Building Better Boards

Companies facing new requirements for governance are scrambling to buttress financial reporting systems, overhaul board structures--whatever it takes to comply. But there are limits to how much the outside can impose good governance. Boards know what they ought to be: seats of challenge and inquiry that add value without meddling and make CEOs more effective but not all-powerful. A board can reach that goal only by functioning as a high-performance team, one that is competent, coordinated, collegial, and focused on an unambiguous goal. Such entities don't just evolve; they must be constructed to an exacting blueprint--what the author calls "board building." In this article, Nadler offers an agenda and a set of tools for boards to define and achieve their objectives. It's important for a board to conduct regular self-assessments and to pay attention to the results of those analyses. As a first step, the directors and the CEO should agree on which of the following common board models best fits the company: passive, certifying, engaged, intervening, or operating. The directors and the CEO should then analyze which business tasks are most important and allot sufficient time and resources to them. Next, the board should take inventory of each director's strengths to ensure that the group as a whole possesses the skills necessary to do its work. Directors must exert more influence over meeting agendas and make sure they have the right information at the right time and in the right format to perform their duties. Finally, the board needs to foster an engaged culture characterized by candor and a willingness to challenge.

• Teams
• Employee performance management
• Corporate social responsibility
• Personal accountability
• Shareholder relations
• Boards