Institutional investors, stock exchange rules and the Securities and Exchange Commission have all put enhanced corporate governance in the spotlight. Companies should embrace this and internally put a focus on corporate governance since the correct governance toolbox can create an effective and progressive board of directors to steer the company toward strategic and financial success. Below are some strategies utilized by successful companies to put together an effective board of directors.
Board Diversity
A diverse board of directors made up of members with various backgrounds, skills, expertise and industry experience can increase overall effectiveness. The more knowledge and varied background the board possesses, the better ability it has to broadly evaluate issues from many difference perspectives. This, in turn, increases the chance of the board making the best possible decision for the organization. Further, companies should consider tailoring the diversity make-up of their board to the best mix they believe matches their strategic vision. Although many agree that both social and financial benefits are derived from having a diverse board of directors, board diversity is still lacking.
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