Gartner survey reveals lower director quality in company boards

A recent survey conducted by Gartner has found that only 38% of company boards of directors can claim high levels of director quality and positive social dynamics.

The survey was held in February 2023 and involved 92 general counsel (GC) respondents. The survey's aim was to provide these individuals with unique benchmarking information relating to the corporate governance practices of their peers, both in public and private sectors.

According to James Crocker, Director, Research, for the Gartner Legal & Compliance practice, "General counsel spend a significant amount of time and energy on director onboarding, education and evaluation, while giving comparatively less attention to sourcing and recruiting."

The ultimate aim of these efforts is to strengthen overall director quality. The research, however, indicates a substantial scope for improvement for many organisations.

An effective board is one that holds its executives accountable while also making positive contributions towards corporate governance, strategy, and risk management. However, the study reports that 50% of the GC state that their board of directors is not entirely effective based on these criteria.

The findings indicated that the most significant individual factor in improving board effectiveness lies in enhancing director quality and social dynamics. With targeted improvements in these areas, board effectiveness saw an increase of 53%. Meanwhile, when Gartner experts rated GC on an index of director quality and social dynamics, they found that 62% did not meet the necessary criteria.

The survey concludes that general counsel must shift their focus towards director sourcing and recruiting, a change which could lead to a 42% improvement in director quality and social dynamics. For boards looking to enhance their sourcing and recruiting efforts, working with the nominating committee chair to improve the quality of director nominations is key, according to Crocker. In addition, it is necessary to create and maintain a portfolio of potential director candidates.

To enrich the quality of nominees, Gartner recommends that GC collaborate with the CEO and CHRO to identify the skills needed for future directors. Moreover, they should also work in coordination with the CHRO and board chair to educate their board on the importance of diverse perspectives.

Doing so would prevent directors from nominating successors who mirror themselves, thus preventing the entrenchment of existing biases and blind spots in the board makeup. Furthermore, working with the CHRO to expand the talent pools for candidates is crucial.

The spokesperson from Gartner asserted that by maintaining a well-crafted portfolio, it will "help maximise the quality of directors the organisation considers as openings arise, which will help improve the board's ability to guide the organisation through disruptions and evolving economic circumstances."