As the pace of business continues to increase, board management effectiveness is increasingly important. Boards must be able filter out the “known knowns” and concentrate on strategic imperatives that drive the long-term benefit of their companies and guide them towards their goals.
In order to do this they need access to information that allows them to spot and address emerging risks quickly and efficiently. They must also be able to develop a culture that encourages constructive disagreement and engage in honest discussions that can challenge the majority’s views. To do so, they must have the ability to refine their professional skepticism in a practical manner and be able to raise red flags – in the boardroom, and with their company’s top executives.
Boards must also make sure they have effective procedures for identifying new talent, hiring those who are qualified and effectively in bringing them into the fold. The board is like an organism that evolves and when directors leave they will be replaced by people with the appropriate mix of experience, abilities and skills to meet the company’s changing demands.
It is essential to have an approach that makes sure that the decisions taken in the boardroom reflect in actions taken by the committees. This is typically where boards fail due to lack of clarity or a disjointed approach. A well-designed evaluation process can reveal these issues and provide constructive feedback to individual directors without focusing on anyone in particular. This can assist the board to identify gaps in its leadership and ensure it has the capacity to achieve its strategic goals.
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