Report: Academia Shares Views on Role of Board Director
NEW YORK, July 2, 2018 /PRNewswire/ -- Overall, directors may have too many professional commitments to serve productively on multiple corporate boards as their workloads continue to expand. At the same time, those directors need to focus on being a key steward of company culture. Those are just two of the many insights gleaned from The Conference Board Governance Center's new report, which details the role and expectations of corporate directors from the perspective of academic researchers.
The viewpoints featured are from the organization's recent roundtable discussion with professors from institutions that include the following: Columbia Law School, Yale Law School, University of Pennsylvania Law School, Harvard Law School, Georgetown Law Center, the University of San Diego School of Business, and the Millstein Center for Global Markets and Corporate Ownership at Columbia Law School. Additional representatives from several other universities along with institutional investors also participated in the discussion.
Insights from the report, Just What is the Corporate Director's Job?, include the following:
- Academic commentary helps shape the role of directors. Key offerings they bring to the table include unveiling empirical evidence of distorted behaviors, conflicts of interest, inefficiencies, along with promoting the need for periodic board refreshment and more diversity. In addition to conducting their scholarship, universities should train law and business students so they can bring higher expectations of board performance to the corporate world.
- Action isn't always best for a company when engaging with investors. While engaging directly with investors is increasingly viewed as a necessary part of the board's job, acting in direct response to specific (and perhaps non-representative) investor preferences doesn't necessarily lead to good economic decisions. Thus, "muddling through" investor preferences may sometimes be the right role for the board. Better disclosure should reduce the need for engagement.
- Directors should prioritize crisis management, but at the same time, delegate the details. While boards must confront critical business risks – for example, cybersecurity – their focus should center less on solving specific problems and more on monitoring trends. To perform this oversight-oriented role, directors should seek assurances with management that it has adequate reporting systems in place to identify and address potential crises.
"In the eyes of professors and corporate governance researchers, the 'soft' skills of directors are a lot more important than in years' past due in part to the rise in stakeholder interest as a part of board oversight," said Gary Larkin, the report's author and research associate with The Conference Board. "With the help of academia, some of those stakeholders have discovered that such skills as collaboration, consensus-building, collegiality, and cynicism are vital to board decision making."
"Academics play important roles as independent observers and influencers of corporate governance practices and trends, especially as governance has become an increasingly distinct field of study at our top law and business schools," said Douglas Chia, executive director of The Conference Board's Governance Center. "The group of highly accomplished professors we brought together to talk about the job of the corporate director showed us their penchant for vigorous debate over how data-driven studies reflect what goes on in the corporate world."
"The Conference Board's role in facilitating dialogue between practitioners and academic researchers deserves significant praise," said Professor Eric Talley, co-director of the Millstein Center for Global Markets and Corporate Ownership at Columbia Law School. "Both groups have a lot to learn from one another, and our engaged dialogue during this roundtable made clear the potential for continued productive collaboration."
The report is the seventh in a series of Governance Center publications that feature insights from boardroom stakeholders and influencers about the role of the corporate director. In addition to highlights from the roundtable, the report includes a list describing influential research on the corporate director's job, a hypothetical corporate director's job description from the perspective of academia, and a comparison of the number of female directors in 2009 and 2015.
Media can contact The Conference Board for a copy of the report.
About The Conference Board's Governance Center
The Conference Board's Governance Center draws upon authoritative research from The Conference Board. Our mission is to work in the public interest to provide knowledge and thought leadership on global corporate governance issues for boards and c-suite leaders, investors, and other leading organizations.
About The Conference Board
The Conference Board is a global, independent business membership and research association working in the public interest. Our mission is unique: To provide the world's leading organizations with the practical knowledge they need to improve their performance and better serve society. The Conference Board is a non-advocacy, not-for-profit entity holding 501 (c) (3) tax-exempt status in the United States.
SOURCE The Conference Board
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