Making boards work with 4 changes essential to making boards effective

Making boards work with 4 changes essential to making boards effective because Boards aren’t working

  1. Selecting the right people. In short, companies keep appointing directors who aren’t independent thinkers and whose experience is too general
  2. Spending quality time on strategy. Most governance experts would agree that public-company directors need to put in more days on the job and devote more time to understanding and shaping strategy.
  3. Engaging with long-term investors. While boards may be guilty of pushing executives to maximize short-term results, we have no doubt where that pressure really originates: financial markets. That’s why it’s essential to persuade institutional investors, whose ownership position makes them the cornerstone of our capitalist system, to be a counterforce.
  4. Paying directors more. Good capitalists believe in incentives. There is a growing consensus that directors should sit on fewer boards and get paid more. We fully agree, but the even more important issue is to structure that pay toward longer-term rewards. To get directors really thinking and behaving like owners, companies should ask them to put a greater portion of their net worth on the table.

http://www.mckinsey.com/insights/organization/making_boards_work?cid=other-eml-alt-mip-mck-oth-1412

maltaway_balatti_board member_effective board

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