah. Uh, according to that research, 37% of C-suite executives versus 64% of directors say the board is involved in monitoring the development of CEO succession candidates. That, to me, is a big perception gap in terms of involvement, but what I also found- I don't know, funny, but, uh, interesting, another interesting disconnect was 100% of directors surveyed versus only 51% of executives say the board reviews succession plans for roles beyond the CEO at least annually.

Dottie Schindlinger: So that's really interesting, isn't it? So I, you know, that perception gap is, is really fascinating. Um, you know, Lindsay really wanted to know my opinion about that, and I, and I said, "Look, you know, it's very possible that the board has some of these conversations without anyone from the C-suite in the room."

Yeah. I mean, there is executive sessions of board meetings for this reason, right? So that we can have conversations about HR-related issues, most often about the C-suite, and we don't have to worry about having someone from the C-suite in the room to dampen the conversation. So it is very possible that they are, in fact, having these conversations without the CEO's knowledge.

And, and I know that can be really, you know, challenging because the CEO sometimes is also the board chair, but you can have executive s- sessions without the CEO in the room and have the lead independent director step in as the chair of that session and have good conversations about it. I also think, though, part of the perception gap isn't just that the C-suite's not involved.

I think it's also that, you know, nom gov chairs and board members generally all understand that it is very much part of their job to make sure that the organization has the leadership it needs to be successful, and they're all thinking about it a lot. I mean, we, we heard this in our What Directors Think report this year and in some of the other work that we've done, that thinking about the leadership for the future is, is weighing heavily on the minds of boards right now.

Not least of which because there was such a big exodus of CEO talent last year from many public companies, but also because it's the AI era, and they're all thinking about, "Hey, we're making these big bets in AI, and if we don't have anybody in the C-suite who is deep in AI, are, are we really in a good position to succeed with this strategy?

Do we have the talent we need to pull it off?" So I think boards are really weighing and wrestling with that question, which from their perspective probably leads to a lot of conversations around succession planning. Whether or not that's acknowledged by the CEO is a different question.

Meghan Day: Very, very true.

Well, I think, you know, to that point, you know, are you seeing any examples of what boards are doing differently to assess if they really have that sort of for the future team in place?

Dottie Schindlinger: I mean, I don't have data to back it up, but in, in some anecdotal conversations I've had with some directors recently, I, I know there have been conversations around whether or not they need a chief AI officer.

There've been some conversations around whether or not they need to think differently about who takes that CIO role and sort of what that person's team looks like, and maybe they're asking the CIO some different questions these days about where they're investing in talent development across their team.

You know, they're also having lots of conversations with the head of HR, you know, whoever their, their chief HR officer is, about talent strategy. And so, you know, again, like I'm saying, I, I think talent is both a broad topic and a narrow one, right? So the board is thinking about do we have the right CEO, do we have the right CFO, do we have the right COO?

But then they're also putting some pressure on some of these other key roles to make sure that the, the whole organization is positioned for, for the future. That is something I'm hearing quite a bit in conversations with directors right now.

Meghan Day: Well, that tees up, uh, an interview I recently had with Tracy Nolan, who is an accomplished executive and board member who talks really about her leadership style through many experiences she's had through disruption, turbulent times, very much the world that we are living in right now, and I think she's got some great wisdom to share.

Dottie Schindlinger: Great. Let's give it a listen.

Meghan Day: Joining us on the Corporate Director podcast today is Tracy Nolan. Tracy is a growth strategist, Fortune 100 senior executive, and board director recognized for leading organizations successfully through transformation, disruption, and growth. Tracy, welcome to the show.

Tracy Nolan: Thank you, Megan. Um, it's great to be here with you.

Meghan Day: Well, you have had a much more expansive career than I just quickly mentioned in the intro. So I'd love to have you share more about yourself and your journey as an executive and a board member.

