This article was written by Olga Mack and Katia Bloom, originally published on Above the Law.
There are so many takeaways for lawyers from Caroline Tsay’s experience of joining her first public board at the age of 34. No, that’s not a typo, and that’s why — for all of those times any of us are told we’re too young, don’t have the perfect experience matrix, haven’t checked all of the right boxes — we wanted to share her story.
Most professionals go through a long and arduous process to achieve their first public board positions. But Caroline Tsay, independent director of Rosetta Stone, Inc. and Morningstar, Inc., and CEO of Compute Software, Inc., joined her first public board at an age much younger than most, after an exciting, whirlwind interview experience.
“Everything happened relatively quickly,” Tsay says. “Soon after I perfected my board bio, I found myself speaking at a technology conference in front of a Rosetta Stone executive.” The executive introduced Tsay to the CEO and the board as an independent director candidate. She quickly found herself plunged headfirst into the world of service on corporate boards.
Tsay believes that her immersive experience on a corporate board has been educational and transformative. “I have learned so much,” she explains. “This thrilling experience has taught me the principles and lessons that I still apply as a board member and executive daily.”
Tsay has identified five key lessons that apply to both being a great legal department leader and effective board member alike:
- Know and evaluate your business. “It is important to ask the tough questions routinely,” says Tsay. She learned that discussing the company’s performance, conducting an honest self-assessment, and closing gaps between the board and management are not optional. These are must-have strategies. But that is not always enough. “Sometimes management is internally focused, so you need to look for outside perspectives. A good place to start is conducting a market analysis and hiring a third party.” explains Tsay.
- Review your board composition annually. Like any general counsel would evaluate her team, “You need to ask yourself regularly whether the current board composition creates the best process, and whether you have the right people at the table,” says Tsay. “It is important for the board to ask itself annually whether each board member, the CEO, and other members of the management team are performing as well as they should be. The board should ask whether each key player still brings relevant skills and talents to the company. Also, it helps to identify missing board director skills or experiences to strategically and intentionally recruit board candidates to round out the board.” explains Tsay. “If you don’t ask yourself these questions as a board, it can be a matter of time and performance before shareholders or analysts will ask these questions.”
- Always articulate the game plan. Being clear about your company’s game plan is essential, especially when managing a corporate transition or a set of special circumstances. “We often agree on a clear and systematic approach to all challenges and opportunities that we revisit periodically. For example, we agree about who would lead the board response, who would communicate with the shareholders and the media, and who would manage the important and functional response team,” explains Tsay. This often requires juggling several streams of input, so it’s important to make sure your plan balances all factors. “We often get a lot of input about short and long strategies from many different stakeholders. As board members, you need to assess priorities and how they fit in with your game plan. It is the ultimate team sport and we do our best to act as a collegial, respectful, and balanced team,” Tsay says.
- Keep an open mind, sincerely consider suggestions, and respond effectively. Similar to boards, in-house counsel are frequently having to balance input from across the company as they navigate the delicate balance that is risk management. Many shareholders and analysts are collaborative and their proposals may have merit. “I learned to approach suggestions and questions with an open mind,” says Tsay. “We work with shareholders to implement various governance or operational changes. We also collaborate about what suggestions to override and make sure we reach consensus.” This open collaboration is important to resolve situations. “This is an effective way to de-escalate differences and reach the productive, actionable outcomes sooner to help the company thrive and grow,” explains Tsay.
Although this process may be uncomfortable, board members should see it as a period of growth. “Shareholders and analysts may push the board a lot and in a good way. Sometimes, they add a sense of urgency that the board may not able to create on its own,” says Tsay. She explains she often asks herself and other members of the board “whether we should act with a bit more urgency on some questions and issues. I am convinced that this is an important question to ask.”
- Take any challenge and opportunity for the company seriously.Suspending any unproductive pride or ego is vital for surviving the challenges and taking advantage of opportunities, big or small. By the time shareholders or analysts approach the company, they have most likely already done a lot of research and gained the support of other important shareholders. Tsay explains, “The more sophisticated boards and companies will take these shareholders and analysts seriously from day one. They will respond objectively and avoid dismissing them on an emotional whim.”
This may require some difficult choices under time pressure and uncertain information. “Sometimes, you have to replace your CEO or members of the board,” admits Tsay. “These major restructuring decisions are tough for the board and management. But it is absolutely paramount to go through systematic, honest, and transparent evaluations, especially when there are challenges to the company’s decisions or operations,” she adds. “That’s one way to support maximizing shareholder value, which is the responsibility of a board of directors.”
Although Tsay never expected her first board appointment to be a transformative experience, the strategies she learned are applicable not only to all board service, but to any lawyer working on being the best strategic partner possible. By implementing Tsay’s tips, any board or legal department can become more effective, collaborative, and transparent.