Preparing Board Leaders in an Era Where Disruption Is the New Normal
- For the foreseeable future, public and private US corporations will navigate an ever-more-turbulent, unpredictable, and fast-paced environment.
- The Future of the American Board report addresses the importance of corporate purpose in driving business and its governance and emphasizes that boards must consider the interests of all critical stakeholders, such as employees, customers, and communities, in the creation of long-term shareholder value.
- A diverse, expert Commission of leaders in corporate governance who came together to guide this initiative, including Commission cochairs Bill McNabb and Sue Cole, and Special Advisor to the Commission Holly Gregory will discuss the report live on a virtual press conference on Tuesday, September 27.
WASHINGTON, Sept. 27, 2022 /PRNewswire/ -- How do corporate boards lead in a world where disruption is the new normal and where the business of business is not merely about the pursuit of profits anymore?
The National Association of Corporate Directors (NACD), the authority on boardroom practices representing more than 23,000 board members, today released the Future of the American Board: A Framework for Governing into the Future report to help guide boards into the future, position them to become better stewards of long-term value creation for all stakeholders, and meet broadening expectations at a time when business is being called on to address an increasing number of challenges facing the nation and the planet.
In January 2022, NACD assembled a Commission of 19 experienced board leaders, investors, CEOs, academics, and former regulators to discuss how intensifying pressures and demands on boards will affect their governance in the coming years and how boards can best adapt their workings. The result of the intensive work of the Commission is the Future of the American Board: A Framework for Governing into the Future.
"Disruptions involving shifting economic conditions, the geopolitical order, advancements in technology, labor market dynamics, supply chains, regulation, climate change, and social and investor activism are reshaping society and are transforming the role of business," said Commission cochair Bill McNabb, board leader, former chair and CEO of Vanguard and author of Talent, Strategy, Risk: How Investors and Boards Are Redefining Risks. "The boards of directors who guide corporate activity also need to adapt to assure that corporate governance keeps pace."
Commission cochair Sue Cole, director of Martin Marietta Materials Inc. and chair of NACD, noted, "As boards adapt to these shifting responsibilities and priorities, the Commission anticipates that governance will focus on corporate purpose as the force that motivates and unifies corporate activity."
The report offers a principles-based framework to build toward high performance that invites each board to discuss how it can best adapt to a different future, rather than a detailed prescription on how boards must change their practices, processes, and structures. The report's guiding principles, each with companion questions that boards can use to spur discussion, focus on the importance of corporate purpose, accountability to all relevant stakeholders, board-management relationships, and agility in how the board operates and acts.
Moreover, the report argues that the edges of board stewardship must expand to include a more formal and proactive focus on talent and culture, while it underlines that boards must engage with management to determine when the company takes a position on sensitive political and social issues.
"Shareholder value is not created in a vacuum: the interests of customers, employees, suppliers, and communities matter in the pursuit of long-term growth," said NACD president and CEO Peter Gleason. "The principles outlined in the Future of the American Board report are grounded in the common interest of boards and their stakeholders and their accountability to these groups and ultimately, of the corporation to the broader community and society in which it operates—which in essence provides it with the license to do business."
In January 2022, NACD established The Future of the American Board Commission, comprising 19 leaders in governance, including leading directors, investors, academics, CEOs, and former regulators, to develop a set of guiding principles for boards to help them govern into a more turbulent future.
The goal of the initiative is to help boards evolve to meet the demands of a more demanding, inclusive, and turbulent future. The Commission developed principles within The Future of the American Board report to guide American directors and corporations into the future and will continue their mission with updates from the initiative's partner-led working groups in 2023. Partners leading these working groups include KPMG (Audit Committee), Marsh McLennan (Risk Committee), Pearl Meyer (Compensation Committee) and Korn Ferry (Nominating and Governance Committee).
The National Association of Corporate Directors (NACD) is the premier membership organization for board directors who want to expand their knowledge, grow their network, and maximize their potential.
As the unmatched authority in corporate governance, NACD sets the standards of excellence through its research and community-driven director education, programming, and publications. Directors trust NACD to arm them with the relevant insights to make high-quality decisions on the most pressing and strategic issues facing their businesses today.
NACD also prepares leaders to meet tomorrow's biggest challenges. The NACD Directorship Certification® is the leading director credential in the United States. It sets a new standard for director education, positions directors to meet boardroom challenges, and includes an ongoing education requirement that prepares directors for what is next.
With an ever-expanding community of more than 23,000 members and a nationwide chapter network, our impact is both local and global. NACD members are driven by a common purpose: to be trusted catalysts of economic opportunity and positive change—in business and in the communities we serve.
To learn more about NACD, visit www.nacdonline.org.