RC: A board should be composed of individuals who have the skills and abilities to drive corporate strategy and deliver long-term shareholder value. Do you think that companies pay enough attention to the many aspects of board composition?
Walker: In today’s highly competitive, innovative and disruptive business environment, boards simply cannot rely on their limited networks to fill critical board seats. It is critical for boards to develop detailed director needs assessments, based upon specific skill sets, cultural fit and demographics.
RC: Generally speaking, are boards slow to come to grips with issues such as gender diversity and ensuring that diverse skill sets are represented on the board?
Walker: Historically, boards often took the path of least resistance. It was much easier for directors to ask their boardroom peers about potential director candidates or default to friends of the CEO rather than challenging themselves to look outside their own networks. Our governance surveys reflect that 81 percent of larger public company boards today have at least one female director and 56 percent have at least one minority director. In smaller companies – companies under $300m in market capitalisation – 62 percent have at least one female director and 37 percent have at least one minority director. Given the current business environment and escalating scrutiny from stakeholders, including institutional investors, regulatory bodies, activists and special interest organisations, boards are beginning to seriously consider the importance of having diversity of skills, gender and ethnicity represented at the table.
Jul-Sep 2017 Issue
National Association of Corporate Directors