A Good Board
A Good Board
Many corporate governance codes require an annual board review affecting particularly listed companies. However, research shows that well-run boards take the process of self-evaluation seriously even where it is not mandated. Board reviews examine the workings of a board and its members along with its effectiveness, the quality of its decision making and strategy, and its relationship with owners and executive management. What are the key features of a good board – particularly in today’s politically and economically turbulent business landscape?
Focus on stakeholder groups
Strong boards should have a clear understanding of their responsibilities and purpose to each of its core stakeholder groups and have an appropriate level and frequency of engagement with each of them. Boards need to particularly consider the impact on stakeholders when making decisions around developing strategy or considering mergers and acquisitions. Their reporting and disclosure practices should also meet the needs of their various stakeholder groups.
Understand the intersection of business with society
Strong boards have directors who are capable of taking the public interest perspective and devote adequate time to understand how their strategy might impact on wider society and the environment. They welcome and analyse feedback, both positive and negative, on any impacts the business is having. They pay attention to large-scale environmental and societal risks as part of their oversight.
Make purposeful decisions
Strong boards make sound decisions only after due consideration of relevant information and analyses. When making decisions with longer-term impact, boards should model alternative future scenarios to get a depth of perspective. Any process for deliberating and making decisions should leave board members with a clear understanding and ability to explain the rationale behind them.
Strong boards will also devote time to discuss difficult or controversial issues and the Chair should be proactive in including directors of opposing or minority views into these discussions. Indeed, the Chair plays a pivotal role in ensuring that a board is guided towards the best conclusive decisions possible without imposing their own view. Boards should have the capacity to challenge one another’s assumptions and beliefs and have a working relationship that allows opposing viewpoints and challenging questions.
Embody equality, diversity, and inclusion
A strong board understands the benefit of fostering a diverse, equitable and inclusive workplace and leads by example. Good boards consider the benefit of including a range of protected characteristics in their composition when constructing their skills and experience matrix. They should deliberately advocate for openness and inclusivity when selecting new directors. All members of the board, whatever their gender, race, or ethnicity, must feel that their contributions are respected and valued.
Be reflective and develop
The board has a wide remit to monitor business performance, advise executives on strategy, and provide connections into broader networks. Being effective in this remit requires the board to act as a robust team and have the ability to challenge other members and recover from disagreements. Behavioural psychologists and organisational learning experts agree that people cannot learn without feedback. No matter how good a board is, it’s bound to get better if it’s reviewed intelligently. Board evaluations, individual director assessments, and peer reviews can all build a picture of how effective the board is as a whole.
Alumni
Alumni has more than 20 years' experience of supporting boards and owners with both comprehensive and high-level board reviews - always with a focus on future strategic objectives. We work in partnership with our clients to ensure their boardrooms have the right skills and experience to allow for strong corporate governance, rich and varied perspectives and strategic thinking that is both robust and innovative.
Using a tailored approach, Alumni will work with you to identify the strengths and weaknesses in your board composition using both quantitative and qualitative research. We provide high quality feedback on current board effectiveness and its ability to meet both current and future strategic goals.
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