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      • Grow with Governance: PadUp Ventures' Rajat Jain Demystifies Correlation of Governance and Economic Growth
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      • NEW REGULATORY PROVISIONS RELATED TO INDEPENDENT DIRECTORS
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Board Refreshment: Finding the Right Balance for your Board!

Board Refreshment: Finding the Right Balance for your Board!

By Neha Shah
Calendar

Mar 17 th 2021

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“Heterogeneous BoDs with independent thinking enforce governance, and diversity strengthens creativity.”                                                                                                                                                               

                                                                                                                                   - Pearl Zhu

Today the primary concern of investors and all the key stakeholders is that of stale Boards. It means that the Board which has not added new members for many years, may become complacent, whereby a lack of independence,new perspectives, and diversity could pose significant risks in relation to long-term performance and effective oversight of management. Therefore, finding the right balance for the Board is extremely crucial.

These days evolution of Board of Directors is often referred to as ‘Board Refreshment’. In these evolving times, businesses are bringing in innovative practices for the long-term sustainability and certainly, this evolution must begin at the top with the Board of Directors. Very interestingly, Board directorship is still considered to be a lifetime engagement for the directors on Board. In fact, we could say that we live in a corporate culture that still assumes that there is some problem when a director’s tenure is anything less than a perennial. However, this nowhere means that the seniority, wisdom and knowledge of such directors are not important for the growth of the company. Yet, it is extremely critical for the Board to evolve with the ever-changing business environment and hence their ‘Independence’ and ‘Performance’ play a vital role in creating a strategic Board. It is very important that the composition of Board must reflect company’s current strategies and plans.

Studies reveal that key stakeholders of countries like UK and US are very much aware of the concept of Board Refreshment, however, in India, we are still living in a culture where the Board follows an old school of thought where seniority in terms of ‘tenure’ is taken with deep seriousness. Emphasis on aforementioned terms like ‘Independence’ and ‘Performance’ seems to be gone for a toss while creating right Boards and nurturing their thought process for better decisions. Considering today’s scenario of Indian corporates, we realize that because of the incorrect composition of Boards and their irrelevant thought process, many companies have faced corporate governance failures. It is not always about having financial scams amounting to failures for companies, but if we check the data, unfortunately in most of the companies, governance failures have taken place due to improper systems in place. Certainly, composition of the right Board is the topmost in the list that can either make or break company’s vision. It is observed that very few companies in India know about the concept of succession planning and if at all they are conceptually aware, no plans in this regard have been implemented to ensure business sustainability.

Taking Indian corporates into consideration and how they could find the right balance for their Boards, lets list down some ways that can help companies to move towards the concept of ‘Board Refreshment’:

a.      Conduct annual individual director’s evaluation

It is rightly said that a robust Board and the Board evaluation process followed by the Company can help in measuring both the group and individual performances. Such assessments if conducted on regular basis can help companies to determine the commitment, mindset and performance of directors’ basis their skillsets, independence and rational thinking, ability to take strategic decisions, engagement with stakeholders, style of communication and leadership and more.

b.     Review and assessment of director’s skillsets basis the long-term sustainability of the business and ever-changing market environment

Having a right mix of people at the top is a blessing. However, to attain such a combination is one of the most difficult tasks that companies face in practicality. It is very important that focus on the skillsets of directors must be taken as one of the topmost parameters for assessing the performance because with the ever-changing market conditions, it becomes extremely relevant to have upgraded skills for director or senior management personnel to take decisions with greater efficiency. Therefore, a regular review and assessment would not only help companies to have the right choices of directors at the top but also a great professional mix with varied skillsets and backgrounds would be a boon.

c.      Establish Board renewal and succession programs with short term milestones

A Board renewal program with short term milestones creates a framework that allows the Board to plan and target its refreshment and tenure balance to specific objectives, while offering greater flexibility compared to term limits or mandatory retirement age policies. For example, companies can set a target of nominating a minimum of one new director to the Board every three years, or they can annually benchmark progress against an optimal Board tenure composition. This will give companies a broader mindset to shape up their future plans in a more strategic manner.

d.     Board Governance and Training should pay greater emphasis on introduction of terms like ‘Board Refreshment’ and ‘Succession Planning’

Many companies in India follow the process of ensuring Board governance from time to time. However, mere training of the Board of Directors is not at all the solution to get right Boards in place. Having same contents in the Board training will only lead towards tick the box approach and make the procedure mundane rather than giving benefits in the ling-run. Therefore, introduction of relevant topics to the Board considering the market conditions is extremely important especially in order to make them think big towards the future of the Company and make right decisions at the right time.

Therefore, having renewed Board with fresh and innovative thinking is the need of the hour. A refreshed Board is an asset to every company and it must be highlighted that the lack of Board refreshment poses significant risks to Board performance and effective oversight of the Company.

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Category

  • All
  • Boardrooms
  • BOARDROOMS
  • Independent Directors
  • Role of Board
  • Mindset Shifts of Boards
  • Independent Directors and Promoters
  • Sustainability / ESG
  • business implication
  • employee exits
  • COMMITTEE MEETINGS
  • Union Budget
  • Independent Director
  • Grow with Governance
  • Grow with Governance
  • INDEPENDENT DIRECTOR
  • Entrepreneurial Board
  • ESG & ITS IMPORTANCE
  • leadership coaching
  • Change Management
  • Advisory Boards
  • Boards
  • Boardroom
  • Brand Yourself as a Leader of the Company
  • Kindness
  • Are you hesitant to speak in the Boardroom!
  • Governance & ESG
  • Directors
  • Independent Directors
  • Corporate Governance
  • Leader development
  • Gratitude, Purpose
  • decision making
  • Systematic Investment Plans in Emotional Intelligence
  • Corporate Governance
  • The Board’s Role in ESG!
  • Balance Boards
  • Agility and Compassion
  • Governance and Board
  • Diversity and Inclusion
  • Directors,Promoter Directors
  • Board Members, Directors and Independent Directors
  • Board and Senior Management
  • New Directors
  • Cyber Insurance
  • Salary Increment
  • Economy Growth
  • Human Resources
  • Generating Wealth Beyond Money
  • Agile Mindset for Leadership
  • Aspiring Independent Directors
  • Board Leadership
  • Corporate Governance & Women on Boards
  • BOARD MEMBER
  • SME
  • WOMEN DIRECTOR
  • BOARD MEMBERS

