Is your board match-fit to take on 2021?
(Sponsored article) The competitive landscape in nearly every sector is changing rapidly. The economic and political reality of 2021 is starting to take shape. So how does a board operating in this environment make sure it remains relevant without being reflexive? More importantly how will your board drive your company’s vision with a focus on performance while making necessary changes to reflect shifts in society’s standards and expectations.
Future-focussed boards often transform themselves by embracing more flexible decision-making models that allow for the voices of a range of others to be included in governance decisions. This transformation challenges the very notion of the ‘old world’ corporate hierarchy featuring a small, closed, fixed group of governing directors at the apex of the company’s decision making.
This transformation often includes looking at the concept of a future-ready board and entails a genuine exploration of the composition of today’s boards– and what changes might be needed to rewrite the future. If you have a future-ready board –the board, as a collective, will add value by focussing on opportunity identification whilst maintaining its eye on the expectations of investors and stakeholders.
Investors and stakeholders look to work with companies committed to making a difference. Boards and their executive leadership teams are expected to meet this challenge by leading with ‘intentional integrity’, creating respectful and inclusive work environments, and understanding what it means to deliver on stakeholder expectations including expectations that pertain to values. For example, diversity and inclusion measures are a core value for leading companies today. But value alignment can go so much broader than these matters.
Long-term investors are holding boards and CEOs accountable for taking action with regard to changing societal norms and the company’s impact on a much broader stakeholder base whilst still expecting a return for shareholders. This may seem an impossible ask but it is not.
A future-ready board is prepared for the task ahead. A future-ready board is diverse, socially responsible, and tech savvy. As a collective, this board appreciates (and embodies) inclusion, and demonstrates keen awareness of how to balance profit expectations with purpose to meet long-term stakeholder values. A future-ready director embraces efficient technologies and is curious and willing to learn and relearn.
As the age of many directors and CEOs increases, future-ready also means understanding the needs of the company during board and CEO succession planning. To optimise your board, these are the four key areas of composition to guide your discussions:
- Profit and being purpose-driven
- Diversity in its many forms
- Experience in ESG
- Expertise in technology, risk, and security.
These are discussed in more detail in a new whitepaper that examines how board evaluations can drive board effectiveness.
Key considerations for your board:
- Whereas profit is essential, communicate how your company effectively engages with purpose to create a clear future state for your company and how that future state aligns with key stakeholder expectations.
- Consider how you can attract candidates that will bring diverse and unique backgrounds to your board.
- Consider adding younger leaders who have a pulse on today’s societal and economic shifts and offer new perspectives.
- Consider building ESG into your corporate strategy, given the focus of today’s investors and stakeholders on such issues.
- Consider creating a genuine framework around technology and risk oversight responsibilities and activities that show how the governance risk is enacted in the organisation and how governance and operational risks are escalated when things go wrong.
- Encourage forward-looking, ongoing board member education, including an on-boarding program that brings new directors up to speed quickly.
Fine tuning your board
In order to build a future-ready board, it’s important to conduct annual evaluations that provide metrics and insights into composition, functioning, and performance.
With these insights, the board can take the right steps forward.
About Nasdaq Governance Solutions
Nasdaq Governance Solutions helps public, private and non-profit organizations in the design and implementation of third-party board assessments that promote commitment to healthy board dynamics and continuous improvement.
Join Nasdaq Governance Solutions and Board Matters on 17th March to learn more about global governance trends impacting boards in 2021 and how a board evaluation enhances future-ready board preparedness.