Top Boards Do These 4 Things Differently
Reviewing financial statements, audit activities, and compliance activities are all part of the work required of board members to keep the company running on the right path. They are the responsibility of the board, not the mission of the board. The most successful boards do far more than this, focusing on more forward-looking, value-creating, strategic issues.
Earlier this year, Russell Reynolds Associates surveyed 750 board directors about where their board prioritised its time and energy in the preceding 12 months. When the authors of this article combined that data with insights from their work, and discussions with other directors and outside experts, what stood out was a group they call “Gold Medal Boards,” those that rate themselves as operating in a highly effective manner and that oversee a high-performing company (one that has outperformed relevant total shareholder return benchmarks for two or more years consecutively). The data around this group is clear: Gold Medal Boards don’t spend any more time on their work than other boards, but they spend their time in vastly different ways.
Gold Medal Boards were more likely to list strategic planning or review, oversight on major transactions, and CEO and management succession planning as top areas. Along the same lines, Gold Medal Board directors were also more likely than others to report engaging in enterprise risk review, board refreshment activities, and crisis management scenario planning.
It’s not that these boards don’t fulfil their review and compliance responsibilities. They absolutely do. But they don’t spend any more time than is necessary, and they use the time they save to focus on more value-add work.
Beyond simply asking Gold Medal Board directors how they spend their time, they were also asked how their board operates. Four best practices for board leadership emerged:
- Refocus the board agenda
- Make debate a top priority
- Give clear feedback
- Be present and ready to speak up
These four areas require directors to consider the bigger picture, foster quality debate in an atmosphere of trust, actively seek out diversity of thought and experience, and a willingness to avoid groupthink. The most successful boards not only know this, but they craft their work and interactions to reflect it.
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