Peter Crow
  • Home
  • About
  • Musings
  • Research
  • Contact

The contribution of boards to company performance

19/4/2014

2 Comments

 
A blog article, with the catchy title How to double your company's profit: begin by refreshing your board of directors, appeared in Huffington Post today. The article is helpful because it highlights the importance of having a diverse board. Here's a snippet: 
Imagine instead a board comprised of 10.7 people (the average board size) where directors of a variety of ages bring the relevant expertise and leadership experience that is needed, and have grown up in various regions of the world, in a variety of socio-economic conditions. Such a group, some with academic credentials or particular subject mastery, others having built and led innovative ventures, climbed the ranks of multinational corporations throughout the world, having life experiences in emerging markets, and playing and working with the latest technologies from the time they could crawl, can truly envision what's possible and also know what questions to ask management.

With such boards of directors, multinational corporations will finally unleash their greatest potential, attaining exponential profits while achieving peace and prosperity.

Korngold makes some great points—she is amongst an increasing number of people to suggest that better governance leads to better performance. Diversity in the boardroom is a good thing. However, a couple of her assumptions deserve comment:
  • Korngold suggests that diversity in the boardroom is causal to increased company performance. Sorry, but we don't know that. Diversity of thought and experience within a group has been associated with the making of better decisions (because a wider range of options and ideas are explored). However, placing a diverse group of experienced and effective directors together to govern a company does not necessarily lead to high performance. There are many other internal and external factors, some of which are well outside the control of the company, let alone the board.
  • Korngold asserts that increased performance occurs when board members "truly envision what's possible and also know what questions to ask management". These are important attributes of effective boards, however there is much more to it. In addition to being fully engaged in the process of governance (implied in Korngold's comments), boards need to be forward facing and actively involved in the development of strategy. Even then, increased performance may not follow.

Governance is complex, socially-dynamic and every board is unique in some way. Things that work in one instance may or may not have the same effect elsewhere. Notwithstanding these comments, I enjoy reading Korngold's articles. They add much richness to the discourse.
2 Comments
James McRitchie link
20/4/2014 03:07:55

"placing a diverse group of experienced and effective directors together to govern a company does not necessarily lead to high performance"

Seeds planted in fertile soil don't necessarily grow but in most cases it is better than casting them to the wind.

Reply
Peter Crow
20/4/2014 04:55:24

Thanks James, your analogy is nigh on perfect!

Reply



Leave a Reply.

    Search

    Musings

    Thoughts on corporate governance, strategy and the craft of board work; our place in the world; and, other things that catch my attention.

    Categories

    All
    Accountability
    Conferences
    Corporate Governance
    Decision Making
    Director Development
    Diversity
    Effectiveness
    Entrepreneur
    Ethics
    Family Business
    Governance
    Guest Post
    Language
    Leadership
    Management
    Performance
    Phd
    Readings
    Research
    Research Update
    Societal Wellbeing
    Speaking Engagements
    Strategy
    Sustainability
    Teaching
    Time Management
    Tough Questions
    Value Creation

    Archives

    January 2023
    December 2022
    November 2022
    October 2022
    September 2022
    August 2022
    July 2022
    June 2022
    May 2022
    April 2022
    March 2022
    February 2022
    December 2021
    November 2021
    July 2021
    June 2021
    March 2021
    February 2021
    September 2020
    August 2020
    July 2020
    June 2020
    May 2020
    April 2020
    March 2020
    November 2019
    October 2019
    July 2019
    June 2019
    May 2019
    April 2019
    February 2019
    January 2019
    December 2018
    November 2018
    October 2018
    August 2018
    July 2018
    June 2018
    April 2018
    March 2018
    February 2018
    January 2018
    December 2017
    November 2017
    October 2017
    September 2017
    August 2017
    July 2017
    June 2017
    May 2017
    April 2017
    March 2017
    February 2017
    January 2017
    December 2016
    November 2016
    October 2016
    September 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    January 2016
    December 2015
    November 2015
    October 2015
    September 2015
    August 2015
    July 2015
    June 2015
    May 2015
    April 2015
    March 2015
    February 2015
    January 2015
    December 2014
    November 2014
    October 2014
    September 2014
    August 2014
    July 2014
    June 2014
    May 2014
    April 2014
    March 2014
    February 2014
    January 2014
    December 2013
    November 2013
    October 2013
    September 2013
    August 2013
    July 2013
    June 2013
    May 2013
    April 2013
    March 2013
    February 2013
    January 2013
    December 2012
    November 2012
    October 2012
    September 2012
    August 2012
    July 2012
    June 2012
    May 2012
    April 2012
    March 2012

Peter Crow PhD CMInstD

Company director | Board advisor
© COPYRIGHT 2001–23. TERMS OF USE & PRIVACY
Photos used under Creative Commons from ghfpii, BMiz, Michigan Municipal League (MML), Colby Stopa, MorboKat
  • Home
  • About
  • Musings
  • Research
  • Contact