“The true causal factors that lead to better governance are group dynamics, focus on substantive issues, and information architecture.”
– RAM CHARAN, HARVARD BUSINESS SCHOOL
The BoardsGlobal Knowledge Centre incorporates insights from many years of practical experience working with diverse boards and organisations and their real challenges, and global thought leadership, research and best practice. We regularly add new information and welcome your comments and feedback (see email and phone links below).
We have developed a reservoir of insights on how boards and C-suite teams can optimise their performance and create a culture and structures which enable them to strengthen their board and enhance their contribution to their organisation.
We have synthesised our observations below; this includes leading global research, best practice and thought leadership. We hope you find these of interest.
“On key issues Directors have to be at the table. They have to be driving the issues, the central idea that drives the business, the commitment to ethics and integrity. In all these areas, Directors are number one. That is their job.”
– MICHAEL USEEM, WHARTON CENTRE FOR LEADERSHIP
“Ultimately a board’s or executive team’s performance can be measured through the value which it contributes to an organisation.”
“Board members need to be proactive when they sense there is trouble brewing. The one regret Directors repeatedly express is not speaking up and calling out (issues) until it was too late.”
– RICHARD LE BLANC, YORK UNIVERSITY
“Research and our experience tells us that over and above requisite skills and experience, the most important capabilities in board members include their critical thinking, ability to integrate with the existing board members and culture, emotional intelligence and questioning style. “
“The greatest challenge Directors face is to stay fully informed about the companies on whose boards they serve.”
– WILLIAM GEORGE, CHAIR AND FORMER CEO
“The most successful boards have at least forty per cent of their board members with experience in their company’s industry sector.”
“If you are an investor, it is good to look at Directors: do they bring a lot to the table both to monitor for shareholder value and lead strategically?”
– MICHAEL USEEM
“For diversity to be truly value-adding for boards, there needs to be a culture of deep respect for difference.”
“The real test of a board of directors comes when the company is in crisis. The overarching lesson I have distilled from the crises I’ve experienced is that board members need to understand and trust each other.”
– WILLIAM GEORGE
“It can be challenging for board members who are highly logical, analytical and fact-based to work with management who in some sectors are known to be more relationship-driven and feeling-based. It is helpful for both parties to make an effort to understand each others’ cultural norms and values which drive their priorities.”
“What distinguishes exemplary boards is that they are robust, effective social systems.”
– JEFFREY SONNENFELD, YALE
“The most critical cultural ingredients in high functioning boards are trust and respect.”
“Without a sense of purpose, no company, either public or private, can achieve its full potential.”
“Effective Chairs concentrate on enabling the board as a whole to make decisions rather than dominating the group process. Self-restraint is a common practice.”
– STANISLAV SHEKSHNIA AND VERONIKA ZAGIEVA, INSEAD
“Boards work best when there is a mix of early-, mid- and mature-career board members, as the stage of an individual’s board career has implications for the mix of risk appetites amongst Directors on a board.”
“Directors are in the boardroom to bring their own judgment and their own experience.”
– MICHAEL USEEM
“Appropriately boards continue to evolve, as do the businesses and society around them. Today’s boards have a deeper level of engagement with the business and stakeholders than was the case ten years ago. Where once the prime focus of the board role was monitoring performance, now boards are also expected to demonstrate leadership.”
“Society is demanding that companies, both public and private, serve a social purpose. To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society.”
– LARRY FINK, CEO OF BLACKROCK
“If I had an hour to solve a problem and my life depended on the solution, I would spend the first 55 minutes determining the proper question to ask, for once I know the proper question, I could solve the problem in less than five minutes.”
– ALBERT EINSTEIN
Article #1 High Functioning Boards – the Art of Questioning and More
Asking great questions is to boards like sextants are to sailors – an essential tool for guiding and creating direction in boardroom discussion. Constructive questioning is one of the six areas that are fundamental to high functioning Directors and boards. In this article we explain why the art of questioning is so critical for boards, how questions create impact, and when and how to use questions to greatest effect.
Article #2 Final Report of the APRA Prudential Panel Inquiry into the CBA – April 2018
In the current environment of scrutiny into corporate behaviour, trust and risk management, the recent APRA Prudential Panel Inquiry into the CBA makes forceful recommendations for the role of the board in corporate governance. It demands a greater level of rigour in the frameworks and practices of the Board and the Risk, Audit and Remuneration sub-committees, and the Board’s responsibility to challenge the executive leadership.
Article #3 How Board Members Build Trust
Last year Andrea Durrant published an article on how board members can help to build trust. This was triggered by research released by the World Economic Forum and the annual Edelman Trust Barometer. Since then in Australia we have experienced the APRA review into CBA and the 2018 Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, so this commentary has even more relevance. In the article Andrea considers the deeper factors at play and shares five “Trust Takeaways”.
Article #4 Larry Fink’s Annual Letter to CEOs January 2018
Blackrock’s Larry Fink released his Annual Letter to CEOs in January 2018, in which he proposed a new model for corporate governance calling for deeper engagement by boards in developing long term strategy, with this delivering healthier long term growth and shareholder value. He also called for more diverse boards, as his view is that a mindset which draws from wider sources is more likely to propose opportunities and less likely to overlook threats. Larry believes that one of the roles of the board is to help organisations both articulate and implement their wider purpose.
We regularly add new documents and welcome your comments and feedback. (see email form below)
Research tells us that over and above requisite skills and experience, the most important capabilities in board members include their critical thinking, ability to integrate with the existing board members and culture, emotional intelligence and questioning style.
Organisational culture can have a direct impact on economic performance. However a recent comprehensive research study across 200 companies finds that even a strong culture and alignment with strategy on its own is not enough.
Strong corporate cultures which have had strong historical performance can develop institutional arrogance, inward focus, bureaucracy and an inability to adapt to change. Even strategically sound organisations will not sustain long term growth without continuous response to markets and environments.