Tracy Nolan: Thanks, Megan. I actually always start with saying that when I graduated college, I went into retailing, and I thought maybe I'd do retailing, maybe I would end up as a school teacher, or maybe just in a home, you know, stay-at-home mom.

Um, so I never had this career path as something that was planned by any means, but I really have spent my career overseeing, you know, multi-billion P&Ls, leading large scale transformations, and through M&A, and also in highly regulatory, uh, you know, industries such as telecommunications and now in healthcare.

Much of my work has been really through the intersection of really leaning into change and never being afraid to take a risk, calculated risk, but take a risk for me personally, and really looking at how strategy, execution, and change all comes together, and that overall is really what led my ability to lead through complex, um, situations.

Over time, I really looked at it and said, "Hey, I would love to not only do what I'm doing, but how do I help other companies, through board work, be able to look at opportunities and not just run status quo?" And so, you know, I really have a passion when it comes around helping corporations and leaders really thrive through transformational times.

'Cause so many times we get stuck and, or things are going well and we don't think we need to, to transform, and we, with all the external factors that are out there today, um, you know, reinvention of operations is really critical to the success of not only you personally, but also in a cor- in the corporate setting.

Meghan Day: Well, you've mentioned transformation, disruption, growth, and to me, that is also known as what every company in the world is grappling with right now. So from a boardroom perspective, what do directors most often get wrong or underestimate about leading through such major transformation?

Tracy Nolan: You know, I, I really see what, you know, some of the, the misunderstanding or something that a board of directors don't take as a real key to what they're doing.

But it's the cues that they give, Megan, to the organization. It's what they prioritize, it's the questions they ask, it's what they tolerate. It's the things that they're not saying, right? And it's the things that they're giving airtime to and that really resonate. I always talk about a sha- casting a shadow of a leader as a leader, but as a board it's even more important.

So in those board meetings, what are they questioning? What aren't they questioning? Because, you know, you come out of those meetings, and whatever the, the key questions are is what the organization goes and focuses on. So at times, you know, if we're not asking questions or, you know, challenging some of the status quo, that's really what I think, uh, board directors miss when you're really going through a transformation.

Meghan Day: You've also highlighted your ability to align strategy, risk, and culture as a differentiator. How do you recommend boards practically bring those three elements together in their oversight, in their committee work?

Tracy Nolan: Well, it's, you know, uh, you just said it, in their oversight and committee work. Like, s- there are so many, uh, boards today are very focused on certain committees that oversee certain things and then, you know, the, the quarterly board meetings.

But what is missed because it's segmented in what they look at is that they're not really bringing that risk, uh, culture, and strategy together. So, um, you know, it's great to have committees, but it really starts with, like, up at the top. What does success look like for us? What could derail us? And what are the cultures and incentives that support what we want to do needs to be brought into every committee.

Every committee needs to not just ask, "Okay, how are we doing on risk?" But, like, what would success look like, you know? And, and going back to bringing the, you know, weaving the strategy and where we're going into even what I actually have also recommended that companies re-look at the typical board matrix and the, the committees.

And is there a way of, like, are they still relevant for what you're going through? I mean, you will want to have those, but would you rename them differently from a committee perspective, and how do you pull that thread across all?

Meghan Day: That's a really interesting idea, and definitely, I think, worth consideration.

Just because this is how we've done it before doesn't mean that's how we need to do it in the future.

Tracy Nolan: That is so true. So many companies have, you know, who have been s- highly successful are not there today because they were happy with how they've been super successful, so. And times are changing so fast right now.

Meghan Day: Yes, indeed. Well, you mentioned in your, uh, introduction that you've overseen multi-billion dollar PNLs, you've guided large M&A integrations in highly regulated sectors. What are one or two lessons from those experiences that today's corporate directors can keep top- top of mind?

Tracy Nolan: I've seen two really, you know, two things.

