Great Corporate Governance Starts with Capable Directors

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Expert Perspective from Grahall’s OmniMedia Editorial Board

Joanne Lublin’s article in the Wall Street Journal, Using a Board Seat as a Stepping Stone, quotes Susan Stautberg, co-founder of OnBoard Bootcamp as saying potential director candidates should “…downplay their usual aggressiveness during board interviews because a director must be a good listener…Boards value teamwork, diplomacy and collaboration as well.”

In our experience, the best directors are more like supreme court judges – good questioners first; good listeners second.  Unfortunately, some Boards seem to be the embodiment of the proverbial “Three Wise Monkeys,” unwilling to recognize anything damaging or detrimental in the decisions and actions of management. 

When considering new director candidates, a company should look first NOT at the candidates’ resumes, but at the company’s situation.  At what business stage does the company find itself?  Is it a start-up concern, in a growth phase, a mature business or facing challenges? 

As we said on our blog Putting a Price on Corporate Governance: Does Your Board Add To Your Value Chain?, ideally, a company would have a situational board comprised of individuals with the appropriate experience to shape and enhance the organization’s value in each stage of the business cycle.  During a start-up phase the Board should let the company executives determine strategy and operations. Speed and agility with strong executive leadership is the best practice in most start-ups. At the same time, during an organization’s mature phase, the Board needs to contribute more, evaluating proposed strategies and pushing for management to take appropriate risks.

Grahall has created an index referred to as the Grahall Board of Directors Contribution Index, which identifies the different characteristics of the Board governance and matches that governance to the company’s situation, optimizing the chance for successful governance. It is clear from our analysis of over 1,000 publically listed companies that great governance is situational.

Companies should focus first on where they are, and where they are going.  The next step is to consider director candidates who have the experience and skills to help steer the company successfully down this path.   Contact us and we can help you evaluate the optimal Director Contribution and deliver great corporate governance.

Contact Grahall’s  OmniMedia Editorial Board at edie.kingston@grahall.com

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