ESG Oversight a New Top Priority
One source of volatility requiring comprehensive director management is environmental, social and governance (ESG). While companies are taking meaningful steps on ESG, many still have a long way to go to live up to the standards of new proposed legislation.
“Most general counsel accept the importance of ESG expertise on the board,” said Crocker. “Yet just 30% of boards actually possess any ESG or environmental expertise. Key to improving the situation will be director ESG education on the most relevant ESG topics for the business, which can be delivered by in-house experts.”
Director management, however, should play a wider role than just educating existing board members. Formally identifying skill gaps, evaluating existing directors and feeding that into the process of sourcing and recruiting new board members is key to building the needed expertise at board level.
Director Life Cycle
Director management can be significantly improved by taking a “life cycle” approach. Each element of director management is treated as a part of a larger whole that contributed to all other stages.
“Performance evaluations should help to identify skill gaps and inform director education, as well as the search and recruitment phase of director management,” said Crocker. “Keep things relevant by basing skills and expertise assessment on the organization’s strategic direction.”
Gartner clients can also read more in: 6 Key Findings From the 2022 Corporate Governance and Board Management Benchmark.
Non clients can read the ebook: 6 Key Findings from the Corporate Governance and Board Management Benchmark.
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