In this episode of the Inside the Strategy Room podcast, Senior Partner Emeritus Celia Huber speaks with Christiana Smith Shi, who sits on the boards of Columbia Sportswear and UPS and is chair of Habitat for Humanity International. As today’s challenging macro environment and ever-evolving business risks increase board members’ time commitments, Smith Shi opens the boardroom door to reveal what looks different across not-for-profits and corporate boards, and what drives board effectiveness. She also shares how executives can approach the development opportunities that board service offers.
This is an edited transcript of their conversation. For more discussions on the strategy issues that matter, follow the series on your preferred podcast platform.
Celia Huber: Christiana, you’ve had a successful career as both a management consultant and an executive at Nike. You’ve also served on multiple boards, including Williams Sonoma, West Marine, and, currently, Columbia Sportswear, UPS, and Habitat for Humanity. What first attracted you to board service?
Christiana Smith Shi: I joined my first board in part to see what it was like to be on the other side of the table. As an executive or a consultant working with clients, you’re presenting, you’re advising. I wanted to see what it was like to sit in the seat. And at McKinsey, I had seen the terrific impact that board service can have on executive development. When I was COO of direct to consumer at Nike and was in line to become president, which ultimately happened, I thought there was probably a lot of enterprise perspective to pick up if I sat in a boardroom.
Celia Huber: Tell me about that initial transition. You had your executive hat on during the day, then put on the board hat. Was that difficult?
Christiana Smith Shi: I think for someone who’s been a senior adviser, the transition to being a board member from an executive was probably easier. At McKinsey, even as a senior partner, you’re used to not being the one making the decisions. You’re certainly doing your best to tailor the advice to the client and the situation, but ultimately, it’s their call. It’s the same when you’re in a boardroom, and for some executives, that’s the most difficult hurdle as they move from running their own show to sitting on a board. There is a set of decisions boards get to make, but it’s limited. In most areas, it’s the CEO and the leadership team’s call. They want your advice and perspective, but in the end, they’re running the business, and you are not. I’ve had to remind myself of that several times, particularly when I’ve served on boards that are close to my field of expertise. You sit there and think, “Oh, I know what I’d do if it were me.” Well, it isn’t you.
One of the realities of board service that surprises people is that most of the work gets done in committee.
Celia Huber: Our annual board survey has shown that the time needed for board meeting preparation is upward of 30 days and is increasing. Does that reflect your experience?
Christiana Smith Shi: I’ve served on boards for 14 years, and the time commitment has definitely gone up. Specific macro challenges have driven some of that, but there’s also a broader perception of risk in the business environment. I now tell people who are considering joining boards to assume it will take about 15 percent of their time. You’ve got committee meetings and the board meetings, but there’s almost always work in between—extra committee calls and calls with the CEO. If you’re chairing a committee, there’s that preparation. And then there’s the prereads.
Celia Huber: So, if we think about board effectiveness, what do you think it takes to be a great board member, or a great committee member?
Christiana Smith Shi: I think the first thing that makes a great board member is understanding that you are not there operationally, as I’ve said. The second thing is building trust. It’s true for anyone on any team, but it’s particularly true with a CEO. It’s a funny situation when you think about the fact that CEOs help select the board members, but those board members are effectively the CEO’s boss. How many times in our career do we get to hire our boss? So, you interview with the CEO, and then literally in the first board meeting you’ve got to make the transition of, “I’m here to represent stakeholders of all kinds, not to represent you as the CEO, but to support you in creating the value that we all know this company can create.” I think any board member who keeps that mindset—and acknowledges there are certain things they’ll have to tell the CEO that may be the opposite of what they want to hear—will make a good board member.
One of the realities of board service that surprises people is that most of the work gets done in committee. A good chunk of the time in board meetings is the committees reporting back on what they’ve done and bringing recommendations to the board for approval. In the committee itself, you make some decisions that, based on the bylaws, only the committee has to opine on. A good committee member understands the value of that work. It is particularly difficult when you have a committee member who doesn’t do the reading—as irritating as it is to receive a board book that’s 450 pages long, and a committee book that’s 85 pages plus an appendix, you need to read it because that’s what you are there for. You’ve got to have a point of view, and a good committee member can get a discussion going; then the committee can work its way through any tensions.
