The Supervisory Director as Guardian of the Future

Most supervisory directors will aim to do the right thing. What, besides the combination of regulatory pressure and crises, makes it difficult to fully embrace this role as guardians of the future?
Hofsté: ‘When a supervisory director starts out on this road, you immediately enter the debate over ‘who controls the strategy.’ Legally, it is the responsibility of the executive board, but the board needs the Supervisory Board’s support to fulfil this responsibility. It is crucial for supervisory directors to engage with what the organization stands for and where it wants to go. Our main role is to select leaders who can shape that path, to support them on this path and support also their development. Keeping a focus on the future also helps us identify the relevant, more long-term, risks.'
Ritsema van Eck: ‘It is my perception that there is a tension between doing good and the reactions from regulators and society. I experience this as supervisory director but even more so in my role as executive at De Alliantie. We are one of the largest housing corporations in the Netherlands, and while we build many homes, we also need to sell some to sustain our operations. This often sparks opposition from activists, regulators, and politicians who argue that these sales reduce the ‘social reserve.’ Even though for every house sold, new homes are being built which increases the overall housing supply, we fail to get this message across. It takes courage to maintain focus on the higher goal—solving the housing crisis. It requires continuous effort. It feels like walking a tightrope.’
Messerschmidt: ‘You also have a responsibility to all stakeholders. As a supervisory director, I deal with members and participants. The funds we manage provide the income and financial security of our members and participants, so we handle those investments with extreme caution. This naturally leads to a more cautious approach, taking only well-considered risks with investments.’

At the same time there is the ongoing transition towards a more sustainable and humane economy. How do you actively contribute to this?
Hofsté: ‘I find it complex. I certainly have the ambition to do good and leave the world a better place for my daughter and her children, but I am not a revolutionary leader. It is challenging for companies too; trying to do a little bit of everything well, results in no real impact. You need to make choices and focus. As a key player in your field, you have the responsibility—and the ability—to go a step further. It is essential to focus on initiatives that align with your organization. A great example is Zilveren Kruis, which, as a health insurer, actively works on prevention and for example reducing the enormous amounts of waste in hospitals, impacting both lives and CO2 emissions.
Making such choices requires courage from executives and commissioners because it essentially means saying: ‘This is what we stand for. We can discuss this, but do not approach us with a thousand other ideas.’ Of course we strive to do the right thing, but this is not where our strength lies.’
Ritsema van Eck: ‘Noblesse oblige, indeed. As one of the largest housing corporations in the Netherlands, De Alliantie aims to lead in areas such as sustainability. We have significant innovation capabilities and often share our developments with other organizations. I also admire Triodos Bank, which, although not the largest or most profitable bank, is a leader in sustainable investing. Even a small player can successfully set an example in a niche.’
Messerschmidt: ‘Sometimes the impact is quite indirect. Buma/Stemra, for example, plays a leading role in strengthening the position of women in the music sector, while the financial institutions I am connected with make an impact through our investment choices.’

There is a growing sense that regulatory and societal pressures are leading executives to become more risk-averse, making them hesitant to commit to ambitious goals. Is this something you recognize?
Hofsté: ‘This has become more noticeable in recent years. With developments around claims the focus has shifted from pursuing aspirational goals to achieving what is realistically attainable. Regulations such as the CSRD scores on the factual, and not ambitions, which of course is also important.’
Messerschmidt: ‘At one of the companies where I served as supervisory director, the aim was to delay compliance with the CSRD for as long as possible. This was partly due to the workload, but mainly from hesitancy about exposing where exactly we were regarding sustainability. We did ultimately accelerate the implementation, but at the time it caused significant debate in the boardroom.’
Ritsema van Eck: ‘This to me touches on the essence of the courage a manager needs. You know what is important, but you always have the fear of claims. I believe both public and private companies too often point to government and regulations as excuses to avoid assuming the responsibility themselves. That is weak. We all are in the driver’s seat. In fact, I would encourage organizations to broaden their view on where they can make a difference. While companies cannot do everything, they often do have the capacity to have an impact beyond their core activities.’
Hofsté: ‘This however brings its own challenges. The moment you seek to make an extra contribution, it almost automatically triggers a wave of societal and political expectations that often leads to further regulations. Both citizens and governments tend to shift many problems—and the costs of their solutions—onto individual companies, while we all, after all, should play our part.’

