Board development


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Questions to develop board member competencies. Research included.

Published in: Economy & Finance

Board development

  1. 1. Board development
  2. 2. Question # 1 How large is the board?
  3. 3. Companies with small boards perform better
  4. 4. Research on group dynamics suggests that groups of 6 or 7 are the most effective at decision making.
  5. 5. Question # 2 How are board meetings done? How are decisions made?
  6. 6. At, board meetings are open. Anyone can attend meeting if they wish to.
  7. 7. To begin each meeting, the board of has a “connect to purpose” moment, for example a story from a patient or physician.
  8. 8. When confronted with a profound decision, one that will have wide impact on the mission of for generations to come, the board’s values and ethics committee convenes a group of citizens and members of the system for input before bringing a recommendation to the full board.
  9. 9. Further inspiration
  10. 10. Question # 3 How is communication done between meetings?
  11. 11. Under a new model, professional directors working in audit committees as well as in compensation committees would also spend a significant amount of time gathering information throughout the year engaging with company staff and others between board meetings.
  12. 12. Survey of 171 Canadian directors shows that 21% say social media is significant for their boards today, but 74% say it will be significant within 3-5 years. 10% of the directors say they are active users of social media.
  13. 13. Digital megatrends such as big data analytics, cloud computing, mobile commerce, smartphone penetration and social media are now embedded in the core of business. More importantly, these trends are critical to competitive advantage. As with any fundamental change of this kind, boards must play a central role in ensuring that companies are accurately evaluating risks and opportunities.
  14. 14. Bank of Montreal encourages shareholders to directly contact its independent directors, in particular about such topics as succession planning, corporate governance practices, and disclosure.
  15. 15. One of the benefits the board and I had was an active, capable lead director with whom I could work closely. He did a superb job in guiding the issues of the independent directors and in keeping me fully informed of any concerns and issues the board might have. When it came time to select my successor, he developed a sound process that we both agreed upon and led the board through it.
  16. 16. Question # 4 How is CEO succession planning done?
  17. 17. The board should find ways to make CEO succession planning a routine, recurring, and candid topic of discussion. The best approach is to include a CEO-free session during each board meeting, presided over by the lead outside director.
  18. 18. Taking into account both industry dynamics and company strategy, boards should develop a CEO profile that identifies the key skills, expertise, and experience needed to execute the company strategy. While the board may have chosen an effective CEO based on the time of the appointment, it does not necessarily mean that the same CEO should continue for the next phase in the organization’s growth.
  19. 19. Assessment tools and methodologies to identify the future CEO among internal candidates can include 360-degree feedback instruments, experiential simulations, and external assessments. Boards should use the results of these assessments to understand the quality of internal leadership talent and as a base from which to develop a list of potential external candidates.
  20. 20. Boards should create individual development plans for non-CEO leaders that focus on acquiring the skills, expertise, and experience needed in the future. The training plans should feature mentoring by board members, as well as rotations in different functions, business lines, and geographic areas. When directors actively participate in formulating development plans and in mentoring, they increase their insights into the internal leadership potential to an extent far beyond that offered by formal presentations
  21. 21. Question # 5 What is the relation between the CEO and the board?
  22. 22. Boards should be independent of management.
  23. 23. Percent of listed companies with split Chairman-CEO roles
  24. 24. North American CEOs strongly prefer the dual mandate of being board chair and CEO, as it puts them squarely in charge and avoids the likelihood of conflicts or power struggles within the boardroom. The downside of this model is that in the past it often encouraged complacency by boards and discouraged them from getting deeply involved in issues until it was too late.
  25. 25. survey/assets/pdf/pwc-annual-corporate-directors-survey-full-report.pdf If you currently have a combined chair/CEO, has your board discussed splitting the role during your next CEO succession?
  26. 26. A board may contribute directly to company performance by co-creating the strategy of the company. By pursuing a co-creative role, boards can help open the minds of executives and steer the strategy debate beyond any cultural blind spots.
  27. 27. Question # 6 To what extent and how are external people involved?
  28. 28. Level of influence that various groups have over board’s decisions on executive compensation
  29. 29. A growing tendency to engage outside experts has improved the quality of board decision making in recent years. Good boards now bring in governance experts to review their practices and provide clear feedback.
  30. 30. Invite outsiders to critique the company’s strategy in the boards’ strategy sessions.
  31. 31. Shareholder engagement activities will likely continue to increase among organizations and boards. ot%20Topics/Hot%20Topics%20-%20Shareholder%20engagement%20-%20A%20new%20era%20in%20corp%20gov%20-%20Sept%202013%20-%20Final.pdf
  32. 32. To test whether a board is doing its job well or not, observe the growth and involvement of activist investors. If the board is doing its job well, there are no activist opportunities.
  33. 33. Survey shows that 48% of boards have a formal process of determining the combination of skills and attributes required for their board and, therefore, for new directors. The future of director selection is becoming an increasingly objective and skill-focused process.
  34. 34. Question # 7 How do board members develop themselves?
  35. 35.
  36. 36. Further inspiration