Outperforming Boards Revamp Meeting Agendas
The Agenda article, "Outperforming Boards Revamp Meeting Agendas", featured our firm paper, "Going for Gold—The 2019 Global Board Culture and Director Behaviors Survey," and quoted Russell Reynolds Associates Consultant Rusty O'Kelly on why boards should reallocate their time to allow for more strategy-based discussion. The article is excerpted below.
Board chairs and lead directors are reallocating time on meeting agendas to allow for more work and discussion around strategy so that directors can add insights to current strategic plans, monitor operating results and ask questions that will tease out how the company can accelerate growth. Additional time is also being devoted to talent development, succession plans and company culture.
The reworked agendas are taking the place of more compliance-focused agendas, which sources say boards can fall into after periods of turbulence or following regulatory upheaval. In order to make space on meeting agendas for strategy while not giving short shrift to compliance, boards are delegating that work to the audit committee, and some have even formed additional committees or subcommittees to manage that workload to avoid overburdening audit committee members. Accordingly, boards that focus more heavily on strategic issues are overseeing companies that are showing stronger performance, according to a new report.
The study, published this month by Russell Reynolds Associates and titled “Going for Gold: The 2019 Global Board Culture and Director Behaviors Survey,” reviewed board practices at higher-performing companies versus lower-performing companies in a survey of 750 directors. Among all the companies, directors averaged about 200 hours per year on board work, not including time spent traveling. However, among companies that outperformed total shareholder return (TSR) benchmarks for two or more years in a row, and whose boards rated themselves as highly effective, the survey found that those boards spent their 200 hours far differently than the other boards.
Rusty O'Kelley, global leader of the board consulting and effectiveness practice at RRA, says the findings in the report confirmed a hypothesis he and his colleagues formed after conducting about 50 board assessments per year: Companies emerging from crisis struggle to shed compliance-focused agendas, while companies focused on moving from good to great craft strategy-focused agendas that help boards add value.
Such an agenda is much harder to create, O’Kelley says.
“It’s easy to have a compliance-focused agenda,” O’Kelley says. “All you do is bring in auditors and compliance people and drill them, and it’s easy to set that up.”
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