NON EXECUTIVE directors (NEDs) are faced with several challenges as they do their work. e quality of the Board members significantly impacts the performance of the organisation. e quality of Board members is primarily dependent on the selection criteria and process.

In some instances, the quality of the NEDs is influenced by the remuneration on offer. Organisations that adopt best practices in governance tend to make better business decisions, manage risk better and have better reputation. e adoption of good corporate governance practices tends to be driven by the quality of board leadership, the ability of the Board to focus on the right issues and generally the conduct(behaviour) of the directors.

In a study of 750 directors published by the Harvard Law School Forum on corporate governance and financial regulations (Global Board Culture and Director Behaviors Survey — conducted from October 2018 to February 2019.), they discovered the following insights which every Board must pay attention to:

In the same study, they found out that a dysfunctional board can easily cripple a company. e right skills and experience mix plays a significant role in the success of a board in driving company performance.

e research noted behavioural characteristics of board members that tend to lead to better performance.

Successful boards have open-minded directors; they are open to hearing a diversity of views in some instances, conflicting views, but they engage with those conflicting views productively to find common ground.

Such boards allow dissenting ideas and find common ground and take a common position once the issues have been thoroughly debated. e board chair plays a significant role in steering the board ahead successfully. What was noted of the board chair’s behaviour is given below, with gold medal boards leading the way.

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Non-executive directors global compensation trends

Willis Towers Watson’s Global Executive Compensation Analysis team reviewed 300 publicly-owned companies from the 2018 Fortune 500 list with proxies filed by June 30, 2018, for director compensation trends analysis and compared results to data from the same companies reported in 2017

References

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Going for Gold: Global Board Culture and Director Behaviors Survey(2019).Harvard Law School Forum on Corporate Governance and Financial Regulation.

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e Search for Meaningful Director Compensation Limits (2018) — Harvard Law School Forum on Corporate Governance and Financial Regulations.

Nguwi is an occupational psychologist, data scientist, speaker and managing consultant at Industrial Psychology Consultants (Pvt) Ltd, a management and HR consulting firm. https:// www.linkedin.com/in/memorynguwi/ Phone +263 24 248 1 946-48/ 2290 0276, cell number +263 772 356 361 or e-mail: mnguwi@ipcconsultants.com or visit ipcconsultants.com