File phot of Barbara Stymiest, chair of Research In Motion Ltd.
Last week's dramatic changes at Research In Motion Ltd. have dominated the headlines, and much of the focus has been on new chief executive officer Thorsten Heins. But the appointment of Barbara Stymiest as the company's new chairwoman is also significant, putting an independent director with no ties to management at the head of RIM's board for the first time.
No one suspects that these moves alone will guide RIM out of the woods. So what should RIM's new chairwoman do in the next six months to build on these changes?
Implement a new type of executive session – of just the new CEO and the independent directors
RIM co-founders Mike Lazaridis and Jim Balsillie may be out of the corner offices they shared as co-CEOs, but they're still at the board table. Sometimes there's value in having a founder remain on the board; other times, it gets in the way of a new CEO trying to drive change in a troubled company.
Executive sessions – sessions of just "independent" board members with no members of management present – are required in Toronto Stock Exchange governance guidelines and in Nasdaq rules (RIM is listed on both markets). In addition, most boards have voluntarily implemented what is often referred to as a "second executive session" – a session of just the CEO and the outside directors with no other management present. This has become a useful practice that enables board members to have a more candid discussion with the CEO than they might do with his direct reports in the boardroom, such as the chief financial officer or general counsel.
Ms. Stymiest needs to adopt this practice of having a session that includes just Mr. Heins and the outside directors – without Mr. Balsillie and Mr. Lazaridis. U.S. boards have begun adopting this practice during CEO transitions where the outgoing CEO remains on the board as chairman for a transitional period of 12 to 18 months. In RIM's situation, the value of such a session is obvious – and Ms. Stymiest should adopt it at the very next board meeting to give Mr. Heins a fighting chance to make changes at RIM.
Have the new CEO develop his own strategy for RIM – and hold him accountable
Let's be clear – the development of corporate strategy rests with the chief executive officer, not the board. So I'm not suggesting that the board should roll up its sleeves and usurp the CEO's responsibility. But I am concerned to see Mr. Heins telling the media that he's going to "stay the course." The market has already expressed its view of RIM's strategy with a declining stock price. As chairwoman, Ms. Stymiest needs to demand that Mr. Heins review all aspects of RIM's strategy – and engage the board as part of that process. And she needs to hold him accountable on it.
Which brings us to the issue of CEO evaluation. So much ink is spilled over executive compensation. But CEO evaluation, the process a board uses to assess a CEO's performance, goes largely unnoticed. At most public companies in both Canada and the U.S., CEO evaluation is often unstructured and informal.
I have no idea what RIM's CEO evaluation process looks like, but if RIM is typical of most founder-led organizations, it's probably pretty thin. If so, Ms. Stymiest needs to address that issue immediately, so that Ms. Heins is not only tasked to develop the company's strategy but is clearly held accountable to meet well-defined strategic, operational and financial goals.
Behind the scenes, Ms. Stymiest would be wise to retain a search firm to identify potential outside candidates to find a new CEO, in the event that Mr. Heins is unsuccessful.
Overhaul the board – and make it a genuine asset to this once-great company
Here's how great chairs think about their boards. They ask: Is this the best possible team that we can put around the board table to govern the affairs of this particular company? When you look at the résumés of RIM's directors, the answer to this question is self-evident – and Ms. Stymiest needs to actively address this issue in the next six months.
Only two RIM directors bring any experience in the technology or communications industry – the former CEO of IBM Canada and the former CEO of Telefonica, who appears to primarily have experience in Spain and Portugal. There's nobody here from the Silicon Valley, no one from Cisco, Motorola, Apple or other companies in the sector where RIM does business.
Obviously, conflicts of interest preclude Ms. Stymiest from recruiting active executives at industry competitors. But it's inconceivable to me that this gap can't be filled with retired or former executives from within RIM's industry. And it needs to be filled quickly – so that someone at the board table who knows the business can challenge not only the former co-CEOs but also the current CEO on key business issues.
As so much of this company's future internationally lies in Asia – not in Spain or Portugal – adding another director with Asian expertise who can weigh in on decisions related to this critical market is also essential. Finally, strengthening the board's capabilities in consumer branding, beyond last year's addition of former Procter & Gamble executive Claudia Kotchka, is also in order.
Despite its problems, RIM is a sexy company – and directors love turnarounds. There will be no shortage of board talent for RIM once Ms. Stymiest gets serious and goes shopping for the directors her shareholders deserve.
Beverly Behan is a New York-based adviser to boards of the S&P1500 and author of Great Companies Deserve Great Boards: A CEO's Guide to the Boardroom (Palgrave Macmillan, 2011). She has worked with more than 100 boards in Canada, the U.S. and internationally over the past 15 years.