Board composition and behavior

Behind boardroom doors

Highly effective boards include a mix of directors with the expertise and experience to fulfill their essential oversight roles. Directors’ responsibilities are expanding, and the number and complexity of the issues they have to oversee are increasing.

Having a board made up of the right people with the relevant skill sets is critical in today’s competitive business environment. But how do boards get that dynamic in place? It starts with finding bright director candidates with the right array of skills and experience. In today’s ever-changing business world, it’s no surprise that industry and financial expertise are the most valued attributes by directors. As more companies embrace emerging technologies and new strategies leveraging technology, boards are also seeking directors with digital skills. Three-quarters say technology and digital media expertise is at least somewhat important, an increase from 68% a year earlier.

The average corporate board has 10.7 people, and the average director sits on a board for just over eight and a half years.* What if someone on the board isn’t measuring up? More than one in three directors (35%) think someone on their board should be replaced. The top three reasons are diminished performance because of aging, a lack of the required expertise, and poor preparation for meetings. Over half of directors who have served on the board less than one year believe a fellow board member should be replaced–but fewer than 25% who’ve served more than 10 years feel the same. The biggest hurdles to replacing an underperforming colleague lie with board leadership’s discomfort addressing the issue, followed by a lack of individual director assessments.

* Spencer Stuart U.S. Board Index, 2012

Building the best board
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