Based on our experience working with hundreds of boards each year, we know board and director performance depends on the quality of board leadership, the ability of the board to focus on the right issues and a small number of critical director behaviors. Our latest research backs this up.
The link between critical director behaviors and higher company performance was evidenced in our second Global Board Culture and Director Behaviors Survey, completed by 750 corporate (supervisory board-level) directors of large public companies worldwide. This data provides a roadmap for driving improvement in board effectiveness and, potentially, corporate performance.
This post focuses on understanding a group of boards we call “Gold Medal Boards”—those that rate themselves as operating in a highly effective manner and that oversee a high-performing company (one that has outperformed relevant total shareholder return (TSR) benchmarks for two or more years consecutively). When we look at the data for this group and compare it to the broader population of boards, the differences are clear. These boards spend the same amount of time on their work as the global peer set, but prioritize more strategic, longer-term and forward-looking discussions. Their directors are more likely to seek to understand other perspectives, focus on being present at meetings and build deep relationships with management and investors. Gold Medal Board chairs lead differently too—demonstrating behaviors that foster and facilitate higher-quality debates in the boardroom.
Along with Gold Medal Boards, we also report on board members who self-identified as having the most engaging, professional and productive cultures and who seek to understand what sets them apart and what other directors can learn from them. Directors on boards with a strong positive culture are more likely to report that their fellow directors broadly engage in all aspects of board responsibilities, that they have participated in a self-evaluation exercise, that they discuss corporate culture at more than half of all board meetings, and that they are confident the company culture reflects the desire of the board—an interesting correlation at a time when there is increasing pressure for directors to oversee corporate culture, including diversity and inclusion.
Read the full article on the Harvard Law School Forum on Corporate Governance.