Kimmo Jyllilä believes that doctrines and speeches about how to make board work more efficient often forget an essential factor: atmosphere. Atmosphere is created through human interaction that produces added value through trust, transparency and feedback.
A company’s board of directors steers ownership. The board’s tasks include being responsible for corporate governance and strategy as well as for hiring and firing the CEO.
“The board of directors is an integral part of the company, and of the whole team that makes up the company. The board promotes the company’s interests and, of course, also supervises its operations. The core of board work is distilled in the atmosphere: whether the board members are proud of their contribution and genuinely developing business activities – also in the intervals between board meetings. An effective board of directors is not a snoopers’ club, meeting just to check up on people,” says Tesi’s Board Chairman Kimmo Jyllilä.
“The board’s atmosphere is built on trust,” asserts Jyllilä. In its everyday working, the board must show that it trusts the CEO. He believes this is essential, because if management cannot make mistakes it cannot make any progress.
The mutual trust and transparency enjoyed by the board and management enhance working efficiency, because time is not then spent on conjecture about situation awareness. A board that helps the CEO address pain points before they become problems is close to business operations in the right way. In practice, a CEO cannot always present all issues to the management team.”
When trust has a solid foundation, a CEO will dare to be the bearer of bad news also, without the fear of becoming recycled in CEOs’ very own circular economy. In a crisis, trust and transparency are put to the test, but Jyllilä believes that business problems will not be transformed into a huge opportunity just by replacing the CEO.
A comprehensive approach instead of just attending meetings
The ‘Board Work 2019’ study analysing large Finnish corporations revealed a tendency towards groupthink: there is still room for improvement in the dynamics and discussion culture of boards of directors.
“Trust between board members means that each member can express his or her opinion openly, so that others can listen and evaluate. Each of the board members was elected because he or she possesses a certain skill for the particular job, and finding that value is a shared responsibility. The board chairman must read the situation; at who seems to have something to say,” explains Jyllilä, and adds that the task is never-ending.
He emphasises that the board must be in step with the company: “It’s essential that there’s a genuine interest, a desire to learn the business and to listen and learn more. In an ideal board of directors, everyone has an opinion on a matter and a desire to express that opinion, and the views put forward are refined into what’s best for the company. It’s about having a comprehensive approach, not just attending meetings.”
A board of directors lives the future
In Jyllilä’s opinion, there is far better awareness of the value of board work than there was, say, ten years ago. This is reflected also in the selection of board members: the needs and development stage of the company determine the expertise that is sought. That applies in Tesi also. To fill a board position associated with venture or equity investing, say, someone who will bring added value is needed – an independent expert who can genuinely help the company.
“The future takes first place in board work. In order for ownership to steer and develop a company, there must be a vision of the future and work must be target-oriented. That is how strategy is converted into reality. Board work is not so much about building something on the present, but more about being focused on the future.
Ownership does not outweigh argumentation
The elements of board work can be learnt in the Certified Board Member (HHJ) training programme offered by Board Partners and the local Chamber of Commerce. Many organisations, such as Boardman, arrange training and events associated with board work and ownership. Jyllilä regards the lessons to be learnt from business development responsibility and from practical board work and teamwork as essential. He believes the attitude towards self-development and towards the development occurring in board work is decisive.
“It’s crucial to see what issues fall within the board’s sphere and on which level in the different stages of a company. The discussion then sticks to the right level, with the priority on the company’s needs. An owner must himself or herself also identify in which role he or she sits in each room. The owner of a family company, for instance, cannot invoke ownership as an argument to the board. Argumentation must be based on something else if the board is to be of any use later,” Jyllilä points out. The company’s best interests must also be put first when there are diverse owner interests.
“It’s well worth trying to create a good atmosphere in board work. At best, a passion for succeeding together unites the whole company.”
Kimmo Jyllilä’s tips for a productive board atmosphere
Trust: The effectiveness of a board of directors is based on a healthy underlying trust in the right things being done at the right time. The board is not a monitoring unit that pops up at meetings, but an integral part of the company that is proud of it and is prepared to work also between meetings.
Transparency: Each board member is selected on the basis of a specific expertise. For transparency to prevail within the board of directors: each person may, and will want to, comment. The discussion is refined into added value for the company. Transparency between management and board flushes out problems in advance and saves guesswork. A CEO must be helped in identifying pain points and in working together to redress them.
Feedback: Continuous feedback is the engine of success. Board chairmen: respect board members by giving them individual feedback. Board members: give private feedback to the board chairman.
Kimmo Jyllilä
Who he is: Board Chairman and active owner of family-owned company Serres Group, operating in the healthtech sector. Chairman of Tesi’s Board of Directors. Has been a VC/PE investor for some ten years and a consultant to investment funds, advising them on strategy, governance and investment activities.
Education: MSc (Econ)
Board experience: Has done board work for almost 30 years, mainly in SMEs with oligarchical ownership seeking growth at home and abroad.
Most impressive in Tesi’s board work: Feels he has a ringside view of the Finnish venture capital and private equity sector. “I can be of support to an excellent and really talented team influencing the development of Finland’s economy.”
Memorable experiences of ownership and board work: Generational change in his own family company taught him about roles. In 2003 his father transferred from management to the board of directors, and Kimmo became board chairman. A new CEO started with the company, while the former board members continued to sit on the board. New openings combined with board stability helped in avoiding major errors.
Successes: Board Partners has granted Serres Ltd the Golden Gavel award for its successful change-of-generation arrangements and effective board work.