One worked really well, and one didn't, and it really all came down to this: when boards think that the value's created at the time of the M&A, and they get all excited because we've done it, but the big part is really about the integration, and boards need to spend more time talking about integration.

'Cause I've seen integrations go really well in where they, you know, where, where value's been created, and I've also seen them where they've missed because of a poor integration. You know, one integration that was very large, um, what I thought was really great that the board did is even before the integration started, they already had made decisions that, like, we're not gonna go through every single item that happens within the organization and decide what cultures, what pieces of this culture and what pieces of that culture should we then combine?

But it was more of like, "Hey, we're gonna take on everything that this one company does because they do it well today. The other one did it well too, but let's, let's make that decision quickly and definitively on culture operations," you know, all of the key items. It wasn't a debate for months on what to do.

They just made that decision and went, and they were able to create value much quicker. So I'd say for boards, it's really about laying out the expectations, not just about, you know, "Hey, this is great that we're going to go ahead and have an M&A happen, and the value's gonna happen." It's making sure that value happens quickly and effectively and really making sure there's a plan for that integration.

Meghan Day: I wanna shift gears slightly. Uh, you've mentioned that your leadership mantra is inspiring leaders to lift as they climb, and you're passionate about advancing women at all levels. What concrete steps can boards and senior leaders take to better sponsor and support diverse talent into executive and board roles?

You've lived that experience. I'd love to hear that from your perspective.

Tracy Nolan: This one I am. I'm so passionate about lifting, um, as you climb because there's so many instances where I think back and I have, in my career, I have, you know, three or four key sponsors that I didn't even understand what a sponsor was.

I thought I had mentors, but people who put me in what I call uncomfort zones and pushed me to do things that I didn't even think that I was capable of doing, but they had more confidence in me than I did. And, you know, w- every company and every board talks about, you know, succession planning. But is it just a something we report out on that's owned by HR and reported to the board, you know, once a year or maybe even twice a year?

And how far do they go? And I'd say instead of going through the list of the succession planning, I'd really focus on what is the system design to ensure that we are helping lift people and make sure that we're really, really going at it. So it's more of a metrics-based approach that I would want a board to have and broaden like what is the ready now mean, and, you know, recognizing that leadership, not just in the silos of, "Hey, I'm a f- in finance," or, "I'm in operations," but what are those that those leaders who can handle transformation and complexity and can show scale across the organization, and really shift to making sure that the board is hearing about those stories and the ready now capabilities in some sort of report card and, and that it's talked about, even if it's 15 minutes on every board call, like, you know, four times a year, six times a year, like what has the latest moves happened, and being able to monitor it, not just from a once a year, "Here's my, you know, succession plan of me," but really throughout the organization.

Meghan Day: That is great advice. Succession planning can often be complex and overwhelming for organizations to really get their arms around. You've also said that powerful leadership requires embracing both strength and grace. How does that philosophy show up in the boardroom, especially in some of the more intense moments?

Tracy Nolan: Well, you know, I know from being a participant, it, to, in a board, uh, you know, presenting to a board, and then also being a board member, uh, you know, there's a lot of prep and work that goes into all of those meetings. One of the key elements is, is that you want to keep grace, as I say, on, you know, how decisions are made, the questions that are asked, in a really calm tone, respect for disagreements, and maintaining trust in the system, because you're not gonna get to hear if the, if the people who are coming in to present are all nervous, and they feel scripted, and they can't be natural, and they're worried for a gotcha through the meeting.

So I think that whole grace in treating people like you want to be treated, even when it's a tough, tough conversation, and even if you think that things aren't going as well as it is, you're gonna get more out of it. And I go back to, in business, everybody thinks it's about being hard or, you know, demanding, and I, I gotta tell you, you can have grace, and you can show strength, and you don't have to be hard.

And when I say strength, I talk about the fact that it's about clarity under pressure. Mm. It's being able to really be clear. If the board can show grace, uh, with strength, that is really the secret to, uh, really unlock what's really going on in the organization. Otherwise, you're gonna get what you, what they think you, the board wants to hear

Meghan Day: So important.

