This blogpost is shared as part of a series of insights from INSEAD Directors Network, based on roundtable discussions held during INSEAD Directors Forum October 2018. The Directors Forum Round Table Discussions were held with IDN members led by IDN board members or IDN Ambassadors. Other Blogposts in Series shared last.
Accelerate Board Effectiveness through composition, committee structure, processes, tools and assessments
This round table discussion “Accelerate Board Effectiveness through composition, committee structure, processes, tools and assessments” was led by Thomas Seale, IDP-C, IDN board Member.
At the INSEAD Directors Forum in October in Fontainebleau, I had the pleasure to moderate a group on the above topic. We focused our discussion around shared experiences of best (or worst) board practices.
We first discussed the paper from the Harvard Business School, entitled:“Director Perceptions of their Boards’ Effectiveness, Size and Composition, Dynamics, and Internal Governance”, which had also been recommended as pre-reading.
The paper interviewed over 2300 directors of global companies. Through our group discussion we felt that:
– most board members gave themselves a high rating (self congratulatory)
– two of the most important jobs for a Board (evaluating a CEO and success planning) were not well performed by boards
– it appears that the ‘buddy system’ was mainly used to fill vacant board positions
– overall: board effectiveness was rather low and boards are reactive
We then each presented what we had experienced as a ‘best’ or ‘worst’ practice in terms of board effectiveness.
Our principle findings were:
- It is important for board members to challenge the norm
In most boards, members want to get along. However, this may not be conducive to dealing with the right issues.
- The Chairman is a crucial role.
A lot of board effectiveness depends on the role of the Chairman
- Process is important
Members had experiences with CEO Succession and “Fair process”. These are powerful tools, but not always easy to implement.
- Board Composition is key
Boards should not be made up of just ‘friends.’ Cannot have too much complicity nor too much conflict—a balance is needed. Independents play a critical role.
- Regulated industries face particular challenges
So much of the board agenda is ‘ticking the box’ that real issues may be overlooked or under discussed.
- Present Options
Boards should ask Management to present options. Don’t come with just one solution.
Our group enjoyed the session and we all realized the hard work involved in making boards effective. It was also impressive to see how we learned from each other’s vast and varied board experience.
Thomas Seale, Moderator, IDP-C; IDN Board Member
Other blogpost in this series:
Governance in a Disruptive World by IDN Board Member Liselotte Engstam
From Board oversight of Strategy, to creating a Sustainable Business, by Helen Pitcher OBE, IDP-C, Vice President IDN
Anticipate and manage for geopolitical trade, corporate governance codes and regulatory changes by Cleopatra Kitty, IDN Cyprus Ambassador
The impact of technology on Strategy & Business Models by Mary Francia, IDN Board Member
Align Risk Management with Strategy and Operating Performance, Reward and Remuneration by Susana Gomez- Smith, IDN Portugal Ambassador
Accelerate Board Effectiveness by IDN Board Member Thomas Seale
More insight from INSEAD Directors Network, will be shared based on INSEAD Directors Forum 2018, Round Table Discussions – Look out for more upcoming blogposts!