Corporate America needs directors who understand what is going on around the world. The Honorable Susan C. Schwab, former U.S. trade representative from 2006 to 2009 under President George W. Bush, and a director who now serves on three major multi-national companies—Boeing, Caterpillar and FedEx– offered perspective on how to globalize a board. An edited transcript of her remarks follows.
A lot of what I want to talk about I would apply equally to corporate boards and to senior management of the corporations on whose boards many of us sit. I’ll start out with my bias, and my bias is that in this day and age both senior management and the boards have to have strong, call it “international IQs,” the globally literate, globally conversant. Ideally, in your senior management you want individuals who have lived and worked abroad, particularly in a developing country. You should have more than token representation.
Let me turn to a few questions that I would ask you to contemplate when you’re thinking about your board’s global IQ. Do you know how to protect your international property overseas or what to do if your intellectual property is being challenged? Does your firm’s senior management know enough about ITAR and FCPA to keep you out of jail or to keep you from facing very significant fines? Are there individuals that can claim, let’s say, no more than two or three degrees of separation from a foreign government official in a country that is of very significant importance to your business, good or bad? Again: suppliers, partners, competitors, markets and so on. You need two or three degrees of separation, in case of an emergency where you have to get a hold of somebody at a very high level in that government.
Do you or others on your board have sufficient access to expertise so that you are able to predict things that are likely to come your way when you are dealing with key global markets? Do you take advantage of the kinds of assistance that the U.S. government provides to U.S. firms that are interested in investing or exporting overseas, or that face challenges on the imports side from products coming into the United States that may be unfairly traded? The fact of the matter is you are paying for those services…and you should surely avail yourselves of those opportunities.
One could argue that U.S. trade policy has been largely moribund for the last two years. There are some signs that that may be changing, the situation may be improving, but for now, your board should contemplate the implications of the fact that there are at least 200 bilateral and regional free trade agreements under negotiation today around the world involving countries other than the United States, that are likely to exclude U.S. exports or create preferential arrangements for the product produced in other countries. What are the implications of that for your production in the United States, your production elsewhere? Just as important: do the workers in the firms on which you are a board member understand the importance of international trade and market access abroad to their future and their future employment?
Are you sufficiently familiar with what we produce in the United States to recognize that we still are the, or one of the, top two or three manufacturers in the world? Do you know that when China’s GDP starts to exceed the U.S. GDP, which could happen this decade, whether that is significant to your business?
Finally, when looking at succession planning or refreshing your board–I’ll circle back to my original point–are you thinking about your firm’s global IQ?
I’ll close with a personal observation, which brought home to me the importance of diversity better than anything else I had read or been told. My late husband was a professional musician at one point in his career and we used to listen to music together. It took me a while to figure out that we would listen to the same piece of music at the same time, but because of his musical training he had a richer experience than I did; he was hearing more than I was. For those of you who speak a second language or a third language, I’m sure you’ve found the same thing, where you’ve found you have insights that individuals, who are as smart as you are, aren’t getting into a culture or country. Hence the importance of one’s global IQ and a board’s international IQ.
Promoting the concept of Global IQ for Board members of Globalised companies is good. But, I think that this is a basic requirement for nominating any person to the Board level, except in the case of family businesses. Of course, periodic updation of global knowledge and awareness is a must to lead any globalised company.
But point is, Is it being practised anywhere or has it been made mandatory requirement to become and to renew Board membership in US or elsewhere?
Prof. V. Thyagarajan
Director
Asia Pacific Institute of Management Studies
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