Boards of directors today often face heightened pressures and increased complications amid high profile scandals, regulatory demands, activist investors and media scrutiny, according to a new Executive Monitor report released by Boyden, a premier global talent and leadership advisory firm.
The report, titled The Board of Directors: Regulation and the Role of Boards, unpacks the challenges facing directors and explores areas of opportunity. It consists of two editions, U.S. and Global. The U.S. edition examines recent shifts in the landscape, including the CEO and board relationship, effective management of regulation, and changing factors of digitization.
The report features results from a new Boyden survey of 1,200 U.S. adults, completed in May 2018, regarding their views on the state of regulation:
- For the technology sector, 55% of U.S. adults believe that technology and digital companies are under-regulated.
- For financial services, a plurality, or 44%, of U.S. adults ages 18 to 34 indicated that regulation in the industry has become too overcorrected, stifling innovation.
"The integrity of the company ultimately boils down to board independence. This independence is a direct result of regulation, which is ultimately in place to protect the shareholders," said Thomas Flannery, Global Leader of Boyden’s CEO & Board Services Practice and Managing Partner, Boyden United States.
"Regulatory legislation is never a first mover," added Eleanor Bloxham, Founder and President of The Value Alliance. "Regulation is reactive and is always late to the game, implemented in response to issues and conflicts."
In addition, the report reviews the following key board attributes and concerns:
- The need for independent thought on the part of individual directors
- Consequences of an ineffective relationship between the CEO and board
- Instances of management overextension and lack of board oversight
"I have always abided by the principle that the boardroom should never feel like a dog-and-pony show. It is a red flag to find yourself looking around and knowing exactly what each board member is going to say," explained George Chavel, Board Member at C.H. Guenther & Son, Giant Eagle, Valet Living, and World Kitchen, Inc.
"Years ago, it was ideal to have a board of exclusively CEOs," said Karen Kosiba Edwards, Partner of Boyden United States. "However, the world is moving so fast now that knowledge quickly becomes outdated. For this reason, it is critical to have a variety of functional expertise in the boardroom to provide insight on the ever-changing landscape."
In addition to remarks from Flannery, Bloxham and Kosiba Edwards, the report includes insights from interviews with other Boyden partners and outside executives including Cindy Baerman, CEO at Executive Advisory Services; Sturges Karban, CEO and Director at MJIC and Board Member at Thorin Resources, LLC; and Charles Cohen, Co-Founder at Cohen & Grigsby, P.C. and recipient of the National Association of Corporate Directors 2018 Lifetime Achievement in Governance Award.