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What the Best Company Boards Focus On

What the Best Company Boards Focus On

Non-Executive Directors are faced with several challenges as they do their work. The quality of the Board members significantly impacts the performance of the organisation.  The quality of Board members is largely depended on the selection criteria and process.  In some instances, the quality of the NEDs is influenced by the remuneration on offer.

Organisations that adopt best practices in governance tend to make better business decisions, manage risk better and have a better market reputation.  The adoption of good corporate governance practices tends to be driven by the quality of board leadership, the ability of the board to focus on the right issues and generally the conduct(behavior) of the directors. 

In a study of 750 directors published by the Harvard Law School forum on corporate governance and financial regulations {Global Board Culture and Director Behaviors Survey – conducted from October 2018 to February 2019.} they discovered following insights which every board must pay attention to:

Source: {Global Board Culture and Director Behaviors Survey – conducted from October 2018 to February 2019.}

In the same study, the found out that a dysfunctional board can easily cripple a company.  The right skills and experience mix plays a big role in the success of a board in driving company performance.  The research noted behavioural characteristics of board members that tend to lead to better performance. Successful boards have directors who are open-minded; who are open to hearing a diversity of views in some instances conflicting views but then engage with those conflicting views in a productive way aimed at finding common ground. Such Boards allow dissenting ideas but work towards finding common ground and take a common position once the issues have been thoroughly debated.

The Board Chair plays a big role in steering the Board ahead successfully. What was noted of the Board Chair’s behaviour is given below with gold medal boards leading the way.

Source: {Global Board Culture and Director Behaviors Survey – conducted from October 2018 to February 2019.}

About Board culture the results show the following trends:

Source: {Global Board Culture and Director Behaviors Survey – conducted from October 2018 to February 2019.}

Non-Executive Directors Global Compensation Trends

Willis Towers Watson’s Global Executive Compensation Analysis Team reviewed 300 publicly-owned companies from the 2018 Fortune 500 list with proxies filed by June 30, 2018, for director compensation trends analysis and compared results to data from the same companies reported in 2017

Sources: The Search for Meaningful Director Compensation Limits (2018) – Harvard Law School Forum on Corporate Governance and Financial Regulations.

References

  • Going for Gold: Global Board Culture and Director Behaviors Survey(2019).Harvard Law School Forum on Corporate Governance and Financial Regulation.
  • The Search for Meaningful Director Compensation Limits (2018) – Harvard Law School Forum on Corporate Governance and Financial Regulations.

Memory Nguwi is an Occupational Psychologist, Data Scientist, Speaker, & Managing Consultant – Industrial Psychology Consultants (Pvt) Ltd a management and human resources consulting firm. https://www.linkedin.com/in/memorynguwi/  Phone 481946-48/481950/2900276/2900966 or email: mnguwi@ipcconsultants.com or visit our website at www.ipcconsultants.com

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