“Most organizations are making some attempt to assess the strategic impact of ESG,” said Mr. Tanenbaum. “But far fewer are going to the next level by setting clear ESG-related operational goals or otherwise embedding ESG into corporate decision making.”
While GC tend to be successful at bringing new information to the board, they self-report as less effective at driving action. However, as organizational transformation shifts to a societal focus, board action is required to ensure that directors have the skills, knowledge, experience and processes necessary to oversee this shift, and GC are often the executive best suited to help.
Think More Broadly About What Is Driving a Need for Board Education
Board education and director training, respectively, were the second and third most common priorities for GC. This reflects a feeling among GC that their board lacks the skills to best navigate the current environment their organization faces.
“It’s an intuitive solution to the problem: we need more or different skills, let’s get some training,” said Mr. Tanenbaum. “But actually, GC and the board in general need to see any skills deficits they may have as a larger lifecycle problem rather than as just a lack of training.”
To make the biggest impact in increasing the board’s readiness for the societal transformation that is ahead means thinking about how board evaluations can uncover skill, perspective and process gaps, that feed into director selection. GC must also look at refreshment that is supplemented with training in an ongoing lifecycle. These are aspects that are driven by the need for specific skills and perspectives rather than by outmoded selection criteria.
Board evaluations in their current form often don’t assess individual director skills, so it’s hard to pinpoint where the worst deficiencies lie. It’s difficult to remedy this through training because over half of organizations do not have any requirement for annual director training.
“Too often board evaluations are a check-the-box exercise, and director tenures are so long that they inhibit board refreshment,” said Mr. Tanenbaum. “The skills the board needs for the next 10 years likely won’t be found in the same old places. All of these factors play a part where boards have become stagnant and lacking in the skills they need to guide the organization, and new thinking is required to break out of old patterns.”
Gartner clients can learn more: 6 Ways for GC to Improve Board Effectiveness in 2021.
Non clients can learn more here: 6 Ways for GC to Improve Board Effectiveness in 2021.
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