The board room is going through an extraordinary time of transition. More is being demanded of boards than ever before, and the activities of boards are under greater scrutiny.
Corporate boards no longer operate in a secretive world behind closed doors, beyond the watchful eyes of the public and media. Investors, stakeholders, regulatory bodies, and governments are demanding more transparency and accountability. The past six months have catapulted the boards of HP, Yahoo, NewsCorp, Goldman Sachs, MF Global, and Olympus, straight into the news headlines.
The reason for this increased scrutiny is a greater public understanding of the role boards can and should play. There is growing awareness by investors, employees, and customers of the consequences of boards and board members not asking hard questions, not adding real value to the organization, and not protecting its future health and wealth.
Many question what boards do and if they have the skill, vision, and determination, and indeed any power, to affect the real change necessary in steering organizations and improving their business practices. The answer is that the best boards do. Most organizations have boards, be they in the public or private sector, a FTSE 100 company or an NGO, a university or a utility, and these boards have the power to influence the direction of business, to ensure that organizations are doing what is necessary to operate at its best, and to take real action if the organization is not performing well.
Boards will be judged in the future on their ability to “future proof” their organization, ensuring that their organization has longevity and fortitude and the ability to withstand the vagaries of the marketplace, serving not only those invested in the company today, but the investors and all of the stakeholders of tomorrow. They’ll also be viewed for how well they fulfill and balance their grounding and stargazing responsibilities, making sure the company meets all of its legal requirements, manages risks properly and does business in a responsible way, while at the same time making sure the organization is ready and able to become the robust and resilient business that is capable of responding effectively to the yet unknown challenges in its future. Boards will be assessed on whether they simply chase short term gain or build strong organizations for the long term, and whether the people around the table of the board room complement each other well for the tasks at hand.