A Board of Director (BOD) seat at a Fortune 500 company used to be a plum position with quarterly meetings and a quarter million in annual compensation for providing guidance on incremental growth, etc. – with minimal oversight or legal exposure. The biggest challenge was picking a new CEO every five years or so !
It’s different now with BOD responsibilities being a lot more demanding. According to Brian Stafford, CEO of Diligent, which provides collaboration BOD software used by many enterprises – “ The role of the BOD has changed materially over the last 10 years – and there is going to be even more change, demands, and complexity going forward ”. This is due to the increasing need of the BOD to deal with – growing Stakeholder capitalism, new digital services and competencies, ability to make innovation more rewarding, understanding of new value, metrics and concepts that define success, better managing the changing nature of risk, etc.
Further, today’s BOD need to guide companies through 3 simultaneous revolutions –
- a technology revolution
- a stakeholder revolution
- a workplace revolution
+ help successfully manage through crises –
- a pandemic
- social justice issues
- the threat of major conflicts between nations
- in the war for top talent
All with the need to meaningfully improve outcomes in an environment where it’s important the BOD has superior knowledge, competencies, and skills to address –
- rising User expectations
- building a very entrepreneurial and opportunistic organization
- being good at creating, scaling, and monetizing new digital services
- the growing importance of “ Purpose “ and “ ESG “
- greater employee activism and political polarization
- increasing transparency and accountability requirements
- delivering high value product / services, making innovation more rewarding, gaining market traction, scaling the business, evolving the business model, etc.
- the expanding role and demands of regulators associated with monitoring and reporting on climate impact, diversity, security / cyber exposure, better at managing the changing nature of risk, etc.
The Modern Board 25 is a list of the most innovative Boards of Directors among S&P 500 companies. It’s based on the belief that for an enterprise to meaningfully improve outcomes by successfully managing through the above challenges, effecting change, and making innovation more rewarding – need to be guided by a highly competent and performing BOD – that can be predicted based on who is in the room. As companies seek to make this happen on a sustainable basis – the BOD and C-Suite need to expand their competencies and be more diversified with better insights and more strengths that come with experience.
To see who is doing well, see the first ranking of 25 companies that are progressing to address the challenge and opportunities in the Modern Board 25. Criteria included expertise, independence, diversity and tenure of board membership. The premise is that companies with a strong BOD is best suited to deal with turbulence and change. You can view the entire list here, read more about the methodology here, and listen to the full podcast interview on Apple or on Spotify.
For more insights on how the BOD needs to contribute to meaningfully improving outcomes, see www.cail.com/BI as well as contacting CAIL.