In this video, Corporate Governance Expert David Beatty addresses the challenges that board of directors can face when looking to become more strategic.
How Does a Board Get More Strategic?
Very difficult. In fact, being a value-added director is extraordinarily difficult. You think about the great financial crises, for example, 15 banks. All of them had eminent individuals on the Board, collectively they lost $2 trillion worth of shareholder value. And they try to be strategic, none of them got there.
And so, it’s really a difficult challenge to move beyond just being a compliance board, a policing board, a rubber stamp board. It takes a lot of energy and a lot of effort. A lot of ingenuity and, I think to some extent actually, a lot of luck.
Not many Boards make it. And most CEO’s in North America who I’ve polled, and I think you’ve all ready seen this slide, have a very low value attached to their time with the Board.
So from a managerial point-of-view, it’s, “Why do I do this?” And from an external third party evaluation point-of-view, “Do we get value from our Board?” The answer’s very often, “No, we don’t.”
So it’s a tough job. That’s where I always start.