9 board management best practices for 2024
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 the board to respond to an ever-changing corporate landscape.
With risks and opportunities evolving faster than ever, boards must closely manage their activities to remain agile, capable and effective. Whether you are managing enterprise risk or choosing board management software, this guide can help. Here, we’ll explain the board management best practices for 2024 to keep you a step ahead.
9 board management best practices
1. Education: 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 2024, the world is a volatile place. But as Maria Moats, Leader of PwC’s Governance Insights Center, noted in an 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 top governance, risk and compliance (GRC) issues.
A need to focus on risk is one of the biggest takeaways when we assess GRC in 2024 — but the most compelling risks are constantly evolving, as are the regulatory and legislative requirements you need to comply with.
2. Keep shareholders and stakeholders top of mind, and…
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. 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.
This is especially critical given the universal proxy rules adopted in 2023, which empower shareholders to make their feelings known come the annual shareholder meeting. Boards that understand shareholder sentiment can build partnerships with their shareholders to navigate the proxy fights that may emerge in 2024.
3. …Prioritize the issues that matter to your stakeholders
Engaging with stakeholders is a critical first step. Yet, discussions aren’t enough. Board management should encourage boards to remember they serve their stakeholders. To do that, directors need to act.
For example, 89% of investors consider a company’s environmental, social and governance (ESG) posture before buying shares, while an estimated 4 in 10 employees care about ESG. A well-managed board will respond to that focus by integrating ESG into the corporation’s strategic direction, risk management and reporting.
4. Cultivate an agile approach…
The need for corporate agility, which came to the fore during the Covid-19 pandemic, becomes even more vital during economic uncertainty Maria Moats noted the potential for recession in 2023 or 2024 — 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.
5. …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.
6. 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 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.
7. Get on top of governance
Whether this is following 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.
8. Address risk enterprise-wide
As corporations face risk from all sides — cybersecurity, fraud and climate change, among others — boards must develop a more integrated view of risk. Rather than waiting until risks arise, successful board management will push directors to proactively identify risk and the opportunities it can present.
Boards that embrace enterprise risk management (ERM) can more clearly define roles and responsibilities related to risk and make more strategic decisions that protect the organization from costly threats.
9. Explore how board management software boosts efficiency
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 nine 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.
