The term “board refreshment” is the one the governance world has been using for the past couple of years as shorthand for giving more rigorous attention to board composition. Such attention is well warranted.
I think back to the days when I first joined Directors & Boards. The prevailing attitude in the early 1980s when boards were in the hunt for a new member was, “Let's get the best person available.” The best person, no surprise, often was a friend of the CEO. Boards today are more inclined to take a look around the table and see who is missing — i.e., what knowledge base, skill sets, perspectives, and diversity dimensions are lacking in the board's makeup — along with who just doesn't “fit” anymore. This is a good thing to be happening. It is the essence of board refreshment, as long as such gaps are not only identified but then filled with stronger hands to move the board and company forward.
There have been advisories aplenty in the pages of Directors & Boards on doing board refreshment. A big focus has been on beefing up the board's technology expertise. Critics have spotted significant shortfalls in boards' oversight of the technology component of business operations and of their failure to adopt proper risk policies and practices. Take a reading of Shellye Archambeau's article (page 43) for a sound analysis of this board role.
Another aspect of board refreshment is simply having a better understanding of your fellow members. This is the contribution that Ralph Stow makes with his distinctive cover story, “Do You Have a Gang on Your Board?” (page 18). This is a groundbreaking article for us, as we have never had an author profile in this way the personality types that populate a board. As Ralph writes, “Each adds their own unique value to a board, and each must be managed appropriately to truly leverage their benefit.” Authors Dennis Cagan and Peter Boni add in a few additional character types (pages 23-24) to worthy effect.
In an editor's note back in 2003, when I was projecting what was ahead for board members at that time, I cited an old Jewish saying: “I ask not for a lighter burden, I ask for broader shoulders.” It was a lamentation Jeff Sonnenfeld shared with a group of us who attended his Yale CEO Leadership Summit. (Many of you know Jeff for the dynamic work he does in his leadership role at the Yale School of Management and as founder and president of Yale's Chief Executive Leadership Institute.) It was an appropriate sentiment for the early 2000s, a troubled time when corporate America was emerging from the rubble of the dot-com implosion.
As I write this editor's note in the closing days of January, the stock market has been pummeling the shares of public companies (and private companies are getting beat up too as the market resets private firm valuation metrics). Board members are feeling the punches. And we can look around at other things going on that are indicators of troubling times for boards — for example, how regulators are imposing new capital requirements on stalwart providers of financial services (such as MetLife) that are forcing companies to change their destiny.
The year has barely launched when we come to the realization that the burden of board service is not going to be getting any lighter in the months ahead. So, broader shoulders it is as you enter the boardroom for your 2016 meetings — where one of the top priorities may be having to do some refreshing of the gang sitting around the table.