Q&A with Ferran González Feliubadaló, Founder at Nexus Governance Partners
Earlier this year, VAB announced a partnership with the corporate governance training consultancy Nexus Governance Partners. In this interview with the company’s founding partner, we would like to highlight the work that the Nexus does, the services it offers, and key challenges for businesses and their board directors in today’s organisational governance environment.
What are the biggest challenges for governance boards at present? Are there any issues that boards may have not yet picked up on but which they should be mindful of?
The most obvious challenge is knowing how to adapt to an uncertain, volatile environment that is changing rapidly. This is having a significant impact on our surroundings and, consequently, on our organisations. Just think of the paradigmatic example of artificial intelligence, whose rapid emergence is already having a major impact on many businesses. There are surely more examples to come. Having a good corporate strategy and a culture aligned with defined business needs will be key to many companies’ performance and survival. Understanding the need to create value for different stakeholders, having well-identified and evaluated corporate risks and proper resource allocation will also be essential.
A good governance system with well-designed, well-structured and well-built objectives is key to any company’s survival and success. Speaking metaphorically, beyond inertia, depending on the size of the company and the strength of the storm, the corporate ship may stay afloat for a more or less extended period despite the holes in the hull.
How do you view boards' success in addressing new challenges like AI regulation or cybersecurity? Are boards finding the right directorial talent to take on and guide businesses in these areas?
Technology is advancing at a pace that's difficult to keep up with. It's not about being an expert in AI or cybersecurity. There are very few people who truly understand the different types of artificial intelligence and the technical implications of cybersecurity (far fewer than those who claim to be experts in the field). Very few boards will have true experts in these fields among their members (and even less so if these members also need to have other knowledge, skills and attitudes required to be good directors overall).
What’s important is having a board with enough varied perspectives and sound judgment to ask the relevant questions to understand the implications that both AI and cybersecurity may have on our businesses and how to act accordingly. That’s much less difficult.
Increasingly, boards of directors have to focus on finding the right balance between meeting the needs of both shareholders and stakeholder groups. Is it your experience that they are handling this well?
Most boards, unfortunately, do not work effectively. They often forget that the primary function of a good governance system is to create lasting value efficiently and effectively. First and foremost, they must serve as an instrument that aligns the interests of the different stakeholders and shareholders: ownership, executives and also families in the case of family businesses. In addition, they must be clear about the reason for their existence. All members must understand the board’s objectives and work toward achieving them. Lastly, they must be built based on appropriate criteria, which is what we call at Nexus Governance Partners (the company I founded to help build good corporate governance systems) the six value levers of corporate governance: objective, structure, functions, method, people and leadership.
When focusing on stakeholders, there is often talk about broader themes, e.g., issues like ESG and DEI. However, in markets like the USA, there has been pushback against companies supporting such programmes. How can boards take principled, yet practical, stances on these issues?
It is important to have a target that sets the long-term goal and helps us chart the course step by step in the short term. That is what strategy is for. But we also need to understand that the target is mobile. I will not be the one to say whether the current acceleration of climate change processes (which is unquestionable) is deterministically caused by human factors or not, nor whether society's perception aligns with that of scientists or politicians. My opinion is irrelevant.
Circumstances change, and the ability to adapt is crucial for success. One of the main skills a good governance system must have is the ability to read changes in the environment and manage the consequences of external factors beyond our control. Then leaders need to adapt with sound judgment. Political and social trends related to ESG or DEI factors are one of those external factors that must be monitored, evaluated and used to make decisions with sound judgment: assessing the costs, risks and potential benefits of changing course or staying the same.