KPMG’s Susan Angele offers perspectives on working with boards and increasing their diversity.
CCBJ: How would you describe the role of the general counsel or chief legal officer in relation to the board?
Susan Angele: The role is very strategic, and it's interesting because it's one of the few executive roles that has a seat with the leadership team but is also very much an advisor to the board. A general counsel's role is, of course, to advise the corporation as a whole, so that means that he or she should bring best practices to the board, help the board think through how to be effective and draw on learnings from outside to do so.
The general counsel can also play a role in helping new board members come up to speed on, number one, the obligations of a board member and, number two, what the board member needs to know about the company to be able to contribute very quickly as a new board member. So, the general counsel can both advise the board member and work with management to put together a world-class on-boarding program for new board members. The same goes for board education. Boards today need to stay on top of company strategy and risk and understand the external trends that might be impacting the company.
Board education has become much more robust in recent years. It's about knowing what the company is doing, but also about knowing the trends. I see the general counsel working with the board Chair to develop interesting board-education programs, whether it's bringing in an outside investor or an analyst to talk to the board, or attending trade shows and industry events to learn something about trends that board members wouldn't otherwise be exposed to. Those are the kinds of things that are going into board education now, and the general counsel can play an integral role in that.
The other area is acting as an “antenna.” As issues come up and the board makes decisions, the general counsel has an obligation to do more than just say, "Here's what the law says." The general counsel is a good strategic advisor to the business, and he or she can and should play that role in the board room, as well.
Tell us about KPMG's Audit Committee Institute. What needs does this group serve?
Strong board members are constantly seeking to sharpen their skills and knowledge, and this is the need we serve. For example, my colleagues and I frequently write and speak about issues of importance to nominating and governance committee members and the full board, such as the board’s role in strategy, encouraging innovation and changing business models, board effectiveness, board composition and other topics. And we address these issues to fill this need for board education, at events including our annual directors’ conference, webcasts, peer exchanges and individual boardroom discussions.
The Audit Committee Institute takes what we know about board governance and combines it with everything that the KPMG auditors know, which is a tremendous amount in terms of what audit committees are facing. We work together to build best practices for audit committees. We provide webcasts and reading materials, including an audit committee guide that's available on our website. We hold one-on-one sessions with new audit committee members as well as current, experienced audit committee members. And we've done a great deal of thinking about the role of the audit committee chair.
Having conversations—convening audit committee members so that they can learn from each other—is a good way to share and deliver information. So we hold quite a few peer-exchanges. We also partner with others on programs. For example, we work with the National Association of Corporate Directors. We sponsor its audit committee chair council, and we put on programs at its global board summit that specifically look at audit committee and private company issues.
We also address the specific areas that audit committees are involved in. This includes all of the issues around financial reporting, risk oversight and—depending on the audit committee scope—cybersecurity. So, working both independently and in partnership with others, we've put on programs for audit committee members and other board members who are interested in these topics.
How do you and KPMG support WomenCorporateDirectors?
One of the great things about KPMG is that there are many programs, and a great deal of passion, for supporting women—particularly in empowering talented women in their careers. Our support of women corporate directors takes place in a larger context. KPMG has a woman CEO, and we support women through a number of programs, internally and externally. For example, our KPMG Women’s Leadership Summit brings together 200 women from across industries, not internal to KPMG necessarily, who have been nominated for the program by their CEOs. We work with them for a year, including a kick-off program with various superstars from the corporate world and other fields.
When we say, "women corporate directors," that can mean two things. It could mean women corporate directors generally, or it could mean the organization WomenCorporateDirectors. Looking at the first meaning, we work with women who are on boards to help them be more effective. For women close to that board level, we'll meet with aspiring board members and help them understand more about what boards do. We'll also engage in on-boarding for new board members.
As for the WomenCorporateDirectors organization, or WCD, KPMG was a founding sponsor of that organization, which has been in existence for about 15 years. We've devoted money to it, but we’ve also contributed significant amounts of time from KPMG people all over the world. WCD grew out of a discussion at the founder’s dining room table and today it has 80 chapters around the world and its members sit on about 8,500 boards, collectively. There is a KPMG partner who supports just about every one of those 80 chapters at the local level, and we also provide national support in various ways. For example, one of my roles is to serve as chair and primary author on a number of WCD leadership reports, as well as participating in some of the local chapter meetings as a speaker. There are many, many women throughout KPMG who devote a great deal of time and talent to the organization.
Recently, the founder of WCD, Susan Stautberg, got to a point where she was looking to do some succession planning and find a way to give the organization life and vitality beyond her individual leadership. She approached KPMG, and the firm agreed to help out and support a transaction that essentially allows WCD to continue independently as a 501(c)(3) organization. And there is an incoming CEO, Susan Keating. . And we’ve put a lot of time and attention in the last year into that transition to help the organization continue to thrive into the future.
What can companies do to recruit more talented women and people of color to their boards?
A big part of my role involves conversations about exactly this topic, and we know a couple of things. First, researchers have found a correlation between gender diversity on a board and results, over and over and over again. We also know that there's a second body of study that looks at diversity generally from a group-psychology perspective. The research on results tends to focus on gender diversity, rather than other types of diversity, simply because the numbers of diverse board members aren't there. But we do know from the psychological research that the reasons that women on boards correlate with a better result are likely to apply to other types of diversity. Basically, studies show that if you take a diverse group and compare it to a completely homogenous group, the decisions coming from the diverse groups are better.
So you start from the position that having more talented women and people of color on the board is just good for business overall. And then you say, "Okay, what are some of the barriers?" One is simply a lack of board turnover, and that’s something that, frankly, is going to take a long time to address. Another barrier is a lack of people making diversity a priority, even though the talent is out there. Someone on the board, whether it's the chair or someone else, has to say something like, "We're going to implement the Rooney Rule," which means that you will not make a decision to bring someone on unless you have seen a diverse slate. When you do that kind of thing, all of a sudden the board composition changes. So it's a matter of pushing and making diversity a priority.
It’s also a matter of expanding the network. Traditionally, boards have been built from people that the CEO knows. That's changed a lot, but boards still have to expand their networks and really ask, who is the best person who brings a perspective to this board room that we don't already have? That probably means finding new skill sets, and it also probably means diversity. And as they expand their networks, boards don’t have to be looking only at sitting CEOs, and it doesn't have to be someone that people on the board already know. When you expand the network, all of a sudden you've got a whole different outlook on finding and recruiting more talented women and people of color.
The last question is, where do you find potential diverse board members? There are many sources. We support a number of groups that include sitting directors and aspiring directors. In addition to WCD, there's a group called Latino Corporate Directors Association, or LCDA. Ascend-Pinnacle is a group that has Asian American board directors. Quorum has LGBT board directors and many, many aspiring board directors. We have also highlighted a group that's been in existence for quite a while that has some amazing African American board directors—the Black Corporate Directors Conference. Any of those groups would be happy to provide candidates for a board that's looking to diversify its membership.
Susan Angele is a Senior Advisor, Board Governance, with the KPMG Board Leadership Center. She works to champion outstanding corporate governance to drive long-term corporate value and enhance investor confidence. She joined KPMG after 25 years in the consumer products industry as in-house legal counsel. Reach her at sangele@KPMG.com.
Published July 6, 2018.