Looking for Smoke Under the Door: The Case for an Actively Engaged Board

Looking for Smoke Under the Door: The Case for an Actively Engaged Board

          
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Looking for Smoke Under the Door: The Case for an Actively Engaged Board

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    An effective board of directors may not guarantee that a company will succeed. But an ineffective board can go a long way to ensuring failure, because the consequences of its attitude and operating model will trickle down into the business. The boardroom should not be just a place from which directors oversee the executive. Boards typically boast decades of senior experience, which directors have an obligation to leverage in order to add value to the business. This means that the board has a role to play in triggering—and subsequently overseeing—transformational change.

    The rules and practices of corporate governance impose on the board many constraints and competing demands. In the finite time available to deliberate and make decisions, the board’s agenda naturally gravitates toward the essential issues of the day: governance, regulation, compliance, and near-term decisions. Often the board’s attention to the long term is relegated to its participation in determining annual strategy. In many companies, this is a flawed process.

    Notwithstanding the packed schedule of most board meetings, the experience and detachment of board members position the board to be an actively engaged catalyst for change. Such a board will be able to identify, interpret, and act upon weak signals inside and outside the business that indicate the need for change; it will be adaptable, changing its composition and operations to meet evolving needs; and it will balance the independence of position and mind required for oversight with the active engagement necessary to provide management with the benefit of its members’ experience.

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