The role of the Advisory Board is changing fundamentally

Compa­nies, company manage­ment and their super­vi­sory and advi­sory boards have always had to face new chal­lenges. Howe­ver, the current simul­tan­eity of extre­mely deman­ding issues repres­ents a parti­cu­larly prono­un­ced accu­mu­la­tion: The explo­ding shortage of skil­led workers, rapid advan­ces in the appli­ca­tion of arti­fi­cial intel­li­gence and the energy tran­si­tion are caus­ing profound struc­tu­ral uphe­avals. — Added to this are the direct effects of geopo­li­ti­cal crises: Be it access to criti­cal raw mate­ri­als or the avai­la­bi­lity of secure trans­por­ta­tion routes, chan­ges in access to markets due to tariffs and embar­goes, the sudden lack of avai­la­bi­lity of truck drivers as a result of the Ukraine war or the recent near-explo­sion of damage caused by cyber attacks. And even AI has a geopo­li­ti­cal back­ground: the USA and China in parti­cu­lar are enga­ged in a power-poli­ti­cal duel in which Europe tends to sit at the side table. 

While geopo­li­tics used to be some­thing for specia­lists, today it is important for almost every company. It is not always possi­ble to prepare for ever­y­thing in detail — but complete surpri­ses should be avoided through appro­priate risk manage­ment. It is ther­e­fore a good idea to firmly estab­lish a ’sensi­bi­lity’ for these issues in the super­vi­sory board / advi­sory board and in the company management. 

These aspects also require a change in the coope­ra­tion between the Execu­tive Board/management and the Super­vi­sory Board/Advisory Board. For the latter, this means consider­a­bly higher requi­re­ments in terms of quali­fi­ca­ti­ons, the ability to make a rele­vant contri­bu­tion to current issues and over­all profes­sio­na­liza­tion and diver­si­fi­ca­tion. Another change concerns the nature of the coope­ra­tion: in addi­tion to the three to four fixed meetings per year, there is also an incre­asing number of ad-hoc exch­an­ges on urgent topics. The advi­sory boards should not only support or moni­tor the manage­ment, they must also ask the right ques­ti­ons, have a large network and raise aware­ness of issues that may not yet be on the management’s radar. In return, these quali­ta­tively and tempo­rally higher requi­re­ments are incre­asingly reflec­ted in the remuneration. 

This is usually a gradual process, but it progres­ses much more slowly than the envi­ron­ment deve­lops. Some family busi­nesses in parti­cu­lar are pain­fully lear­ning that it is no longer enough to rely on their own network alone. Estab­lished compa­nies that have been successful for a long time are forced by an exter­nal event to rethink abruptly, for exam­ple when a hacker attack brings opera­ti­ons to a standstill for months because they can no longer access their own data. An advi­sory board or super­vi­sory board that has alre­ady gained expe­ri­ence in cyber­se­cu­rity can contri­bute a great deal. 

The rules-based world order is at least in a funda­men­tal crisis — if it can be re-estab­lished at all. The Russian war of aggres­sion against Ukraine and the hybrid war — curr­ently at least against Moldova, Serbia and the Baltic states — are the Euro­pean dimen­sion alone. — Further­more, an escala­tion of the situa­tion between Taiwan, China and the USA is to be expec­ted — for me, this is not a ques­tion of ‘if’, but merely of ‘when’ and to what extent. Howe­ver, the growing insta­bi­lity on the Afri­can conti­nent and, not least, the incre­asingly escala­ting conflict in the Middle East also harbor comple­tely diffe­rent threat scena­rios right on Europe’s door­step. A fore­seeable drama­tic rise in migra­tion pres­sure, resul­ting in incre­asing rest­ric­tions on free­dom of move­ment in Europe, is just one aspect of the conceiva­ble consequences. 

About Kai Horten

Kai Horten advi­ses share­hol­ders and entre­pre­neurs on stra­te­gic person­nel decis­i­ons. In addi­tion to appoint­ments to super­vi­sory boards, advi­sory boards and indus­try experts at Board Xperts, he also advi­ses indus­trial, medium-sized and family-owned compa­nies as well as private equity firms on first and second-level appoint­ments as part of the XELLENTO Execu­tive Search team. 

Before joining the person­nel consul­tancy, he was CEO and Mana­ging Direc­tor at ESG Elek­tronik­sys­tem- und Logis­tik GmbH, Premium AEROTEC and Atlas-Elek­tro­nik for 14 years. He holds a degree in aero­space engi­nee­ring from the Univer­sity of the Fede­ral Armed Forces in Munich.

www.board-xperts.com

At this year’s Family Office Forum in Wies­ba­den in mid-Septem­ber, Board Xperts will discuss whether effec­tive advi­sory and super­vi­sory boards are just wishful thin­king or an achie­va­ble goal.

The company profile of Board Xperts can be found in the FYB 2024 issue p. 349.