Board and CEO Advisory Partners

Tone at the Top: The Board’s Impact on Long-term Value


Taking a long-term approach in business leads to superior performance.

Companies that orient themselves around a long-term time horizon while also delivering against short-term objectives have been shown to outperform their peers on several key business measures, including revenue, earnings, economic profit, market capitalization and job creation. These companies were hit hard during the last major economic downturn—as were most businesses—but saw a higher-than-average rebound after markets recovered. According to one economic analysis, had short-term-oriented companies behaved more like long-term-oriented ones, the global economy would have created an additional $1.5 trillion in returns on invested capital in the years following the Great Recession. 1

While the benefit of long-termism is clear, the path to getting there is not. By all accounts, and for a variety of reasons, taking a long-term orientation in business can be difficult, especially for executives. But if the board of directors is committed to taking the long-view, there are a number of specific steps to they can take to get there, beginning with asking a key set of questions:

  • As a board, are we satisfied with our company’s performance?

  • Is the company being fully valued in the market?

  • Is the board playing an appropriate role in creating shareholder value?

Market valuation is a combination of two things: short-term performance and long-term potential. When executives over focus on one of the two – and directors don’t correct course – a company risks becoming either a flash in the pan, or a dreamer that fails to survive long enough to realize its vision. To avoid either fate, boards need to find the right balance between short-term and long-term issues, partner with executives to ensure the company is managed the same way, and engage with the market to build support for their vision and goals. It is no easy task.

Despite these challenges, there are companies that align around a long-term time horizonthat successfully oriented themselves this way. In these companies, management and the board share an explicit set of behaviors that focus themselves—and often the investors too—on the long term. How did this happen? And what differentiates those boards of directors that have been the most successful at focusing their company on the long term from those that have not?

There is a clear divide between companies that align for the long term and those that do not

In late 2019, Russell Reynolds Associates and FCLTGlobal (Focusing Capital on the Long Term) launched an extensive research effort to understand how corporate directors consider time horizons in their work; how the topic is discussed in the boardroom, facilitating alignment between and among management and the board and investors; and how a long-term orientation influenced director recruitment, assessment and selection. This research included an in-depth global survey of 163 corporate directors. Respondents hailed from all major industry segments and all corners of the world: Fifty-six percent of respondents were at companies headquartered in the Americas, 26 percent in Europe (including the United Kingdom), and 18 percent in the Asia Pacific region.

Short-Termers Management and Board Horizons


Companies where management focuses on delivering results on a zero-to-two-year time horizon, and the board expects the company to focus on delivering results on a zero-to-five-year time horizon. This group represents about 30 percent of directors surveyed.

Long-Termers Management and Board Horizons


Companies where management focuses on delivering results over a two-plus-year time horizon, and the board expects the company to focus on delivering results on a five-plus-year time horizon. This group represents about 20 percent of directors surveyed.

The remaining directors served on a board where directors and management were not aligned on their time horizon focus (i.e., management was long-term oriented, while directors were short-term oriented, or vice versa).

It is worth noting, of course, that different industries are influenced by different market forces, some of which naturally result in a bias toward being more short-term or long-term oriented. The data highlighted in this report is for all respondents, and all industries, combined. See Appendix for a breakout of results by geography and industry and a brief discussion of differences between and within certain industries.

While the two groups were identified based solely on their primary time horizons, as we analyzed their responses, we saw significant differences between short-termers and long-termers on almost 30 factors measured in the study—from why they decided to be board directors in the first place through to how they conduct themselves in the boardroom.


Motivations for Joining Board

Percentage of directors selecting motivation as “top 2”

Providing skills and experience to help the company succeed
Interested in the nature of the company or industry
Belief in the purpose or mission of this specific organization
Exposure to an interesting and challenging role
Enhanced career development and experience
Improved personl brand and business reputation
Financial compensation for board service
Building a broader business network
Source: Board’s Impact on Long-Term Value survey, Russell Reynolds Associates and FCLTGlobal, 2019 (n=163)

There is a stark contrast in motivation to board service between short-termers and long-termers. Long-termers are more likely to identify a primary motivation that is company-focused or altruistic in nature, such as providing skills and experience to help the company succeed, being interested in the nature of the company or industry or believing in the purpose or mission of this specific company.

Short-termers, by contrast, overwhelmingly indicated that their motivation to serve was about benefiting themselves. They were more likely to say they were motivated out of a desire for exposure to an interesting and challenging role, enhanced career development and experience, improved personal brand and business reputation, financial compensation for board service, or building a broader business network. In fact, not a single long-termer identified either of those last two reasons as a motivation for their board work.

No board intentionally goes in search of short-termer director candidates, but we found a higher prevalence of them than we would have expected to. It is a reminder that boards need to stay vigilant when identifying and assessing director candidates, and on addressing bad behaviors when they show up in the boardroom. For more guidance on this, see “From Insight to Action” starting on page 7.


Once on the board, long-termers and short-termers act differently. They report focusing on different issues, discussing different topics and keeping an eye on different trends and metrics.

When it comes to identifying the most significant threats to the company’s performance, short-termers focus on issues in the here and now, like failure to execute and operate the business efficiently and failure to respond to changing customer preferences. There are times when every organization should focus on these issues, but shorttermers appear to stay fixated on them beyond the point where a transition to other topics would create longer-term value.

