Breaking the Silence: Unveiling the Need for Directors to Speak Up

Effective corporate governance is essential for the success and sustainability of any organization. However, a recent survey conducted by PwC and The Conference Board reveals that many C-suite executives believe their corporate boards are not adequately challenging senior management. With only 33 percent of respondents stating that their boards ask probing questions, it's clear that there is room for improvement. Explore the reasons behind this issue and discuss what management can do to encourage directors to speak up more.

 

The Board's Role: Challenges and Criticisms

According to the survey, executives at both small and large companies express concerns about their board's ability to ask the right questions. Executives at smaller companies, typically with lower levels of independence and less developed governance practices, often feel their boards fall short in terms of challenging them sufficiently. On the other hand, executives at the largest companies face a different challenge. With diverse businesses under their purview, these executives question their boards' ability to grasp the intricacies of each division, leading to less effective questioning.

 

Management's Responsibility

While board composition and independence are crucial factors in effective corporate governance, the onus falls on management to ensure the board remains engaged and asks the right questions. Here are some steps management can take to foster a more proactive board culture:

 

  1. Provide Comprehensive Meeting Materials: Management should deliver meeting materials well in advance, focusing on areas of risk and opportunity. By giving directors sufficient time to review and digest the information, they can formulate thoughtful questions that challenge management effectively.

 

  1. Avoid Overloading Agendas: It's essential to strike a balance in meeting agendas. Management should refrain from overwhelming directors with presentations that offer limited room for discussion. By creating space for robust dialogue, the board can actively engage with management and offer valuable insights.

 

  1. Facilitate Deep Dives and Site Visits: In multidivisional companies, management can organize deep dives into various business units and arrange director site visits. This hands-on experience allows board members to develop a deeper understanding of the organization's diverse operations. Armed with this knowledge, they can pose pertinent questions that push management to think critically.

 

Corporate Director Council and ESG Center: Empowering Directors

The Conference Board has taken the initiative to address these challenges and offer resources to enhance the effectiveness of corporate boards. The Corporate Director Council program provides directors in leadership positions on US public company boards with practical insights to strengthen their strategic partnership with management. By joining this program, directors gain valuable knowledge and tools to contribute more effectively to their organizations.

 

If you're interested in delving deeper into the topic of how boards can effectively challenge senior management, I highly recommend reading the article "C-suite Wants Directors to Speak Up More, Not Less: Here's What Management Can Do" on The Conference Board's website. This insightful piece provides additional context, statistics, and actionable insights to promote stronger board engagement and questioning. Discover more about the strategies management can adopt to encourage directors to speak up, ask the right questions, and foster a culture of effective corporate governance. Happy reading!

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