Governance – Are boards part of the problem or part of the solution?

So much of the global discussion of corporate governance focuses on the major themes – ESG, sustainability, stakeholder rights, executive pay, and government regulation.

So much of the global discussion of corporate governance focuses on the major themes – ESG, sustainability, stakeholder rights, executive pay, and government regulation. Yet corporate board members on the boardroom front lines often wrestle with basic but crucial issues of “boardsmanship.” How do the well-meaning, part-time amateurs on a board meaningfully direct and monitor a complex business operated by full-time professional managers? Are we demanding more tactical oversight from boards than they can realistically deliver? Has the “Board of Directors” model become a dangerous anachronism?

In this podcast, Dr Sabine Dembkowski, Founder and Managing Partner of Better Boards, discusses governance with Ralph Ward, who is an internationally recognized speaker, writer, and advisor on the role of boards of Directors and the future of governance worldwide. He is publisher of the online newsletter Boardroom INSIDER, the worldwide source for practical, first-hand advice on better boards and Directors, and he also edits The Corporate Board magazine. He is the author of six books on boards and governance.

Key statements:

• “The corporate board model is the worst way of monitoring a large enterprise, except for everything else we have tried”
• “Small adjustments can yield significant improvements”
• “Work with the company secretary and their staff, who are the ghosts in the machine”
• “One of the leakiest areas for online security and data theft are the outside board members; they’re a loose cannon”
• “Intelligent, savvy people know what they’re doing, but the Board of Directors model collectively makes them dumb. It makes it difficult for them to come in, hit the bricks running, and know what to ask”
• “There is very little training on how to be an effective board member and there is almost none on how to be an effective board leader, a Chair – and that’s very dangerous”

The three top takeaways from our conversation are:

• Being on a board is not the ultimate feather in the career cap. Check whether you know what you’re really getting into and are ready to take on the commitment, liability, and regulatory dangers (especially for a major public company).
• Ensure you have the time commitment. People at the corporate level on a Board of Directors are good time managers, yet they always underestimate the time and effort involved in taking on a board role. Take whatever seems like a reasonable amount of time – and double it.
• Keep communication. Please do not leave the board meeting and not think about it until you get ready for the next board meeting. Assume once you’re on a board, it’s one more job you’ll have to weave into your busy schedule.

Please contact sabine.dembkowski@better-boards.com for a copy of the full text blog.

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