I think the last thing is, you’ve got to go deep. If you’re on the risk committee like I am at UPS, you need to understand and be engaged with cyber risk, physical security risk, location risk, aerospace risk, aviation risk, and a whole range of risks. In my opinion, that’s part of the fun of being on a board, how much you learn in the committees and how current you can stay as an executive even when you’re not in an operating role.
Celia Huber: How do you personally keep current on topics such as AI or risk, and stay on top of industry trends?
Christiana Smith Shi: I think there’s a three-part approach. First, in a well-run board, there will be board education. At Habitat, we use one meeting a year where we hold part of the agenda for that purpose. Second, there are many board support organizations, such as the National Association of Corporate Directors (NACD) and 50/50 Women On Boards, that offer educational programs for directors and even certifications. And while I don’t think any of us have time to run off to conferences all the time, I always try to pick one or two each year to attend. The third point is more about industry-specific topics related to the company’s business and the board you’re on. For me, that means staying current on the issues in that particular sector. You need all three angles to stay fresh.
You need to give boards multiple bites at the apple when you’re talking about a major decision.
Celia Huber: Let’s talk about decision-making in the boardroom. Some CEOs complain that they have to reiterate to the board constantly—first introduce an idea, then expand on it, then, perhaps at the third board meeting, get a decision. What makes it easier to get to a decision quickly?
Christiana Smith Shi: The idea of a three-stage decision process isn’t terrible, and it doesn’t have to take a long time. For instance, when we’re talking about M&A, we may move through those three phases over a period of two or three weeks. I do think you need to give boards multiple bites at the apple when you’re talking about a major decision, whether it’s a large acquisition or a major change to a compensation policy. You are doing a disservice if the board does not have time to get all its questions on the table. That’s what they’re there for, right? But you can also move quickly when the situation demands it. Where I’ve seen that work is when CEOs are willing to do board calls and give the board a heads up: “There’s a small set of companies that we’re interested in, we are in different discussions with each. At every board meeting, I’ll let you know where we are, but if one of them heats up, we’re going to have a call, and we may need to send you some information in between.” Then it doesn’t come out of the blue.
Celia Huber: How much is consensus versus debate in the boardroom, and is there a danger in too much consensus?
Christiana Smith Shi: I would rather have a board that actively debates decisions in the boardroom than a board that just rubber stamps everything. I haven’t been on a board that rubber stamps; however, I have seen groupthink creep in. It’s a particular risk for boards that have been together for a while, so I’m a big fan of term limits and board refreshment. I’m also a big fan of succession planning, where you look at your board’s skills matrix and ensure that, over time, you’re staying relevant and contemporary. All those things can help you avoid a situation where the board is consensus-driven.
But a lot of that has to do with the CEO’s relationship with the board, and what they view the board is there to do. I sometimes talk about a spectrum that I see CEOs on. At one end, the board is regarded as a necessary evil: “OK, I have to have these people. They cost me a lot of money and a lot of pain every three or four months, but I’m going to do my best to keep them in their box, and I’ll do my own thing.” That’s at the lower end of the maturity curve. And then at the other end, you have the CEOs who say, “My board is a source of competitive advantage. You wish you had my board.”
If the founder is still involved, you have both the blessings and the challenges that come with that.
Celia Huber: You’ve served on a unique set of boards, from very large public companies to public companies with family ownership to smaller companies. You are now on the board of a large global not-for-profit. What are the biggest differences you see across these types of organizations in the boardroom?
Christiana Smith Shi: I think companies in general are on a spectrum of maturing. If you’re working with a private company, a start-up, or a small, just-IPO’d company, it’s very common for the board to be more involved in operational decisions. They might also play a more consultative role for the CEO and their team. And the CEO is often dealing with a board that is a mix of board members they have selected and board members their investors have told them they have to take. So, you’ll sometimes see the dynamic in the boardroom is a little different—perhaps it takes a while to warm up and for people to really start working together, because they aren’t all coming from the same perspective.
If you go all the way to the other end to a very mature, large, for-profit company, I think you’ll typically find a more cohesive boardroom, in the sense that most of the people are experienced and know what they’re there to do. Some of them are still in operating roles, some aren’t, but the mechanics of it are understood. And so the board is likely more focused on a narrower set of topics: the overall strategy, overall investment levels, capital allocations, and hiring, developing, and evaluating the CEO.
