Building the right board of directors is a crucial step for an organization. Directors must face both new work models as well as digital transformation after dramatic changes to the corporate atmosphere over the last few years.
Whether the board needs new members or has to be built from scratch, appointing and nominating new directors is a process to be approached with caution. Recent years saw how the digital age affected the boards’ design and actions, as directors must now take proactive steps towards the digitalization of their governance. In addition to that, the COVID-19 pandemic and the subsequent use of remote work forced directors to face new challenges, and rapidly.
Building A Diverse Board
In recent years, it emerged that one of the keys to building a successful board was creating a diverse board. A diverse board is comprised of members from different backgrounds, genders, ethnicities. Diversity enables the board members to make meaningful and varied contributions by relying on an array of competencies and experiences.
Bringing gender diversity to the next level
A diverse board should equally take into account gender diversity. Gender diversity in the boardroom first became a point of focus for high-growth companies before impacting most of the boards around the globe. Although the gender gap remains substantial in many nations, the benefits brought by women directors are slowly being recognized with influential women laying the foundation of the governance of tomorrow. This movement is accelerated by countries such as France, which has implemented new regulations requiring companies to comply with ambitious gender quotas in top management posts.
Finding The Balance Between Stability And Innovation On The Board
A strong board of directors should be made of long-serving and committed members, supported by an influx of new members. This constant evolution allows for the board to follow a consistent strategic direction while also bringing some fresh and new perspectives. In addition, the director’s competencies should be aligned with the culture of the company. For an established board, incoming members must be a good fit culturally. It is also important to consider that new members should always bring something new and add value to the current board.
Capturing The Right Range Of Expertise
A new nomination should be preceded by a thorough assessment of the competencies needed by the board, taking into account the competencies already provided by other directors. A fine analysis of the technical and behavioural competencies of the directors will be at the heart of the selection process. The assessment can take the form of a competency table, listing all needed competencies linked with the different directors.
Relying on strong technical skills
The right range of expertise means a strong foundation of traditional skills, mixed with specific innovative competencies. Depending on the strategic direction and current board composition, technical competencies to look for generally include:
- Accounting
- Finance
- Marketing
- HR management
- CEO management
- Strategy implementation and governance
- Industry knowledge
In addition, companies should also look into less traditional technical skills:
- Tech and cybersecurity knowledge
- Climate risk management
- Crisis management background
- Digital governance
Digitalization: The Key To An Effective Board
Digital transformation has deeply impacted companies at various levels, such as legal departments and corporate boards. Yet, the COVID-19 pandemic revealed important disparities in board digitalization.
Board directors must not only be tech-savvy, but they also are important leaders in the implementation of digital tools for the board and company. Digitalization is now critical for growth and sustainability, and, in times of lockdowns and remote work, survivability.
For current boards lacking digitalization skills, bringing this type of profile is crucial. Not only should directors be working towards digital transformation, they should lead this transformation and add value to this process along the way.
The set of skills needed for a director leading digital transformation include:
- Acute understanding of challenges and assets of digital transformation
- Knowledge and experience of digitalization at a company level
- Awareness of vulnerabilities linked to digital security
- Ability to implement digital practices within the board
The Ability To Work Under Maintenance Mode
As shown by the COVID-19 pandemic, the ability to work under maintenance mode is critical for companies navigating in a new economic turmoil. Companies have been forced to operate remotely on a daily basis, for undetermined periods of time. This ability to work under mainte- nance mode goes in hand with the digitalization of boards and operations.
Cautious and agile companies had already designed crisis management plans, which can include reduction of capital expenditures, the flexibility of office space rentals, and digital measures to ensure business continuity. Yet, the crisis revealed that boards were largely unprepared for this type of crisis.
Beyond the crisis management plans, competitive boards have shown a capacity to implement positive change as a reaction to the crisis. These are boards whose members were able to adapt quickly and firmly lead the company through the storm. As working under maintenance mode might become the new normal, directors embracing digital transformation and forward-thinking is a critical asset in a proactive and modern board.
To conclude, a strong and effective board of directors involves several elements: diversity in backgrounds and skills, agile and flexible leaders, and a willingness to dive into digital transfor- mation. These components are essential for boards looking to navigate and thrive in the more complex economic and social landscape ahead.
