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High-Performing Boards: What's on Their Agenda?
McKinsey's recent online survey of more than 770 directors from nonprofit organizations and public and private companies across a broad array of industries worldwide showed dramatic differences not only in how directors allocated their time among boardroom activities, but also regarding their views on the effectiveness of their boards. More than 25 percent of the directors polled assessed their board's impact as "moderate or lower." Authors Chinta Bhagat and Conor Kehoe suggest that the difference in impact that directors have across board functions depends upon the breadth of the issues directors address and the time dedicated to them. Those board members who report having a low to moderate impact said their boards generally undertake only "the basics" of ensuring compliance, reviewing financial reports and assessing portfolio diversification. Directors whose boards have higher impact undertake these activities, but also add a series of other practices. For example, when it comes to strategy the most involved boards take three additional steps: they analyze what drives value, debate alternative strategies and evaluate the allocation of resources.

The study also found that higher-impact board members invest the equivalent of eight additional workdays a year on strategy, including both in-person meetings and telephone calls. They also spend the equivalent of three extra workdays on performance management, mergers and acquisitions, organizational health, and risk management. The most committed boards are not spending this additional time supplanting management's role in developing strategic options. Instead, they are building a better understanding of their organizations and industries, while assisting teams in vetting strategies and subsequently allocating the necessary resources to support them.
McKinsey Quarterly (04/01/14) Bhagat, Chinta; Kehoe, Conor
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MAY 2014 EDITION
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