In discussions about an organization’s societal role, board members do not always see eye to eye. How can these conversations be approached constructively?
Hofsté: ‘One way is through careful agenda management. We increasingly pre-discuss meetings to ensure that we cover the topics we need to and that the difficult subjects receive the space they need. Afterwards, we also debrief to evaluate if the discussion was handled effectively. It is important that these conversations are conducted in a way that leads to balanced decisions. This starts with listening to your colleagues attentively and reflecting on what they say. Knowing each other’s backgrounds and values is invaluable in a supervisory board because it helps you understand why your colleagues think the way they do. ‘Team’ is a word which might fit somewhat uncomfortably in board context, but I firmly believe it is crucial for the board to function as a team.’
Messerschmidt: ‘In traditional supervisory board tasks, such as ensuring compliance with regulations, listening is less complex because the framework is largely predefined. But when it comes to strategy and forward-looking decisions, listening becomes far more critical. Companies are facing disruptive technologies and frequent regulatory changes. You need to move forward together, but you often do not have a clear vision of exactly where things are heading, which requires debating into the blue. This requires having much wider perspectives and interaction.
I always strive to understand what drives my fellow board members. Once I know what motivates them, I can look for triggers to engage with them effectively. At one of my organizations, we start each meeting with a check-in round: How are you feeling? What did you do over the weekend? It feels awkward at first, but it helps us understand what might influence someone’s state of mind during the meeting. Such personal check-ins are not common practice everywhere.’
Ritsema van Eck: ‘In my opinion this getting to know one another can be extensive. I want to understand someone’s upbringing and the impactful events that shaped them. These factors are key to someone’s leadership biography and can reveal where their red buttons lie. These are often very vulnerable conversations, so it is crucial to listen without judgment. We are often too quick to form an opinion about what someone else shares.’
Messerschmidt: ‘It is not only about getting to know each other on a personal level. It is equally important to understand the significant professional and private events that someone has experienced because these too heavily influence how someone unconsciously reacts to situations. These conversations also put the ball back in your court. If you expect vulnerability from others, they should be able to see your vulnerability too. You must try to also recognize your own limitations and triggers.’

How do supervisory directors develop the courage needed to fulfill their roles? Is it simply a matter of age and experience?
Messerschmidt: ‘This differs from person to person. When you are younger, you might be more open-minded and have fewer inhibitions or triggers. Yet, when I was 30, I was less willing to take risks because I still had huge ambitions. I am more likely now to voice my opinions and take risks. Experience and knowledge certainly play a role, but at this stage of my career, I can indulge myself to only engage in activities where I feel I can add value and by that, energize me.’
Hofsté: ‘For me, it helps that I am advanced enough in my career that I no longer feel the need to prove myself. This gives you a certain level of openness.’
Ritsema van Eck: ‘I feel that I most definitely have something to lose. When I face criticism, for example, for selling properties, my reputation is at stake. I do not believe it hinders my decision-making or my willingness to ask critical questions, but there is that inner voice that reminds me: you have a reputation to uphold.’

The projects 'Discomfort in the Boardroom' and 'Enhanced Governance' have attracted a relatively small group of supervisory directors and executives, probably those already committed to a reset in their approach. How can these insights reach a wider audience?
Hofsté: ‘The insights from these projects should be integrated into general governance training programs to then spread like an oil spill. I also believe there should be more focus on leadership development for supervisory directors. It is still rarely addressed, and it often seems as though you are expected to have all the skills the moment you step into the role. This can feel uncomfortable and discourages supervisory directors from investing time in personal growth or even asking for it. To understand each other as a team and truly embrace the role of ‘guardian of the future,’ it is incredibly important that supervisory directors invest in themselves and in each other.’

This article was published in Management Scope 08 2024.