Karin Bergstein: ‘Test Not Only the Strategy, but Also the Execution’

Karin Bergstein: ‘Test Not Only the Strategy, but Also the Execution’
Karin Bergstein’s analytical approach as executive director now aids her well as a supervisory director. Strategy is a significant indicator of the quality of management. ‘I want to know where the cause of problems lies. Those are the interesting conversations.’

Before Karin Bergstein chose a career as a supervisory director, she contributed to the success of the insurance company a.s.r., she served as CEO of ING Car Lease and as member of the board of ING Bank Netherlands. Her career in financial services was not the original plan: Bergstein made the switch to the financial sector after studying medical biology. Her initial passion for healthcare remains evident in her current supervisory directorships. She combines supervisory board memberships at Van Lanschot Kempen and Bank Nederlandse Gemeenten (BNG) with a supervisory role at the University Medical Center Groningen, among others. Joyce Leemrijse, partner and notary at A&O Shearman (formerly Allen & Overy), interviews the experienced supervisory director and audit committee chair about her experiences and best practices.

You have a diverse portfolio of supervisory board memberships, with a focus on the financial and medical sectors. How do you choose your supervisory roles?
‘Companies with growth ambitions inspire me and I have a passion for healthcare. After my medical biology education, I transitioned to financial services, but my passion for healthcare remains. I enjoy my supervisory board membership at the University Medical Center Groningen. Healthcare is a challenging sector, especially when considering developments like the increasing demand due to an ageing population. I have great respect for the directors of large academic hospitals.
When in 2012 I was invited to join the supervisory board of Sanquin Blood Supply, I wholeheartedly accepted. The organization is deeply embedded in society as a blood bank and supplier of blood products for the development of medicines. It was a great fit with my financial background as they needed someone with banking experience. My second supervisory board membership was at Utrecht University, where I also studied. Looking back, I could not have wished for a better start as supervisory director.

Later, you transitioned to supervisory board memberships at Van Lanschot Kempen and Bank Nederlandse Gemeenten, now operating in the sector where you also worked as an executive. Does that bring new challenges?
Laughing: ‘Yes, it is a challenge to keep my hands off. You need to be cautious when beginning as supervisory director in a company where you could have been on the management board. I do not want to encroach on the executive’s role. As a supervisory director, you have the benefit of maintaining a distance from the daily grind. Of course, you still share your knowledge; for instance, I have experience as an executive in setting goals and organizing capital markets days, so I understand the intensive preparations required from the organization. However, the management board always retains responsibility for the strategy. As a supervisory director, you do not have to duplicate the decisions underlying that strategy. You are allowed to challenge the strategy or ask the right questions to refine it. A good strategy also speaks volumes about the quality of the management board. Your most important task as a supervisory director is to ensure there is a good management board in place; that is where you can make the most impact.’

Is this analytical approach also the reason you are a member or chairman of the audit committee at many of the supervisory boards you are a member of?  
‘That is no coincidence. An analytical approach helps me both as an executive and as supervisory director. I am interested in the company’s strategy, but certainly also in its execution. For example, at ING Car Lease, I found it important to understand and steer the metrics of the business model. In the financial sector, I appreciate that the audit committee can confer with the internal audit department – or IAD – of the company. The investigations they conduct provide valuable insights into the corporate culture. The IAD can smartly report that all findings have been resolved, but I want to know what the root cause of those findings was. Those are interesting conversations. For instance, were the expectations unclear at the start of a project? That says something about the organizational culture. It could also be that the management board is overly ambitious, looking at capacity and timelines with rose-colored glasses, and saying ‘yes’ too quickly. Of course, the question is also why the IAD sees something that the team missed. The management's response to the findings also reveals a lot about the organization’s atmosphere. I would rather hear ‘good point, we will fix this’ than a lengthy defense from the management. An IAD report contains a world of information.’

The audit committee seems to be becoming increasingly important within the supervisory board. How do you see the role of this committee evolving?
‘I have noticed that the role of the audit committee in the corporate governance code is indeed growing. This is a positive development but also presents dilemmas. For instance, the code prescribes that the audit committee leads in choosing the auditor. The auditor is the proverbial third pair of eyes for the supervisory board, but the auditor also has that role for the management board. The supervisory director should not take the executive’s place, but this way, they are slowly pushed into that role. I would argue against adding new rules to the corporate governance code after every scandal. I believe the management board deserves more trust.’

