In our work we sometimes come across a board that is working exceptionally well and adding substantial value (both financial and organizational) to the business and for the shareholders. I have been fortunate to work with a number of such boards. Following are some common characteristics I have found in these highly functional boards.
- Majority (usually minimum of three) experienced independent directors.
- Commitment from shareholders and management to welcome independent perspective and insight.
- Director commitment to prepare for meetings and to be available outside of meetings.
- A minimum of financial/audit – compensation – and governance committee functions.
- A knowledgeable and committed Chair who is willing to take responsibility and grow with the job.
- Effective board structure and process.
- Positive synergy among all board members.
- Strategic focus.
- Open communication.
- Willingness to make difficult decisions.
- Management and shareholder willingness to accept board decisions.
- Director familiarity with shareholder expectations and senior management capabilities.
This is certainly not meant to be an exhaustive list, and we would be interested to hear your thoughts or experience with board effectiveness.