Elevating Board Performance: Insights and Opportunities
Boards play a critical role in guiding organizations towards success, but how often do they truly add value? Surprisingly, executive sentiment toward boards is less than stellar, with only 29% of executives rating their board as “good” or “excellent,” according to PWC research. Even more telling, other studies suggest that that 34% of board members feel their boards were either neutral or detrimental to their organizations’ value.
So how do you add value?
“The primary job of the board is to get the right CEO. Nothing works without that. With an underperforming or bad actor CEO, it’s really tricky to get anything done because you just don’t have the executive power. So when it comes to hiring a new CEO, take the time necessary. It’s incredibly important.”
Stuart Roden
- Selecting the Right CEO: Stuart Roden from Lansdowne Partners emphasizes the board’s essential role in choosing a competent CEO, as the organization’s success pivots on this crucial decision. The board performance in this will probably be the biggest indicator of success there is.
- Encouraging Open Dialogue: “We have groupthink year after year, decade after decade” – Baroness Helena Morrissey advocates creating a “safe space” for dissent and challenge, which is crucial for avoiding the pitfalls of groupthink.
- Broadening Diversity: “There are other forms of diversity than demographics.” – Alex Edmans, Professor of Finance at London Business School, suggests that diversity isn’t just demographic but includes varied backgrounds and experiences, enhancing the board’s overall effectiveness.
- Iterative Strategy Development: Roger Martin, recognized by Thinkers50 as the world’s #1 management thinker, advises on a collaborative approach to strategy formulation, engaging the board throughout the process.
- Focusing on Ethics: “If ethical questions are the reason a large portion of CEOs … are losing their jobs, then [the board] needs to do much more to investigate and evaluate their ethical stance.” – Baroness Dambisa Moyo, board member at Chevron and Conde Nast, highlights the importance of ethical considerations within board decisions, which can significantly impact the organization’s direction and integrity.
- Risk Management: Sir Richard Dearlove, former Mi6 Chief, points out the necessity of recognizing and managing both typical and exceptional risks that could threaten the organization’s survival.
“There’s an established framework of everyday risk, largely what your risk register covers, which isn’t too problematic. But there is also life and death risk for companies, which is usually on the outside of the framework. So the important thing is for your senior leadership team to understand when they’re looking at something which is on the outside of the framework, not on the inside. And it’s about identifying where the edge of the known risk map is.”
- Comprehensive Reviews: Dr. Sabine Dembkowski from Better Boards insists on the importance of thorough and objective board evaluations to foster continuous improvement.
Special thanks to Oliver Cummings, CEO of Nurole, for his commitment to enhancing boardroom dynamics and for providing these valuable resources.
Together, let’s strive to enhance our boards, ensuring they not only deliver value but also drive our organizations toward unprecedented success.
- Elevating Board Performance: Insights and Opportunities - May 9, 2024
- Microsoft’s Security Reputation: A Balanced Perspective - April 23, 2024
- What Makes a Nonprofit Successful? - April 17, 2024
