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Governance, Risk Management, and Compliance: It Can't Happen to Us—Avoiding Corporate Disaster While Driving Success by Richard M. Steinberg

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Building a Better Board

So how are the best boards built? In principle, what does work is pretty simple: Build a board with directors who have the knowledge, experience, and skills to understand the company's industry, business, people, and significant issues; who work collegially in providing the requisite advice, counsel, and where necessary, direction to management; and who carry out their monitoring role as well. These directors think independently, raising relevant issues, debating them fully, and working toward consensus. And they have a burning desire to see the company succeed in its mission and provide the desired growth and returns expected by shareholders. This is really a 40,000-foot perspective, and getting the right people into the board seats requires considerable thought, care, and work.

What many nominating committees do, often with outside support, is consider what criteria they want their board directors to meet, and then determine how the current directors measure up. Typically they use a matrix, with desired criteria including sought-after skill sets and other attributes—including personal and interpersonal characteristics and skills—listed in columns across the top, and current board members listed in rows down the side. Then the boxes in the matrix are filled in, either with a mark designating whether a criterion is met, or a quantitative or qualitative measure or ranking to signal relative strength in satisfying the criterion. The goal is to determine strengths ...

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