Redefining the supervisory board's role

Supervisory board members are often seen as the boardroom big-wigs with high-profile connections and fat paychecks. But that perception is changing, as accountability standards such as the US' Sarbanes-Oxley Act take root and shareholders demand more value from their supervisory boards.

"There once was a time when supervisory boards were like country clubs," said David Bailey, lead supervisory board member at Polish spirits giant CEDC, speaking at the CEO Forum held by the American Chamber of Commerce in Poland last week. "They showed up to meetings, had nice dinners, took home some money, and pretty much did what the [supervisory board] chairman asked them to do. That's not good enough for shareholders anymore," he added.

But taking a more active role can be tricky, as supervisory boards have to remember that the executive decisions remain the prerogative of the CEO. Jonathan Siddons, a supervisory board member at Travelplanet, said that much could be gleaned from the language board members use to describe the role they play.

"You don't want board members who describe their role using terms such as 'control,' 'direct,' and 'approve.' Good supervisory board members are the ones who use words such as 'support,' 'add value,' and 'advise,'" he said.

In Poland specifically, where the role of the supervisory board is still developing, management can often expect too much from their boards. A recent study showed that medium-sized companies overwhelmingly believed that they weren't given enough support from their supervisory boards in terms of market research. Those figures shocked many of the seasoned Western businesspeople at the forum.

"Market analysis is a business given," said Bailey. "If management is expecting the supervisory board to do market research for them, then you've got a real problem."

But most agreed that this could be resolved if supervisory boards took the time to consult with management and define the role they expect to play.

"There is currently a crisis of identity [among supervisory boards in Poland], and questions like these arise. The board needs to take the time to determine its role as to how it will create value," said Siddons.