That is great advice. Uh, as we wrap up, keeping in the, the, uh, theme of advice, any best and final thoughts you'd like to leave with our audience?

Tracy Nolan: Again, I think, uh, you know, boards have always been about governance, and, um, I, I believe it's more about big choices, you know, helping guide strategy, asking the right questions, and engaging, um, those to really, you know, see the choices that they're making.

And again, I go back to casting a shadow of what the organization will become. From the time you walk into a boardroom to, hey, am I paying attention or I'm looking at my cellphone, all of those things matter in the topics that are being said, and people, people will take that, and they will run with it. So make sure that you're setting the right shadow of what you want the rest of the organization to emulate.

Meghan Day: Well, Tracy, before we wrap up, we have a couple of questions we like to ask all of our guests. The first is, what do you think will be the biggest difference between boardrooms today and 10 years from now?

Tracy Nolan: First of all, I love this question because I keep going back to what we do today, you know, is gonna be so different in even, you know, a year from now.

Just even from an AI perspective, the things that we're doing today is so different than what we did a year from now. So in 10 years, um, and that, that's a long time, so first of all, I think we're gonna move from oversight to being more active value creation because here's what's gonna happen. The world is speeding up.

Technology is getting faster. Today, we focus on govern- you know, risk, compliance, and CEO performance. I think we're gonna be, like, living in the motion where boards are really shaping strategy in the process. I don't think there's gonna be four meetings or six meetings a year. I think it's gonna be a more of an ongoing, more of a consultative real in action board journey that will happen in the future.

It just, it just, we can't keep ... Businesses and everything is changing so fastly that they're gonna need board, more and more board engagement along the way.

Meghan Day: Definitely. Well, what is the last thing you read, watched, or listened to that made you think about governance in a new light?

Tracy Nolan: There's a book out there called Governance As Leadership: Reframing the Work for, of Nonprofit Boards, and while it's about nonprofits, it really talked about, you know, governing the questions.

And what was really interesting to me is that, again, I go back to the questions we ask are what's really gonna shape, uh, the company going forward. And I know I'm in board meetings, and there's a question that will come up, and it will stick with me for a long time because I'm not satisfied with it. So you can't underestimate.

That book really got me to think as I, you know, prepare to go into a board meeting, what are those key questions that I think will help, you know, transcend that organization, the strategy to where it needs to go? Not just reading the materials and looking at, you know, here's my questions based on that. I try to always come up with a few things that will help the board think, the board and the leader management team think about things a little differently.

Meghan Day: Finally, Tracy, what is your current passion project?

Tracy Nolan: Oh, so as I've mentioned, I've led teams through significant, uh, major transformations. You know, the largest telecom merger in the US history, external crises like COVID, where I had 14,000 people that I needed to keep safe at the same time as keeping employees, customers safe through the process, and the 9/11 crisis and trying to get Wall Street back up and going in the middle, um, you know, of, of all of that.

And I, I would say that right now my passion project is really about helping people choose change, lean into the disruption, and figuring out how to take it and make it a place where you can thrive because people are... When they're uncomfortable and you can't get all the answers, and you have to go with 50% answers and 50% gut, that's when leaders and boards get uncomfortable, and sometimes their silence and not moving forward is what's not going to help them.

So I'm all about helping boards and leadership teams thrive through change. So I'm working on a few things along those lines, a keynote and probably at some point a book. But, um, I've been very fortunate to have some incredible experiences that really have taught me a great deal, and I just hope I could pass a little bit of that on to others so that when they're faced with those types of situations, that they, you know, they react in a way and have a little bit of a roadmap on what might work well for them.

Meghan Day: Well, looking forward to seeing all of those outputs. And Tracy, it's been a real pleasure to have you on the show today. Thank you so much for joining us.

