Just 38% of company boards of directors have high levels of director quality and positive social dynamics, according to a Gartner survey of general counsel.
This statistic comes as many legal chiefs spend a significant amount of time focused on director onboarding, education and evaluation.
However, Gartner advises general counsel to spend more time sourcing and recruiting candidates for board roles.
These activities can improve director quality and social dynamics by 42%, according to a Gartner press release about its survey of 92 GCs.
The recent turmoil at OpenAI surrounding the interactions between the organization’s board and CEO Sam Altman has thrust boards into the spotlight. As part of Altman’s return to OpenAI after his firing, the board is being revamped.
Gartner suggests several steps general counsel can take to improve sourcing and recruiting efforts for their boards.
Identify necessary skills
A general counsel can start by working with their organization’s CEO and chief human resources officer to identify the skills needed from directors.
The skills identified should match with the organization’s strategy for change moving forward.
“Simply backfilling the skills of directors as they depart will create skills gaps as organization strategy evolves and economic and regulatory conditions continue to change,” Gartner says.
Additionally, board refreshment policies can help ensure director seats are filled with candidates who possess the skills demanded by the increasing oversight role boards must play, according to Gartner’s 2023 Corporate Governance Trends report.
For example, it is important that boards include directors who possess cybersecurity expertise, the report says.
Talent pool
Legal chiefs are also advised to work with CHROs to expand the talent pools of candidates being considered for board posts.
Extending the organization’s reach beyond typical recruiting pools can prevent any issues that may arise in trying to fill skills gaps that are identified.
“For instance, a candidate who has little to no experience serving on a board, but also has a strong cybersecurity background, could be a strong candidate that might slip through the cracks if executives place stringent requirements on previous board experience,” Gartner says.
Additionally, GCs should create and maintain a portfolio of potential director candidates, says James Crocker, director, research, for Gartner’s Legal & Compliance practice.
Collaborating with the board’s nominating committee chair can also help improve the quality of director nominations, according to Crocker.
Diversity
There is at least one other way GCs can work with CHROs and board leaders to improve director quality.
Gartner recommends the executives and board chairs work together to educate the board on the importance of diverse perspectives.
This approach could help prevent directors from nominating board members like themselves, which Gartner says “has the effect of entrenching biases and blindspots already present in the current board makeup.”
Stakeholders are also seeking increased director diversity.
“Strategies to increase diversity include adopting a robust board evaluation process, increasing board size and adopting refreshment policies,” the Gartner corporate governance report says.