You prefer companies that grow, such as through acquisitions. What attracts you to that?
‘I think it is the positive energy, combined with the challenge of getting the organization in good order. If the strategy is not right, it is often difficult to create value through acquisitions. Companies with a buy and build strategy have always drawn me. I was involved in many acquisitions both at ING Car Lease and a.s.r.. I see that buy and build strategy at Van Lanschot Kempen, which is growing organically and through acquisitions in the Netherlands and Belgium. Make no mistake about the non-financial benefits of a well-executed acquisition. At Van Lanschot Kempen, the acquisition of Belgium's Mercier Vanderlinden brought in new, enthusiastic people. That can result in a positive creative spiral in an entire organization, as I sometimes call it.'

Does your supervisory role at the British life insurer Chesnara align with that vision?
‘It is an unexpected adventure that came my way. In 2022, I was involved in selling the AI company Aidence (the AI technology scale-up worked, among other things, on a national lung cancer screening program for the UK National Health Services, ed.). At the time of finalizing that deal, a headhunter from London approached me for a board member role at Chesnara in England. The timing was perfect; I had just experienced how enjoyable it is to work internationally again. I did not know anyone in the organization, but the growth strategy appealed to me. Chesnara aims to significantly increase its market share through acquisitions. There was a lot to be done then, but important initial steps have since been taken.’

It also offers you the opportunity to experience supervision in the British one-tier board structure, which is quite different from the Dutch two-tier governance structure.
‘I was very curious about that; everyone has an opinion on it. In practice, the difference for non-executive directors in a one-tier structure compared to a two-tier structure is not huge. However, the role of the chair is different in a one-tier board. That took some getting used to.’

In a one-tier board, the chair is often very close to the executives.
‘In my experience, the chair is practically sharing the executive's chair. It is a significant difference from the role of the chairman of the supervisory board as I know it in the Netherlands. Also, the role of shareholders in the UK is much more dominant than here. As a supervisory board in the Netherlands, we are accustomed to weighing the interests of all stakeholders. I do however see this now increasingly developing in the UK.’

Culture is increasingly seen as a key success factor for companies. What do you focus on as a supervisory director when it comes to culture?
‘Culture determines whether a company grows. With today's rapid technological developments, it is crucial for an organization to adapt. This can only happen if employees are willing to keep learning and dare to make mistakes; that is where the magic lies. Creating and maintaining a culture where everyone feels safe is a topic that regularly tops the agenda, even at institutions like the University of Utrecht. Dependency was an important theme within academia in my time. People's futures in science often hinged on their promoter. The organization needs to be vigilant about this. When assessing the company culture, I greatly value my interactions with the works council; they have a keen sense of what is going on. Still, they cannot catch everything. As a supervisory director, you must acknowledge that issues deep within the organization or the emergence of a culture of fear may escape your notice. This is an important task for the executives.’

In an earlier interview as an executive at a.s.r., you mentioned that diversity is necessary for companies to survive technological disruption. Is it therefore a mandatory topic on the supervisory board agenda?
‘It remains an important theme for every supervisory board. Diversity between men and women is now well ingrained in everyone's thinking in the Netherlands, but progress in bi-cultural diversity has not even begun. There needs to be acceleration, considering how our society is structured. Additionally, inclusivity deserves sufficient attention: how do you ensure your company is a pleasant place for everyone to work? Van Lanschot Kempen is making great strides here. More and more people from different parts of the world are working in the organization, especially in IT, tech, and investment banking. The supervisory board has recently switched to English as the primary language, resulting in many documents now being in English as standard. Everyone in the company understands the reasons behind this decision.’

Gender diversity in most supervisory boards is in order, partly thanks to the statutory quota for listed companies. Should we also consider new quotas for executive boards to promote cultural and gender diversity there as well?

‘I find that a good idea. But let us look beyond the board of directors; the lack of diversity is only the tip of the iceberg. Even just below the board of directors, there may still be insufficient diversity. At a.s.r., years ago, we noticed that we had team members but no team managers with a bi-cultural background. We took action on that. Sometimes, you simply have to approach people personally for a role to convince them. Not everyone volunteers for such positions, as I noticed at ING Car Lease.
There was a Moroccan employee who was a financial super talent. Despite a successful career in finance, we had to persuade him to become CFO of our unit in Italy. He was far too modest to apply for the position himself.’

What are the lessons learned after more than 12 years of experience in diverse supervisory roles? What lessons would you give to a new supervisor starting out?
‘My primary advice is to temper your enthusiasm somewhat. Read the documents and prepare thoroughly for each meeting. For every meeting, consider what overarching questions you want to ask the board. Maximum three questions; more is not effective, even if it may feel that way. Often, these questions have already been addressed in the preparation of the documents or during the executive board’s discussions. By asking a few good questions, you elevate the quality of the meeting to a different – higher – level. And so too the value you add as supervisory director.’

This interview was published in Management Scope 06 2024.

This article was last changed on 25-06-2024