General counsel (GC) are falling short on the director management activities that are under their purview, according to survey by Gartner, Inc. A March 2022 survey of 125 GC measured their effectiveness at conducting or facilitating board management activities. .
“Engaged and well-qualified directors and positive board dynamics are fundamental to a well-functioning board of directors,” said James Crocker, senior principal, research in the Gartner Legal, Risk & Compliance practice. “This depends on director management activities that are often part of the general counsel or corporate secretary’s responsibilities.”
GC rate the corporate approvals process as their most effective board management activity. However, director management is an area where GC rate themselves as relatively less effective (see Figure 1).
“Director management is especially important in times of change and volatility to make sure the board is well equipped to handle a shifting environment and new business priorities,” said Crocker.
Figure 1: General Counsel Effectiveness at Conducting or Facilitating Board Management
ESG Oversight a New Top Priority
One source of volatility requiring comprehensive director management is environmental, social and governance (ESG). While companies are taking meaningful steps on ESG, many still have a long way to go to live up to the standards of new proposed legislation.
“Most general counsel accept the importance of ESG expertise on the board,” said Crocker. “Yet just 30% of boards actually possess any ESG or environmental expertise. Key to improving the situation will be director ESG education on the most relevant ESG topics for the business, which can be delivered by in-house experts.”
Director management, however, should play a wider role than just educating existing board members. Formally identifying skill gaps, evaluating existing directors and feeding that into the process of sourcing and recruiting new board members is key to building the needed expertise at board level.
Director Life Cycle
Director management can be significantly improved by taking a “life cycle” approach. Each element of director management is treated as a part of a larger whole that contributed to all other stages.
“Performance evaluations should help to identify skill gaps and inform director education, as well as the search and recruitment phase of director management,” said Crocker. “Keep things relevant by basing skills and expertise assessment on the organization’s strategic direction.”