Trends in Board Governance

All directors, whether of non-profits or for-profits, face the same problem: how to focus on the essence of board function, strategy, while besieged with the pressures of an increasingly complex world?

Some interesting perspectives surfaced at the National Association of Corporate Directors-New England Chapter meeting at the Newton Marriott yesterday.

Boards should be more proactive in identifying the information they need and the topics that should be discussed. Management must be selective, so as to prevent the sending of too much non-critical information.

Management no longer is setting board agendas. The focus should be on discussion, not “death by power point.” The discussion should be strategic, and inherent in that discussion will be a measurement of enterprise risk.

What kind of boards will we have in the future? There is growing awareness that diversity of experience is essential. As more and more companies restrict their CEOs from serving on outside boards (or limit service to a single board), more board members will be drawn from the ranks of the retired; this in turn creates an upward creep in the average age of directors and a concomitant increase in the mandatory board retirement age.

U.S. boards are slow to move to the European approach of having different stake holders represented on the board: labor, consumers, community. It was not clear to the panel whether this trend would be manifested in the United States.

More and more meetings will be handled electronically, particularly committee meetings which are increasingly important and take a lot of time. It’s almost impossible to do proper service on an active board and still hold a “day job.”

What major changes will we see on boards by the year 2018? The panel did not have an answer. Everyone agreed that maintaining “board culture,” free ability to speak with candor, will remain important. And what about participation by the digital generation? Some companies are establishing advisory boards to deal with the digital revolution. To my view, this is a mistake. Viewing digital issues as something around which a fence can be built is too narrow an approach. Digital data, digital reputation, digital marketing, digital cyber risk, everything in the future is going to be digital; the grayer heads I believe should swallow hard and blend in members of the digital generation, because their input is needed within the board itself – particularly if, as noted, the average age of board members is creeping upwards for other reasons.

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