By contrast, long-termers oriented around concerns that are more likely to play out over years or decades. They identified regulatory uncertainty, macroeconomic uncertainty and a failure to realize a return on innovation investments as their top areas of worry.

Short-termers were highly focused on issues related to delivering immediate results: increasing profitability, improving existing customer perceptions and satisfaction and increasing revenues. In contrast, long-termers were all about growing and expanding the business: increasing market share, expanding into new markets and growing through acquisition. Again, we see a continuation of the theme of short-termers focusing on the present and longtermers focusing on the future.

While it is certainly true that companies which are in free fall, or which are facing doubt about their ability to survive, should be more focused on the immediate than the future, it would be wrong to assume that the short-termers in this study are all facing those challenges. In fact, 61 percent of short-termers reported that their business was in a period rapid growth in revenue or market share (13 percent) or in a period of moderate and stable growth with substantial market penetration (48 percent). Another 13 percent reported moderate to rapid growth in revenue and market share following a period of sustained poor performance. These directors are not standing on burning platforms.

Not only do long-termers and short-termers report focusing on different topics during board meetings, but they also report that their board meetings operate differently from each other. Long-termers report that their board meetings are more organized and better structured relative to short-termers, that their fellow directors have a stronger grasp of organizational culture and talent issues and that their peers also have a greater level of expertise about the broader industry.


One area where both groups are united? Long-termers and short-termers both say that their fellow directors rate high on business acumen (the scores between the two groups are separated by only one percentage point). It isn’t that one group is recruiting high-performing and capable directors and the other is not. But there is ample evidence that long-termers are more likely to dig in to better understand the business and industry and to come to meetings better prepared and more likely to focus on the work at hand. They are applying their skills and time differently. Around the boardroom table, long-termers report being significantly better informed about the company, strategy and operations—outperforming short-termers in every single area:

Overall, how would you describe the other board member’s knowledge of the following aspects of the company? Percentage replying “high” or “very high.”

  Short-Termers Difference Long-Termers
R&D pipeline 49% 30pp 79%
Product or service 74% 20pp 94%
Long-range strategic risks 76% 18pp 94%
Sales 56% 14pp 70%
Operational plans 76% 14pp 90%
Capital allocation plans 83% 11pp 94%
Composition and objectives of company shareholders 82% 5pp 87%
Financial performance 96% 4pp 100%
Key end markets and customers 76% 4pp 80%
Strategic objectives 94% 3pp 97%
Immediate operational risks 83% 1pp 84%
Note: Numbers are rounded to nearest whole
Source: Board’s Impact on Long-Term Value survey, Russell Reynolds Associates and FCLTGlobal, 2019 (n=163)

Remarkably, long-termers aren’t just better informed about long-term topics relative to short-termers, but they are also better informed about short-term ones. Long-termers are significantly stronger on issues related to current products and services, sales activities, operational plans, financial performance, and immediate operational risks. It is clear that long-termers understand something critical: A long-term orientation isn’t undertaken in lieu of short-term focus, but in addition to it.

We see similar results when asking short-termers and long-termers to rate the performance of their fellow directors on behavioral issues: In every single case, long-termers dramatically outperform short-termers.

Overall, how would you rate the performance of other board members (collectively) in these areas? Percentage replying “high” or “very high.”

  Short-Timers Difference Long-Timers
Focusing attention on long-term strategy issues 76% 21pp 97%
Developing deeper knowledge about the company’s business 70% 20pp 90%
Contributing knowledge and expertise during board members 83% 17pp 100%
Reviewing and completing assigned work between meetings 76% 14pp 90%
Focusing attention on short-term performance issues 76% 14pp 90%
Collaborting with others to resolve issues and make decisions 76% 11pp 87%
Preparation for committee meetings and preparation of prework 80% 7pp 87%
Participating in committee meetings 94% 3pp 97%
Challeging positions and issues in boards meetings 87% 3pp 90%
Attendance at meetings 98% 2pp 100%
Preparation for board meetings and preparation of prework 89% 1pp 90%
Note: Numbers are rounded to nearest whole
Source: Board’s Impact on Long-Term Value survey, Russell Reynolds Associates and FCLTGlobal, 2019 (n=163)


It is clear that the way the board is led, and how it uses its time, matters. Long-termers report that their board meetings are highly organized and structured, resulting in a strong board culture focused on long-term growth and performance. What can board leaders do to create an environment like that?

Previous research outlines seven specific activities directors and board leaders can take to have a positive impact on boardroom culture:2

Boardroom Culture
  1. The chair needs to purposefully foster and facilitate high-quality debates around the boardroom table

  2. In the course of the board’s deliberations, the chair should intentionally draw out the relevant expertise of the independent directors

  3. All directors need to keep the discussion focused on the maer at hand and eliminate tangents during meetings

  4. Starting with the onboarding process and continuing throughout their tenure, directors should build and demonstrate trust through their words and actions with their fellow directors

  5. The board must be careful to avoid crossing the line from oversight into operations or management

  6. Everyone in the boardroom must be open to new ideas and ways of doing things

  7. Lastly, directors should remain willing to constructively challenge management when it is appropriate to do so

In addition to a willingness to challenge management, there is a need for open and honest communication between the board and management so management is clear about their board’s goals and desires for the company. Directors may desire a long-term orientation for the organization, but if they don’t guide and incentivize executives to take the same view, they’ll never get alignment between the board and management. A well-functioning corporate board of directors—one that is aligned on time horizons and communicates clearly with managem