7 board management best practices for 2023
Board management is an art: your board oversees the direction of your organization, but who oversees the efficiency and effectiveness of your board? Adopting board management best practices can dramatically streamline your board’s operations and equip it to respond to an ever-changing corporate landscape. With risks and opportunities evolving faster than ever, the board needs to be agile, capable and effective.
We’ve identified seven board best practices for 2023 to keep you a step ahead.
7 Board Management Best Practices
1. Stay On Top of New Risks, Opportunities and Best Practices
Keeping abreast of board management best practices is a best practice in itself. Digitally-savvy boards recognize that issues like cybersecurity need to be front of mind. And as shareholder activism goes mainstream, activist investors have become unlikely heroes, driving campaigns that are “much more reflective of the world in which companies operate” and far more likely to inform board thinking than they were even a year ago.
As we look toward what lies ahead in 2023, the world is a volatile place. But as Maria Moats, Leader of PwC’s Governance Insights Center, noted in a recent episode of Diligent’s Inside America’s Boardrooms, good governance is a crucial underpinning for boards in an uncertain world. This good governance not only creates a strong foundation for effective oversight but also builds trust with stakeholders — both of which are vital to keeping pace with a changing landscape and shifting expectations as you tackle 2023’s top GRC risks.
A need to focus on risk is one of the biggest takeaways when we assess the governance, risk and compliance (GRC) outlook for 2023 — but the most compelling risks are constantly evolving, as are the regulatory and legislative requirements you need to comply with. Keeping pace with best practices can therefore be challenging; joining industry forums or subscribing to relevant newsletters will ensure that you’re in tune with the ever-changing corporate landscape.
2. Keep Shareholders and Stakeholders Top of Mind
When identifying and striving for board management best practices, your stakeholders should be front and center in your thinking. This doesn’t just mean investors: all stakeholders are increasingly vocal about the issues they think organizations and their boards should prioritize and, as we noted, being listened to in unprecedented ways. Diligent’s Modern Governance Summit in October 2022 heard that today, activist investors inform board discussions in ways they wouldn’t have done a few years ago.
Engage with these stakeholders: experienced non-exec director Ray Troubh believes that “interaction of the large shareholders and the board members should be more frequent” than it’s traditionally been if you’re seeking best practice stakeholder engagement.
3. Cultivate an Agile Approach…
The need for corporate agility, which came to the fore during the Covid-19 pandemic, becomes even more vital in a recession. Maria Moats notes the potential for recession — and the fact that “some would say in Europe they are already in recession” — as a key driver for better governance; it’s also an impetus for an agile approach. Being able to adapt to the prevailing conditions is a prerequisite for successful boards and businesses.
4. …and an Adaptive Board
This agility is as vital within your board as across the wider organization. Boards are evolving constructs. The best boards recognize when they need external expertise, drawing on skills honed outside your sector. They keep an eye on new trends in board makeup, like the advent of board technology committees to tackle changing risks. In 2023, flexibility is one of the top board management best practices. Don’t let an inflexible approach hinder your board.
5. Challenge Yourself On Your Diversity of Thinking
The days of boards being dominated by a single demographic are changing. Businesses now realize that diversity of thought delivers strategic advantage and is the basis of an ethically-sound company, as outlined in a 2022 Diligent Institute report.
How do you structure a board? The answer is: to provide a diverse range of thinking. Explore the benefits of reverse mentoring as a way to leave behind old thought processes. Question whether there are barriers to equality on your board, and ensure your succession planning techniques enable you to build a diverse board pipeline.
6. Get On Top of Governance
Whether this is following a best practice in separating the roles of CEO and chair or ensuring a robust audit trail for your board decisions, best practices in governance and risk and compliance should be a key focus of every board.
Running more effective board meetings is a core element of this governance, ensuring timely information-sharing before meetings so that decisions are made with a 360-degree vision and capturing actions to execute all compliance and board duties.
7. Explore All Routes To a More Efficient Board
This discipline in running board meetings doesn’t just benefit your governance processes. Boards of directors are busy people, balancing their board responsibilities with the other challenges of their role.
Board meetings and the business that follows them need to be carried out in the most efficient way possible to maximize effectiveness and best use of board members’ time, which is why introducing the right technology made our list of board management best practices. Board management software facilitates collaboration, streamlines meeting organization and bolsters security — saving directors’ time and driving better data-driven decisions.
Implement Best Practices To Accelerate Your Board Management
Board management is an evolving craft; however rigorous your approach, occasionally revisiting best practices is a good discipline. The seven board management best practices above provide a good baseline for any board wanting to challenge itself.
As stated above, growing numbers of boards recognize the benefits of board management software to streamline and finesse their board management. Board management software can help you run your board confidently, minimizing admin and manual processes and creating a more secure, robust environment for your board.