Build an effective board of directors

N°230a – Synopsis (8p.) – Governance
Build an effective board of directors
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Some boards of directors have been able to go beyond their traditional supervisory role to position themselves as true partners working with operational leaders to boost company performance. How did they go about this?

Depending on their composition and operating practices, boards can create or destroy value.

The Indian IT services company Infosys, for example, credits much of its remarkable success to the quality of its board. Particular care was taken to select complementary profiles when assembling the board to ensure that it is able to play an active strategic role. Without attempting to replace the management team, directors help operational leaders regularly challenge their assumptions and broaden their range of potential options. Similarly, the board of GlaxoSmithKline played a key role in planning and supporting the succession of CEO Jean-Pierre Garnier.

Conversely, some boards have scarcely any impact other than consuming resources and management time. For example, the entire Barclays Bank board was dismissed in 2012 following the LIBOR manipulation scandal. The directors were accused of being unable to work in concert and thus of failing to fulfill their supervisory obligations. Insufficiently engaged, probably lacking in expertise, and far too passive, they were reproached for having blindly accepted the proposals of company leaders.

A high-performing board is not only possible, but can also be extremely valuable. We have selected three areas of focus to achieve this:

- Build a real team of complementary profiles who collectively possess all of the required expertise and can combine this know-how constructively.

- Set up the right level of interaction with management. The board must be able to engage on strategic issues without stepping on the toes of operational leaders.

- Entrust the board with a truly strategic role, far beyond a purely supervisory function.

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