Archive

  • 2021
    • April (3)
      • Will you drive your vehicle without a dashboard?
      • Are you making SIPs to improve your Emotional Intelligence
      • Corporate Governance needs a Moral Compass – Ethics in Indian Boardrooms!
    • August (9)
      • Grow with Governance: ESG is the umbrella for CSR, says Vedanta's Roma Balwani
      • Grow with Governance: PadUp Ventures' Rajat Jain Demystifies Correlation of Governance and Economic Growth
      • Grow with Governance: Family governance impacts the culture of a family-run business, says Equations Advisors' Mita Dixit
      • Entrepreneurial Board
      • NEW REGULATORY PROVISIONS RELATED TO INDEPENDENT DIRECTORS
      • ESG & ITS IMPORTANCE FROM THE POINT OF VIEW OF BOARD MEETING
      • Start early, don't wait till retirement to become an Independent Director, says Increate Value Advisors' Milind Sarwate
      • The winding road of leadership coaching in the post-pandemic era
      • Challenges of Organizational Culture Change
    • February (4)
      • Re-examination of Purpose by the Boards in Post -Pandemic Era
      • What Makes Great Boards Great! Performance Evaluation by Boards and Role of Independent Directors
      • Promoter Director – Time to become Custodian of Governance!
      • Diversity and Inclusion – The Board Perspective!
    • January (2)
      • New Directors - Have you done your due diligence
      • Cyber Security Insurance and Boards
    • July (7)
      • Why Advisory Boards Are Important for Indian Business Corporates?
      • Grow with Governance: ESG essential to repair the damage economic activities caused to the earth, says CA Shailesh Haribhakti
      • Top 10 areas to contribute in Boards as Independent Directors
      • Top 10 Questions to Ask in Boardrooms!
      • Essential HOWs of Boardroom!
      • Kindness is key
      • How to Brand Yourself as a Leader of the Company?
    • June (6)
      • Leading from the Boardroom
      • Are you hesitant to speak in the Boardroom!
      • The Neem Project a Leadership case study
      • Directors Liability in India
      • Why do promoters need Independent Directors?
      • Corporate Governance Deviation – Infosys Case Study
    • March (4)
      • Board Refreshment: Finding the Right Balance for your Board!
      • HR Governance and Board – How Important Is It?
      • Agility and Compassion: Two Pillars for Boards in the Post Pandemic Era!
      • Modernizing Governance: The Board’s Role in ESG!
    • May (3)
      • Restructuring appraisals in 2021 – Gratitude, Purpose & Meritocracy
      • How do you make your personal Brand?
      • Leadership Coaching: How does it help Leaders
    • October (2)
      • Are Independent Director’s required on the Board?
      • 'Ethics & Governance' lesson should start from school, says Federal Bank's Independent Director, Sankarshan Basu
    • September (3)
      • Grow with Governance: As an Independent Director ensure your voice is heard, says Apurva Purohit
      • Grow with Governance: Push for ESG agenda; pool CSR funds to maximise impact, says Ranganath NK, former MD of Grundfos Pumps
      • Grow with Governance: Boards should prepare companies for different risks, says National Insurance Academy's G Srinivasan
  • 2020
    • August (4)
      • WOMEN DIRECTOR-An Emerge
      • ARE YOUR BOARD MEMBERS SAVVY WITH FINANCIAL TERMS AND EXCEL IN FINANCIAL LITERACY QUOTIENT AS PER COMPANIES ACT 2013 MANDATES.
      • BOARD MEMBER SELECTION- A TASK OF PERFECTION
      • SME IPO – AN OPPORTUNITY TO CAPITALIZE YOUR BUSINESS
    • December (3)
      • Good or bad, Salary Increments always cause a heartburn among employees
      • Is Economic Progress Enough?
      • Emotional Intelligence
    • November (3)
      • Generating Wealth Beyond Money
      • "Agile Mindset for Leadership"
      • Tips for Aspiring Independent Directors
    • September (3)
      • Independent Director
      • Lean Thinking Boards
      • Corporate Governance & Women on Boards
  • 2022
    • August (1)
      • Liability of Independent Directors – An Important Aspect of Corporate Governance
    • February (4)
      • A Hero's Farewell: How to handle employee exits with dignity
      • Green Bonds: An Instrument for Financing a Sustainable Future
      • Tool for effectiveness of Board Committees - Ask Right Questions
      • Russia-Ukraine war and India’s Business Implication
    • July (2)
      • Stagnation or Evolution – Mindset Shifts of Boards when Company sees Stagnated Growth
      • Risk Assessment and Minimization Procedures – Role of Board
    • March (2)
      • A study on Sustainability Report of Container Shipping Companies.
      • India and The ESG impact of Crypto Currencies
    • May (1)
      • Independent Directors liability under GST
    • November (1)
      • Workplace Sexual Harassment and the Role of Board
    • October (2)
      • How many Boards are too many?
      • Women in Indian Boardrooms Vs Diversity = Inversely Proportionate
    • September (2)
      • Organizing for the Future – Important keys to becoming future ready
      • Are you ready to serve on the Board?