Tracy Nolan: Thank you, Megan. This was fun.

Dottie Schindlinger: Megan, thank you so much for that interview. That was a really interesting conversation with Tracy. I mean, I know she reached out to us and shared a little bit about her background, and we wanted to have her as a guest on the show, but what were some of the things that stood out to you? 'Cause I know you, you touched on a lot of topics, but she's had a really interesting career experience.

Meghan Day: Yeah, I think coming back to the succession planning conversation, and even just being passionate about lifting as you climb, something that I know you and I have talked about, um, on this show many, many times, this idea of succession planning being more than just generating a list of names that gets reviewed a couple of times a year.

How do you put a true metrics-based system in place that tracks how the organization is actually developing and sponsoring and moving diverse talent into these important roles?

Dottie Schindlinger: I think that was really, really helpful. She, she made it very pragmatic, right? So very easy to understand and how do you do this.

I also thought it was really great to have her just say, "Look, e- leadership really requires strength and grace." And, and I liked the comment she made about you have to have the grace to keep decisions calm. You know, really, really making decisions in a very calm way, maintaining trust in the system, you know, really thinking things through, but, but not feeling this pressure to just act all the time, but really taking the time to think it through and talk it through and just being very calm.

Th- that felt very soothing to me 'cause I don't think the word calm is something we've said very much on this show, Megan, and so it was nice to have someone give a re- really reassuring view of how this can work if you have a little bit more grace in the way that you approach making decisions at the leadership level.

Meghan Day: Well, right, and also coupling that with, I think, her philosophy and passions around choosing change as a leadership practice, leaning into disruption and what that really means, um, as a leader. I think those are the things that, you know, her peers are really grappling with right now.

Dottie Schindlinger: Well, and I also have to say, one of the things that made me smile so much as I listened to your conversation with her was, um, the shout-out that she gave to Governance as Leadership, which is a really classic book in the nonprofit sector.

It's something, quite frankly, I, I used to teach Oh. 20 years ago- Oh, yeah ... you know, to nonprofit boards about, um, you know, generative governance. And isn't it funny, now we think about generative AI- Yeah ... but back then we were talking about generative governance, which is, you know, how do you ask questions that lead to more thought and more consideration rather than questions that shut down discussion?

And, you know, it was a great reminder that, you know, that still is a great idea. That, and that's not just true for nonprofit organizations- Yeah ... but it, it's really true for any board. You know, how do you ask questions that open up options rather than narrowing them? Mm. And it's not always appropriate to do it in every setting.

You know, you don't wanna do that in a, you know, if the house is on fire, you wanna put the fire out. But maybe after the fire is out, asking some generative questions about why the fire started in the first place and how we responded to it can be incredibly powerful, and it was just a good reminder. I was like, "Oh yeah,

Meghan Day: I

Dottie Schindlinger: love that book."

I

Meghan Day: have not read that, so I am going to have to.

Dottie Schindlinger: It's a great one. It's, it's a classic. Like I said, I think it's been around for about 25 years now. I remember very vividly- A classic- ... when it was new ...

Meghan Day: governance tome.

Dottie Schindlinger: That's right. I know.

Meghan Day: Much like Governance Celebrity.

Dottie Schindlinger: Much like me, Megan. I'm a classic. Well, well, on that note, that wraps up another episode of the Corporate Director Podcast, the voice of modern governance.

We'd like to say a few special thank yous, first and foremost to our strong and graceful leader, Tracy Nolan, podcast producers Kira Ciccarelli, Steve Clayton, and Terry Tiery. Our sponsors for the show, including KPMG, Wilson Sonsini, and Meridian Compensation Partners. And most especially, thank you to Diligent for continuing to sponsor this show.

If you like our show, please be sure to give us a rating on your podcast player of choice. Five stars only, please. You can also listen to our episodes and see more from Diligent Institute by going to diligent.com/resources. Thank you so much for listening.

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