Essimari Kairisto: ‘Productively Sparring Supervisory Director Makes All The Difference’

Essimari Kairisto: ‘Productively Sparring Supervisory Director Makes All The Difference’
Essimari Kairisto is the highest-ranking woman and highest-ranking foreigner on the list of emerging top supervisory directors, the Management Scope Next50 2024. She entered the list out of nowhere. It is therefore a good time for a closer acquaintance with this TenneT and Fugro supervisory director. ‘The value of a supervisory director lies in his or her talent for sparring with managers. And fortunately, more and more supervisory directors are good sparring partners - perhaps also because of the rise of women.’ 

Essimari Kairisto has held several important positions in finance and general management. For example, she was CFO of the German construction company Hochtief Solutions until 2016. Since then, she has been involved as supervisory director in several companies in a variety of sectors, including energy, chemicals and construction. An unusual portfolio, as these sectors’ common denominator is not immediately obvious. Valcon managing partner Bianca den Elsen gets better acquainted with the multi-supervisory director. 

Can you expand on how you build your portfolio? Are there certain companies you prefer to be associated with as supervisory director, or not?
‘I have always preferred to work in companies where radical change was needed. I did so not only in the role of board member, but also as a member of the supervisory board. Whether it is that a company needs to accelerate growth, enter new markets, shift the focus of its business activities or that a restructuring is needed to implement far-reaching cost savings: the need for transformation is the common thread. Renewed focus, pressure on numbers, boosting profits and entering new markets. I currently have six companies in my portfolio, and they are all in a phase of change. They are also operating internationally, which is essential for me. Other considerations are whether I have a connection with the other members of the supervisory board and whether I can add meaningful content to what is already there.’

When do you feel a supervisory director is functioning well?
‘In my view, supervisory directors have three roles to play. Supervision is of course one of them, and - by extension - strategy assessment. In addition, they of course fulfill the role of employer for the board members. But there is also a third role: that of sparring partner for the board. When it comes to evaluating the company’s performance, its future direction and the development of individual board members, this is in itself a role of great significance. When the company is in troubled waters, it is even more so.
And this surely is the situation now, with the ongoing turmoil in the world - think of all the geopolitical conflicts, the speed of digitalization, the problems with all kinds of supply chains and all the ESG legislation. Companies need to be agile to be able to deal with this. Supervisory directors can be helpful in this regard. In fact, this is precisely where they can make a difference. Put briefly: companies increasingly need supervisory directors who can effectively fulfill the role of sparring partner for the board. Fortunately, there are more and more such supervisory directors. Perhaps also due to the rise of female supervisory directors. In any case, it seems to me that the old-fashioned supervisory director who primarily presents him- or herself as strict supervisor is gradually being replaced by the supervisory director who, above all, wants to be a sparring partner.’

What competencies must such an effective supervisory board member possess? Or rather, what competencies must be represented in the supervisory board?
‘Some competencies are rather obvious. The ever-increasing digitalization has an enormous influence on the day-to-day activities of companies. Whether you are talking about operational activities, strategic policy, finance, legal affairs or HR: digitization is the order of the day. You really need someone on the supervisory board who understands this. That person does not necessarily need to be a seasoned expert but must be someone who understands digital issues. In fact, I think it is only a matter of time before this even becomes a requirement and digital expertise must be represented on the supervisory board, just as financial expertise already is. At the same time, more and more topics are ESG-related, so it is also best to have someone on your supervisory board who specializes in this.
The third important skill is - given the turbulent environment in which companies find themselves - that members have an innovative mindset and an interest in R&D, an affinity for technology and, if possible, an understanding of the industry. Fourth, members with a political background, or at least with political or geopolitical experience, can add enormous value, given many developments in that area.
One might also wonder whether the shelf life of individual supervisory directors does not become increasingly shorter, no matter how competent they are. The term in Europe now stands at four or five years. That may be too long. In these times when roles within companies are constantly changing because the company must remain agile, supervisory directors should probably rotate a bit more often. In any case, they should also ask themselves: the world around us is changing rapidly, how can we best keep up? Then you may come to the conclusion that a higher turnover rate within the supervisory board might be a good idea.’

In the years prior to serving on supervisory boards, you had an impressive international career as CFO. What do you bring with you from that time to the companies where you now are a member of the supervisory board?
‘It certainly benefits a supervisory board member to have experience as an executive. Even if only because you yourself sat on the other side of the table, which makes it easier to put yourself in the shoes of the executives you now supervise. It is also valuable if you worked in different sectors, are familiar with various markets and held different roles in diverse companies. You are then broadly oriented and can take a bird’s-eye view, which comes in handy for a supervisory director.
Extensive hands-on experience is also useful - in my case especially to support companies in their transformation efforts. I have been through so many change processes that by now I have a good idea of what works and what does not and can therefore advise companies well on this.’