Celia Huber: And how is it different at Habitat for Humanity?
Christiana Smith Shi: When you’re sitting on the board of a large not-for-profit, you start almost every conversation with the mission: “How do we serve that mission? How does this decision relate to our ability to serve that mission?” You also have the craziest financials. There’s unallocated revenue, allocated revenue; you’ve got grant money, you’ve got grant money that’s been promised but hasn’t shown up yet. All the accounting is different.
I sit on the audit and finance committee for Habitat for Humanity, and I had to invest the first three years into learning to be a competent audit committee member in that environment. And then, the team is different. You have people who are typically compensated at a lower level than you’d see in the corporate world, who are incredibly good at what they do and incredibly passionate about what they do but perhaps not as experienced in business. In Habitat’s case, we’re looking to increase access to affordable housing for everyone. We’ve got people from construction, we’ve got people from resource development, grant making, all sorts of areas of expertise. And then you’ve got the board, which typically comes from either a large donor perspective or a corporate experience perspective. It takes a while for a group like that to really gel.
Celia Huber: You’ve also served on a family-dominated board at Columbia Sportswear. How do you think that’s different?
Christiana Smith Shi: When I look back at the boards I’ve been on, they’ve largely been founder- or family-led companies. And what’s different about that is their stage of development and their leadership can be quite different from a 75-year-old Fortune 100 company. If the founder is still involved, you have both the blessings and the challenges that come with that. The blessing is that the founder or the family head who’s running the business understands what the company’s there to do. They know all the history; they understand the brand and its legacy. And they typically have deep admiration from employees, right down to the front line. The kind where they walk through the cafeteria, and everybody wants to stop and get a quick hello from them. The challenge is that it’s very hard to find the balance between giving advice that feels right for the brand and the company’s legacy, while also being contemporary. Part of the board’s job is to look ahead and bring in ideas from outside. That can be a bit more challenging in a founder-led kind of situation.
And then, whether it’s founder- or family-led, the other challenge that most boards will wrestle with is CEO succession planning. If the family still holds a dominant share in the company, even though it’s public, there may be an heir apparent. It’s just as challenging when the next generation doesn’t want to run the business. You’ll also see some of that in a corporate environment when a CEO has been grooming an executive whom they really think should be their successor.
Celia Huber: For executives who are thinking about board service as part of their own development, do you think nonprofits are a good training ground? And how can they make themselves more attractive to corporate boards?
Christiana Smith Shi: I always say nonprofits can be a very good stepping stone to corporate or public company board service. However, you have to hold the bar very high. If you’re going to do nonprofit board service primarily because it’s your passion, and you want to serve your community and fellow humans, then do whatever you want. If you want to learn the kinds of things that will make you a better candidate for corporate board service, then you need to pick a very high-quality nonprofit to start with. For instance, it needs to have its financials in order, and you want committee structures so that you can understand that most of the work gets done in committees, not in the boardroom. You want to have a leadership team that works closely with the board. You want to understand their governance, and you want that to be tight. So, if it’s meant to be a training ground, then you need to examine it from the same kind of lens that you would use for a corporate board. If you do that right, you will learn a great deal and become a more attractive candidate for corporate board service.
Celia Huber: Christiana, what final piece of advice would you give to those who are considering board service?
Christiana Smith Shi: Give yourself plenty of time to decide whether to join a board. Do your due diligence. Once you sign onto a board, you are partnering with people for a while. You can always leave, but it’s not comfortable, and there may be repercussions. Go into it with a mindset of “We are going to be successful together.”
Get an understanding of the company culture—meet other directors and ask yourself, “Can I spend hours in a room with these people regularly and feel like my voice will be heard? Do I feel I can listen and understand them?” Meet with some of the executives on the executive team to question, “Does the CEO have a good team? Do these people respect the CEO? Does the CEO respect his or her team?” And then finally, consider how the CEO views the board. What is he or she really trying to get out of that relationship? Have that scrutiny at the beginning, because it’s a bit like buying a house—once you’ve bought it, that’s your neighborhood. You can’t move the house.
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