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Gross_TownHall_Summit Conf 2023 BRC Intro slides.pptx
- 1. © NACD 2023. All rights reserved. Culture as the Foundation: Building a High-Performance Board 2023 Report of the NACD Blue Ribbon Commission on November 30. 2023
- 2. © NACD 2023. All rights reserved. Empowering Directors. Transforming Boards. All corporate powers shall be exercised by or under the authority of, and the business and affairs of the corporation managed under the direction of, its board of directors, subject to any limitation set forth in the articles of incorporation
- 3. We’ll be fighting the wrong war if we simply tighten procedural rules for boards and ignore the pressing need – to be strong, high-functioning work groups whose members trust and challenge one another and engage directly with senior managers on critical issues. The key to better corporate governance lies in the working relationships between boards and managers, in the social dynamics of board interaction, and in the competence, integrity, and constructive involvement of individual directors. (Jeff Sonnenfeld)
- 4. © NACD 2023. All rights reserved. Empowering Directors. Transforming Boards. The Concept of Culture 4 Board Culture Definition Strong Board Culture Facilitates Shared values, beliefs, assumptions, experiences, and expectations that influence behavior in the boardroom and manifest themselves in board norms, protocols, and practices ► Cultivatingastrongpurposethatbindsdirectorsin commonpursuitofgoodgovernance ► Conveyingexplicitandimplicitgroundrulesforhowboard workisconducted ► Activatingalldirectors’voices ► Strengtheninggroupdynamics ► Settingclearexpectations ► Reducingmisunderstandingormisconductbydirectors ► Helpingattractandretaintoptalent
- 5. © NACD 2023. All rights reserved. Empowering Directors. Transforming Boards. Commission Recommendations 5 Specific recommendations for boards across three categories: • Define optimal board culture • Reinforce the board culture and behavioral norms • Address major cultural fault lines
Editor's Notes
- The report defines board culture explicitly. (BOARD CULTURE DEFINITION) As boards move towards intentionally defining and reinforcing their agreed upon culture the report highlights a variety of factors that can influence board culture: Explicit and implicit rules Norms of behavior and interaction Leadership styles (board chair, lead directors, committee chairs, CEO) Compliance and ethics policies and values Compensation Recruiting, selection, onboarding, and succession planning processes Processes for agenda setting, prioritization, and decision-making Types of meetings (virtual, in person, or hybrid) Communication and information flows Individual styles (diversity, backgrounds, biases, etc.) While this can appear like a long list of factors many of these factors are already addressed in regular board operations, and the report details how boards can thread cultural considerations into board operations to not overburden the board in monitoring its own culture. Doing so can pay big dividends in overall board performance and the report highlights the number of positive impacts a strong board culture can facilitate REVIEW STRONG BOARD FACILITATES TEXT BOX (CAN ALSO SEEEK AUDIENCE FEEDBACK HERE WHERE AN AUDIENCE MEMBER MAY HAVE WITNESSED THESE IN THEIR BOARDROOMS) PIVOT TO NEXT SLIDE
- So how would a board strengthen and build a robust high-performance board culture? To answer the Commission identifies 10 recommendations across three categories where boards should focus on building a strong board culture It’s important to note that these recommendations both work together and reinforce each other but can also be addressed independently given the board’s needs and current cultural context Perhaps a board is just starting their board culture journey after having not discussed it intentionally (start at step category 1) Maybe a board is experiencing tension between members or has existing cliques or silos? (Can use the report’s category three for addressing major fault lines)