Want a highly effective board?

type
Article
author
By Guy Beatson, GM Governance Leadership Centre, IoD
date
7 Jul 2022
read time
1 min to read
Man holding a camera lens with city scene in the distance

The Four Pillars of Governance outlines a set of director qualities, emotional agility and personal competencies for non-executive directors.  It also suggest that the New Zealand Director Competency Framework can help boards and directors measure performance and identify development needs.

But what evidence supports this link between these director qualities, emotional agility and personal competencies, governance best-practice and highly effective boards?

A recent study of 1,100 directors across more than 41 countries, including 12% from Oceania, gives significant insight into the impact of these key competencies on board and company performance.

The study looked at “Gold Medal Boards” against other boards.  Gold medal boards were those where directors rated their boards as highly effective in companies that outperformed relevant total shareholder return benchmarks.

The stand out differences between the “Gold medal” and other boards were:

  • Using a 3 - 5 year or longer time horizon to evaluate opportunities and make decisions
  • Broadly engaging in all aspects of board responsibilities (not just those that related to a director’s specific knowledge and expertise)
  • Communicating in a constructive manner
  • Fostering an inclusive culture
  • Actively cultivating relationships with fellow directors and other executives besides the chief executive
  • Directors possessing the courage to do the right thing for the right reason.

The main conclusions from this study reinforce the foundational attributes necessary for good board and company (and other organisation performance).

However, the study also reveals that the highest levels of board performance requires directors to have the qualities, emotional agility and personal competencies outlined in the Four Pillars, notably:

  • Integrity
  • Courage
  • Capacity to listen and question
  • Good judgement
  • Commitment to knowledge building and professional development.

These attributes and competencies are also part of the responsibilities of IoD members outlined in the IoD’s Code of Practice for Directors. 

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