What makes a great board leader – and how do you know?
When US boards look for a new non-executive leader – or a director candidate who could fill that role when the time comes – they often try to identify ideal candidates by looking at backgrounds and experiences. It is a worthwhile endeavor, as the independent leader has an outsized influence on how effective a board is. Russell Reynolds Associates’ 2016 Board Culture survey showed that the strength of the chair was the single biggest differentiator between the most and least effective boards. However, what is often unclear is how closely the shorthand criteria used to select a chair actually relate to a board’s subsequent performance.
To get a better sense of whether there are tangible aspects that define great board leaders in the US, we ranked S&P 500 companies based on their returns to shareholders over a three-year period and closely analyzed the independent board leaders – chairs or lead directors – for the top 50 and bottom 50 performers. We considered previous roles, tenure on the board, age and compensation of the independent board leaders.