During the course of succession planning, nominating and governance committees are on the lookout for the types of skills, abilities and traits in candidates that they need to fill their vacancies. In most cases, they’re aware of the growing pressures and expectations of board directors. The change in the expectations for board directors calls for a new outlook on board performance. Current and future boards will be the ones that set a new standard and pace for the modern board director.
As companies approach board refreshment, it’s important for them to be keenly aware of the trends and issues facing today’s boards, which means they need to transition from present-day thinking to being forward-thinking. In looking toward a successful future, modern boards will benefit by seeking the following five traits in new board directors — curiosity, information-seeking, an investigative spirit, a disruptive/outside-the-box mindset and awareness.
The Curious Director & Meeting the Challenges of Modern Governance
- Modern Board Directors Are Curious
In the business world, we sometimes forget that some of our greatest inventors and philosophers had such an insatiable curiosity about things that they frustrated and annoyed everyone around them. It was their curiosity and willingness to try new things that resulted in great achievements. In an article for Inc. magazine, Elon Musk stated, “A lot of times the question is harder than the answer. If you can properly phrase the question, then the answer is the easy part.”
Musk makes a valid point. One of the pertinent questions that board succession planning committees should be asking board candidates relates to their willingness to develop skills around curiosity and asking the right questions. Curious board directors are hungry for knowledge and education. They consume information continually. They encourage a positive culture of curiosity instead of perceiving it as incompetence in their peers. Modern boardrooms discourage the concept of telling board directors what they should know and welcome compelling questions in the boardroom.
- Modern Board Directors Are Informed
Continual board education and development are standard parts of good governance. Modern board directors need to invest the proper time and diligence to be knowledgeable and engaged in their duties. According to Korn Ferry’s 33rd Annual Board of Directors Study in 2006, the average board director only spent 17 hours every month on governance issues.
On the whole, what formal programs lack is that they weigh heavier on providing knowledge and information and don’t include skill-building exercises in how to ask the right questions to get answers that are insightful and informative. The result is that these programs provide little useful value.
Most of the information that boards get comes to them secondhand. Independent board directors don’t always know enough about internal processes and operations, other than what management offers to them. As a result, they’re largely dependent on management for the type of issues they’re in charge of overseeing. By contrast, executive directors often lack expertise about the latest trends and news in the marketplace. Modern board directors need to take the time to challenge senior executives before they can contribute meaningful independent business judgment. Independent directors and executive directors need to be asking each other questions that supply answers to their own knowledge base.
In essence, modern board directors are on duty 24/7 and they keep up with perspectives stemming from investors, customers and the media.
- Modern Board Directors Are Investigative
Annual board assessments are an important part of good governance. However, investigation skills merely begin here. Boards limit themselves and their potential by only looking inward at their own effectiveness. To truly provide meaningful oversight and prudent advice to management, boards need quality information that is credible and timely.
Modern board directors can’t pass up a highlight without digging past the headlines to gain a better understanding of trends and current issues. It’s only by objectively evaluating and questioning what’s going on in the marketplace that boards will be able to identify and overcome obstacles. Modern boards must be highly innovative and resourceful, exploring past the obvious to achieve the best practices and outcomes.
To be competitive, modern board directors need to digest new information and determine how to apply it to their company. In addition to assessing external information, modern boards need to be looking at potential responses by asking what they can do better as individual board directors and as a whole board.
- Modern Board Directors Are Disruptive
Related to corporate governance, the word disruption generally has a negative, unsettling connotation. It can mean that board directors are difficult to work with or that forces in the marketplace are disrupting various business models.
Modern governance sets a new course for board directors. Modern board directors who are disruptive are forward-looking and thinking. They’re looking for connections and insights in unexpected places. Modern board directors are eager to hear from agitators and disgruntled employees because it may give them information about how to shake things up in a way that produces thoughts and ideas that haven’t yet been brought to the top for consideration.
Disruptive board directors are thinking more about how they can disrupt the marketplace to position themselves ahead as well as how competitors could disrupt their strategic planning. Jane Stevenson, vice chair of Korn Ferry’s Board and CEO Services, encourages board directors to look at the phase of new ideas to assess whether they’re at “an egg, chick, or hen stage” and make sure to keep new ideas confidential.
- Modern Board Directors Are Aware
The marketplace is continually evolving and reinventing itself. That’s what makes it so exciting. Modern board directors are fully aware that everything can change in an instant. They understand the gravity of being the weak link and how quickly it can put the company’s reputation at risk.
Modern board directors are obsessive about information security and make preventing data breaches a high priority. Awareness in today’s corporate world requires factoring in diverse perspectives and being nimble in thinking.
Gearing Up for the Acceptance of a Modern Outlook on Board Governance
Boards that fail to take a modern approach to the marketplace risk complacency and disengagement by their boards, which will certainly have a negative impact on success and sustainability. The structure of past boards was designed to serve the needs of corporate businesses and shareholders of those times. The Information Age is the driving force behind the traits that encompass modern board directors. Boards that look for directors who are curious, informed, investigative, disruptive and aware will be the game-changers of the future.