Corporate boards are not all created equal. Some are run well — they have members who are engaged and care about their role and the organisation they serve. Others have board members who serve as figureheads - phoning it in for meetings and responsibilities - waiting for their dues to roll in. You want to be the former. Not the latter.
Below are, in our opinion, these three qualities make for an excellent board.
1. Understand your role
Great boards understand the critical role they play in an organisation. And more than that—they know their responsibilities on the actual board. There is an understanding of who is the director versus who sits on committees. They understand their legal obligations and take them seriously.
“What distinguishes exemplary boards is that they are robust, effective social systems.” - Harvard Business Review.
Why does this matter? Because when there is a confusion of responsibilities or an underplaying of the board’s purpose related to the organisation, the organisation suffers. It can create confusion - with people not performing their duties and missing important information that can impact the company—a clear understanding of who does what and why results in a solid performance and mitigates risk.
A great board also knows that they are there to provide strategic rather than operational guidance. Board members are often seasoned and experienced and are there to advise. It’s not to say they won’t get their hands dirty (so to speak) once in a while, but they should have confidence in the company’s employees and instead use their own time to think about the big picture strategy.
2. Embrace diversity
Corporate boards are often criticised for being old and stuck in the past. According to a 2019 study by the Harvard Law School Forum on Corporate Governance, approximately 10% of Russell 3000 directors currently belong to an ethnic minority group, while 15% of new directors are ethnically diverse.
Additionally, the average director age continues to increase, as younger directors’ appointment is less frequent than in previous years, with only 7.2% of new directorships filled by directors younger than 45 years, compared to 11.5% of new directors in 2008.
In 2020, a record 59% of the directors added to the boards of S&P 500 companies were women, yet there is more to be done. Diversity in the boardroom results in more ideas and experiences coming to the table and shaping its future. Diversity does not just mean race, gender, or sexual orientation or identity—it also means experience. Just because a person’s CV does not perfectly align with the business doesn’t mean they don’t have valuable and relevant experiences to offer.
3. Evolve with the company
The best boards are not only embracing diversity, but they are evolving with the company. Whether that means investing in technology to make the board more organised and efficient, embracing the workforce’s remote nature, or thinking outside the box concerning corporate strategy—boards must evolve rather than remain stagnant.
Those that can’t stay ahead of the curve or be forward-thinking will surely be in trouble. That’s because the marketplace is rapidly evolving, and it’s the board’s job to stay ahead of what that means. From technology investment, cybersecurity, and workforce engagement—the view must always be ahead, rather than in the now.
These are some of the qualities and attitudes that we see in the best boards out there. Those that understand their responsibilities and think about the future—are the ones that take their companies to the next level and help them stick around for the long haul.
