Directors & Boards was founded at a time when corporate governance was entering a period of significant transformation, publishing its first issue barely two years after the Model Business Corporations Act fundamentally redefined the role of the board. No longer was it true that “the business and affairs of a corporation shall be managed by a board of directors” but instead “under the direction of a board of directors” — a small change that would have a tremendous impact in the coming decades.
The wave of transformation that started 40 years ago is alive and well today. Board composition has changed dramatically over the years, as have the laws and practices that guide their work. Boards directly managing corporations? That commonly held view in the early 1970s would make a director in 2016 laugh.
Increased Focus on Long-Term Succession Planning for the Board
In recent years, there’s a growing emphasis on the board focusing on the long term, both for the corporation and for the board itself. Not surprisingly, one recent Russell Reynolds Associates survey of directors showed that boards rated “most effective” were 38% more likely than “least effective” boards to use a planning horizon of five years or longer.
This long-term focus is leading many boards to shift away from piecemeal director searches and toward long-term board succession planning. This planning is similar to succession planning in the C-suite: Building an understanding of the current skills and experiences of the sitting directors, the culture and composition of the board as a whole, and the recruitment priorities moving forward. Once that understanding exists, boards and their advisors develop candidate pools along two or three dimensions of skills or experiences (e.g., regional expertise, digital experience) or against diversity measures, and start cultivating potential director candidates.
I had the pleasure of assisting Justus O’Brien and Charles Tribbett with this article, which was published in Directors & Boards.