The Honorable Michael Montelongo, a career soldier, former presidential appointee and Senate-confirmed official, and corporate executive, is President and Chief Executive Officer of GRC Advisory Services, LLC, a private firm specializing in board governance matters and most recently was Chief Administrative Officer and Senior Vice President for Sodexo, Inc. He is also a senior advisor at leadershipForward, a premier leadership performance firm serving Fortune 500 and small business clients. A governance and audit committee financial expert and NACD Board Leadership Fellow, Michael serves on the boards of Herbalife Ltd, the Larry H. Miller Management Corporation, Exostar LLC, Aerospace Corporation, and Leadership Roundtable.
A former Bush White House appointee who served as the 19th assistant secretary for financial management and Chief Financial Officer of the U.S. Air Force, Michael is a public policy expert and lifetime member of the Council on Foreign Relations. Previously, Michael was an executive with a global management consulting firm, a regional telecommunications company, and completed a career in the U.S. Army, a Congressional Fellowship in the U.S. Senate, and service as an assistant professor teaching economics and political science at West Point. Michael earned his bachelor’s degree in science from West Point and a master’s degree in business administration from Harvard Business School.
A confluence of factors including the rise of shareholder engagement and activism, high-profile corporate scandals, and an emphasis on a lack of diversity has put more focus on public company boards of directors in recent years. In particular, company stakeholders are paying closer attention not only to what decisions are being made in the boardroom, but also who is making them, and the concept of defining board performance more acutely has become an imperative for these entities.
C-Suite had the opportunity to speak with Michael Montelongo, currently a multi-boarded director and former executive in both the public and private sectors, who outlined what he believes comprises a well-rounded and high-performing board. In short, high performance requires both the right hardware and software to operate effectively.
Michael Montelongo: After several corporate executive-level assignments, including a presidential appointment as a “wartime” CFO in the Pentagon during the initial 9/11 campaign, I was ready to take the next career development step and add value in a broader, more impactful way. I’ve always sought out challenging, high-profile, high-stakes opportunities that enable me to be part of a meaningful venture, serve and contribute, learn and grow, make a difference and leave an organization better off than I found it. Directorship offers that. It’s a unique opportunity and privilege to serve at what some consider the pinnacle level of corporate leadership and play a key role in enhancing the economic sustainability of the corporate enterprise and bolstering stakeholder confidence.
As you point out, besides functional expertise, a multi-sector perspective or the ability to navigate the private, public and civic sectors, and understand the nexus among them is what my background brings to the boardroom. That kind of fluency can be helpful to companies seeking to better measure their total impact on and define their role in society, engage more broadly and effectively with a wide array of constituencies—especially those with a deep interest in ESG issues—and tap into insights and best practices from multiple sectors.
Beyond that, associating with organizations and colleagues who have strong ethics codes, honor, a strong service orientation, and a strong commitment to customers, employees and their families, and the communities they live and work in matters a great deal. These are traits that translate into a best practice “mission first, people always” or “tone at the top” governance model that all boards aspire to create. Starting with West Point, I have been fortunate to be on teams who cultivate these traits and pass the “bring home to mom or grandma” test of character.
Montelongo: I agree the answer varies according to one’s perspective and the specific context at play. In general terms, a high-performing board has the right people at the right time doing the right things right. In my view, at least two factors must be present for this to occur—the right hardware and the right software. “Hardware” includes such elements as sound board policies and practices—quality control, clarity on role and focus, robust structures, rigorous processes and administration, the right information that is timely, concise, accurate, and thorough, and a focus on the right issues which are the strategic issues.
“Software” is about having the right people and a healthy board culture or environment in place. More specifically, that means selecting the right directors in terms of diversity, experience, independence, integrity and courage, and leaders who practice Level 5 or servant leadership. The right culture—challenging, respectful, transparent and open dialogue—fosters a healthy board environment where everyone is treated, respected, dignified and served as they themselves would like to be.
The first condition—hardware—is a necessary but insufficient one. The second condition—creating a healthy board and board culture or a balanced board team with trust, mutual respect, effective chemistry, candid communication temperament—is hard and the work of leadership. When both conditions are present, more often than not, you have a board that is on its toes, clicking on all cylinders, and is a strategic asset to the company.
Montelongo: Approaching the discipline of board governance with a certain sense of humility is appropriate and healthy—it’s prudent to acknowledge that adversity sometimes befalls even the best-prepared boards that are functioning at a high level. But some of these case studies suggest a focus on culture as a key risk management element for boards to be acutely sensitive to—it can inform risk appetite, risk mitigation, and the strategic reputation decisions and actions of an organization. Without exception, boards and management must set the example and the tone that defines the principled behaviors they expect from themselves, colleagues, associates, employees and external stakeholders in what the company does and how it does it. To ensure this “tone at the top” cascades deeply into the organization, more attention should be paid to the “mood in the middle.” In practice, as a start, this means ensuring all corporate policies, practices and controls—especially codes of conduct and compliance—are aligned with and supportive of the company’s core values, mission, vision and business strategy. The payoff is considerable—research shows that highly ethical performance cultures directly correlate to companies that consistently maximize long-term shareholder value.
Montelongo: As I suggested previously, sometimes unidentified risks or “unknowns” can throw curves at a high-performing board. But for those elements boards can influence, some do not address both the hardware and software components I mentioned earlier with the necessary sustained rigor. Some either fail to identify and address areas for improvement or fail to commit the energy and resources necessary for real growth. In these instances, there is also a lack of clarity, poor process management, lack of alignment and agreement on company strategy, poor team dynamics, and suboptimal board composition. Finally, time and information deficits can contribute to this breakdown.
Montelongo: It’s well-documented that teams and groups and boards that bring varied backgrounds and experiences to the table will generally engage in more robust discussions and produce more robust results. Yet, it’s also well-documented that achieving that diversity can be challenging because the task is to go beyond the traditional sources and networks for such talent. An enterprise must attract directors who can provide valuable, strategic input, while building a board that can draw on the diversity of its members’ expertise and backgrounds—across geographies, gender, race and experience—to create a whole that’s literally greater than the sum of its parts. One approach is to seek out leaders with diverse, multi-sector backgrounds who are equipped to tackle the complex issues and problems that increasingly challenge business, government and civil society. Another idea adopted by some is to consider instituting some form of the Rooney Rule to generate more diverse slates (a concept in the National Football League that requires teams to interview minority candidates for open positions).
Montelongo: I’m not sure I can distill it to just one piece, especially since there is no magic bullet, and it often takes a healthy dose of good luck besides good preparation and persistence. But for starters, be certain you want to do this for the right reasons, perform at a high level and build your credentials to be a competitive candidate, develop your messaging and market yourself using your networks, do your due diligence to ensure there’s a good mutual fit with prospective companies, then pursue this as a vocation, serve selflessly in your new role, and pledge to make a difference for your shareholders and stakeholders.