Report: Board Leaders Must Step Up to Keep Pace With Change
A new report from the National Association of Corporate Directors underlines the importance of boards being transparent, accountable, involved, and able to keep up with a rapidly changing operating environment.
Board leaders can drive big changes in their organizations—as long as they’re willing to embrace that role. That’s a key finding of a new study from the National Association of Corporate Directors (NACD), whose Blue Ribbon Commission initiative this year makes the case that board chairs, and those in similar roles, can be highly effective change agents that help their organizations leverage opportunities for growth.
In fact, according to Fit for the Future: An Urgent Imperative for Board Leadership [registration], it’s essential that they do so.
“The accelerating pace and intensifying complexity of change are leading to the emergence of a fundamentally different operating reality than incumbent executives and directors have experienced in their careers to date,” Blue Ribbon Commission cochairs Cari Dominguez and Lester Lyles write in the report. “However, this dizzying amount of change also creates immense opportunities for companies to out-innovate the competition, to generate value in new ways, and to strengthen their governance.”
The commission’s recommendations for more effective, change-driving leadership include:
More proactive board engagement. Eighty-six percent of board members surveyed said they expect to engage more deeply with organizational management in the future. But such an approach is easier said than done, the commission says, as it can easily lead to micromanagement. “For all of these reasons, making the shift in how the board engages requires strong and steady leadership, and in particular a constructive relationship between the chair or lead director and the CEO,” the report notes.
A shift in strategic focus. Innovation is increasingly important, and boards need to be ready to lead an organization’s adaptation to a changing landscape—but they must do so carefully, the report states: “The most important aspect here is to ensure the right balance between expertise on emerging issues and relevant past experience.”
A meetings rethink. While most boards meet between six and eight times per year, the commission suggests “a more fluid and flexible operating model” in which board members engage more frequently with the CEO. A key challenge is maintaining a balance between active meetings and overload.
More transparency. High-profile controversies in the age of social media have encouraged the rise of “hypertransparency,” and boards must be prepared for information to leak to the public. ”They will need to be aware that public opinion is a moving target, and that those who do not stay ahead of it can find themselves accused of being myopic or, worse, dishonest,” the report states.
More accountability—for everyone. Nearly half of board members don’t think leaders take enough steps to remove directors unqualified to serve. The commission calls for stronger accountability, with “far-reaching effects on the purpose, mandate, and operating model of boards.”
“The board leader plays a pivotal role in catalyzing the changes that are required for boards to lead in these unprecedented times,” NACD CEO Peter Gleason said in a news release.
The report includes a comprehensive toolkit with solutions to help organizations address these issues.
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