“Building Board Culture: The Critical Role of the Board Chair in Driving Board Performance” from Russell Reynolds Associates demonstrates with survey data the positive impacts on board effectiveness associated with particular board chair practices.
Without exception, chairs of boards whose directors rate their board’s effectiveness as a 9 or 10 on a 1-10 scale and who report the company as having outperformed relevant TSR benchmarks for two or more consecutive years (i.e., “Gold Medal Boards”) are more likely than boards overall to exhibit these practices:
The report notes that board evaluations (among other things) enable and inform constructive feedback to directors. Along those lines, Gold Medal Boards conduct a formal evaluation at least once a year at a higher rate than boards overall (66% vs. 55%, respectively) and conduct a third-party-facilitated evaluation at least triennially at a higher rate as well (50% vs. 45%, respectively). (n=1,001).
Gold Medal Boards are also much more likely to proactively address any director performance issues (67% vs. 53% for boards overall) and to have participated in a self-evaluation that prompted meaningful improvement in board performance (68% vs. 57% for boards overall). (n=975).
The survey is based on responses from directors worldwide (approximately 25% Americas) across industries, with 44% representing companies with more than $1 billion in annual revenues.
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This post first appeared in the weekly Society Alert!