Johannesburg, 14 Jun 2018
For a corporate board to be effective, it must first be focused on the right things. Specifically, board members must actively and productively participate in the work of governing.
This is absolutely vital in today's competitive economy, which is full of volatility, uncertainty, complexity and ambiguity. Within this setting, boards have a harder job than ever before. When director performance expectations are higher and the most desirable board candidates are the least available, exceptional director performance is crucial.
Yet, currently more than a third of directors believe at least one of their peers should be removed from the board because of poor performance.
For the past five years, directors participating in PwC's annual corporate governance survey have cited lack of preparedness, lack of expertise, and even age as factors impacting director performance.
With incumbency rates over 90% each year, clearly there is a need to address the issue of board effectiveness. This article offers a suggested framework of focus areas and activities ("7 Practices") to aid board administrators, executives, and directors in their efforts toward the elusive goal of elevating director performance.
1. Identify the cycles of board work
The work of boards is complex, demanding, and high-stakes. It is also cyclical in nature. Boards convene on a regular meeting cycle, deliver on a recurring set of annual responsibilities, and continuously work in a development cycle to refresh and strengthen themselves as strategic assets to the companies they serve.
This board development cycle includes three distinct areas of focus, including (a) planning and recruitment, (b) orientation and onboarding, and (c) evaluation and retention.
There is a great deal of emphasis placed on the recruitment and election of new members, but less so on the other areas. Also, contrary to popular opinion, these are not episodic initiatives. Rather, board development never ends, with director performance at the centre. Today, the responsibility for setting and keeping that cycle in motion rests with the board's audit or governance committee.
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