I would imagine that you view certain things differently from what you did when you were an executive. Do you have an example of this?
‘I used to be unaware of the difference it can make if you act as sparring partner of the board as a supervisory director. As a CFO, I experienced all too often that when a supervisory director entered the room it was as if the thermostat was turned down a few degrees, because he or she did not come to spar constructively but to look over your shoulder.
Of course, a supervisory director is also supervising, I do not deny that. But as I said, the value of a supervisory director increasingly lies in his or her talent for sparring with executives. Such a person can take the company to the next level, unlike someone who only fulfills their role as a supervisor. I also hope that the executives of the companies on whose boards I serve see me as such a sparring partner, as someone who cares deeply about supporting the company. Do they feel the temperature dropping a few degrees? Or do they see my being there as an opportunity to exchange thoughts on topics of interest to move the company forward? Do they see me as the ‘judicious friend’ I want to be? You should ask them!’

You were involved in policy implementation for a long time. Nowadays, you must keep your distance. Is that not incredibly difficult? Do your hands itch when you sit at the table with executives?
‘Let me put it this way: every executive who becomes a supervisory director must first go through a transformation themselves. At the very least, he or she must realize that the role of supervisory director is different from that of executive director. You must have sufficient capacity for self-reflection to determine whether you can take on that role. At the same time, the transition from executive to non-executive is not that enormous, at least not at the large companies I am involved with. The larger the company is, the less you can determine every detail of policy as an executive. You must have confidence in your fellow executives in the teams within the company and have excellent social skills so that you can select the best people to work with. An executive also often must be able to resist the temptation to get involved in the details when something goes wrong and instead give people room to solve problems on their own. As a supervisory director, it is not much different. Sometimes, of course, I have to get into the details on specific issues. Again, just like an executive, who needs to dive down into the detail from time to time.’

You hold supervisory positions in companies from various countries. Do you notice any differences in the way of doing business?
‘Much is similar, of course. All those companies have to comply with the International Financial Reporting Standard IFRS and other international regulations. Even though some laws and regulations may differ, the differences are generally limited in extent - and whether it is a German company, a Finnish company or a company in another country in the EU, their reports follow largely identical guidelines. It is different with cultural aspects. There the differences from country to country are major. For example, did you know that there are only two countries in the EU where the people in companies can laugh at themselves? Finland and the Netherlands!
More generally: characteristic of the Netherlands and the northern EU countries are flat organizations, with people who are very open and direct. With lots of discussions and contributions from many different people, which I applaud enormously. Companies in countries like Germany or Spain are rather hierarchically organized, with far more formal behavior.’

Can you name some defining moments in your career? Moments that really made you think and maybe even had a big impact on the further course of your career?
‘I most definitely had moments like that. The first moment was when I was at the beginning of my career and had completed my studies in international business administration in Germany. During my studies, I always planned to return to Finland one day, to work there and build an international career from there. But I had not yet completed my studies when the Soviet Union collapsed in 1992 and the entire labor market in Finland was swept away. There was an unemployment rate of more than 30 percent - about the same level as just after World War II. As a young professional, I had no chance of finding work.
That was the moment when I had to completely change my plans. I decided to lay a foundation for my further career outside of Finland after all. A good decision, because at that time I had more opportunities to develop myself abroad than I ever would have had in Finland. This taught me that you have to persevere, but not in a rigid way. You have to persevere while being flexible and open to change.
Another profound event was two years ago, when the gas market suddenly collapsed. Germany, of course, had been able to get cheap gas from Russia for 40 years. That ended almost overnight. In fact, one of the companies of which I am a supervisory director depends heavily on cheap gas. It took this organization at least a year and a half to reduce that dependence. It shows that there are many ‘gray swans’ - disasters that are not as inconceivable as ‘black swans,’ but which are nevertheless highly unlikely to happen but when they do, have extreme impact. You would do well to take such gray swans into account in your operations and ensure that you can manage the consequences if they occur. In other words, being able to act quickly on something like a sudden increase in the price of gas. Being agile. For me too, of course, that gas crisis was unexpected. Yet I had experienced the same roller coaster ride before, this I knew. Therefore, this whole episode gave me a familiar feeling: the same feeling I had when the Soviet Union fell apart 30 years earlier. The feeling that nothing is as permanent as change. And that you can survive it and not succumb.’

This interview was published in Management Scope 04 2024.

This article was last changed on 09-04-2024