Global Board Culture Survey 2016
The Harvard Law School Forum article, “Global Board Culture Survey 2016," was authored by Russell Reynolds Associates consultants Rusty O’Kelley and Anthony Goodman. The piece highlighted the findings from the firm’s research, "Global Board Culture Survey Understanding the Behaviors that Drive Board Effectiveness." The article is excerpted below.
During the summer of 2016, 369 corporate (supervisory) large public company directors from a dozen countries participated in Russell Reynolds Associates’ Global Board Culture Survey. The goal of the survey was to better understand the director behaviors that create a high-performing board culture and drive board effectiveness.
Directors around the world were surprisingly consistent in the top five behaviors they named as key to a strong culture and an effective board. The survey showed that the attributes that define an effective director transcend cultural and national differences.
Although survey participants agreed on the five key director behaviors, the survey also revealed that only the most effective and well-led boards were able to successfully incorporate the desired director behaviors into how the board actually operates. When we analyzed the actual observed behaviors of the most effective boards we surveyed, we identified three characteristics that drive an effective culture built upon the most important behaviors:
The most effective boards successfully blend the five key director behaviors as the foundation of an effective culture, and are differentiated in the way they operate by the three drivers of effectiveness.
Global consensus on the most important director behaviors
In our survey, we asked directors which behaviors are most important in fostering a board culture that drives effectiveness and company performance. Our research and global experience working with boards show that boards develop their own culture and behavioral norms. For boards to function optimally, the board must have the right mix of relevant expertise and experience, and the board culture should be constructive and engaged.
Given the wide range of corporate governance regimes that exist globally, we expected that the behaviors directors would cite as most important would also vary widely, especially given that corporate boards exist within the context of a national culture. We expected to see some of the common cultural stereotypes play out in our data, with some nationalities favoring more candor and others emphasizing the importance of building trust and respect among directors.
Instead, our study uncovered a surprising degree of consistency in the behaviors that directors believe are most critical for an effective board. Our respondents identified and prioritized the most important director behaviors as depicted in the following chart:
The five most important director behaviors identified topped the rankings for every region we surveyed. Remarkably, they were also ranked in the same order of importance in every region, with the exception of a small variation in Asia. This suggests that the desired qualities of an effective director transcend cultural customs and regional differences.
When we compared the responses of directors serving on a board in their home country with those serving on a board outside their home country, the weighting and ranking of behaviors remained consistent. This suggests that rather than focusing on the traits that make a director suited to a board in a particular country, boards should focus on these five core attributes, which are the most important in any setting.
This global consistency can also be viewed as some evidence of the acceptance and use of the board-centric model of corporate governance that the largest long-term institutional investors (such as BlackRock, State Street, and Vanguard) and pension funds (such as CalPERS, Hermes, and PGGM) have been promoting around the world. This model holds the independence of the board as a central tenet, with heavy emphasis on the board’s ability to challenge management and hold it accountable.
To read the full article, click here.