11 board management best practices to adopt

Board management is an art. Your board oversees the direction of your organization, but who oversees the efficiency and effectiveness of your board? Adopting board management, best practices can dramatically streamline your board’s operations and equip the board to respond to an ever-changing corporate landscape.

With risks and opportunities evolving faster than ever, boards must closely manage their activities to remain agile, capable, and effective. Here, we’ll explain the board management best practices to keep you ahead, whether you’re actively managing enterprise risk or choosing new board management software.

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1. Education: Stay on top of new risks, opportunities, and best practices

Keeping abreast of board management best practices is a best practice in itself. Digitally savvy boards recognize that issues like cyber security must be front of mind. As shareholder activism goes mainstream, activist investors have become unlikely heroes, driving campaigns “much more reflective of the world in which companies operate and far more likely to inform board thinking than they were even a year ago.

The world is volatile; digital threats are on the rise, the economy remains in flux, and the regulatory landscape is shifting rapidly. However, as Christine O’Donnell, an industry analyst at Verdantix, noted in a recent report on the future of governance, risk, and compliance (GRC) technology, good governance is a crucial underpinning for boards in an uncertain world. This good governance not only creates a strong foundation for effective global oversight but also, as she puts it, “increases resilience and competitiveness across diverse risk landscapes,” — both of which are vital to keeping pace with a changing outlook and shifting expectations as you tackle top issues facing GRC.

However, the most compelling risks are constantly evolving, as are the regulatory and legislative requirements you need to comply with.

2. Keep shareholders and stakeholders top of mind

Your stakeholders should be front and centre when identifying and striving for board management best practices. This doesn’t just mean investors: all stakeholders are increasingly vocal about the issues they think organizations and their boards should prioritize and, as we noted, being listened to in unprecedented ways. Today, activist investors inform board discussions in ways they wouldn’t have done a few years ago.

Engage with these stakeholders: Experienced non-exec director Ray Troubh believes that “the interaction of the large shareholders and the board members should be more frequent” than it has traditionally been if you’re seeking best practice stakeholder engagement.

This is especially critical given the universal proxy rules adopted in 2023, which empower shareholders to express their feelings at the annual shareholder meeting. While the 2024 proxy season brought about the “most expensive shareholder fight ever, it also underscored the value of cultivating stakeholder relationships.

“Now, when shareholder proposals come in, they come against a background of a lot of prior work,” said KPMG BLC Senior Advisor Stephen Brown said in a June webcast.

That prior work includes engaging with investors and asset managers and voluntarily disclosing sensitive information — like emissions data. Corporations should commit to making shareholder transparency inherent in good board management.

3. Prioritize the issues that matter to your stakeholders

Engaging with stakeholders is a critical first step. Yet, discussions aren’t enough. Board management should encourage boards to remember they serve their stakeholders. To do that, directors need to act.

For example, 89% of investors consider a company’s environmental, social, and governance (ESG) posture before buying shares, while an estimated 4 in 10 employees care about ESG. A well-managed board will respond to that focus by integrating ESG into the corporation’s strategic direction, risk management, and reporting.

4. Cultivate an agile approach…

The need for corporate agility, which came to the fore during the COVID-19 pandemic, becomes even more vital during economic uncertainty. Maria Moats noted the potential for recession in 2023 or 2024—and the fact that “some would say in Europe they are already in recession”—as a critical driver for better governance; it’s also an impetus for an agile approach. Adapting to the prevailing conditions is a prerequisite for successful boards and businesses.

5. …and an adaptive board

This agility is as vital within your board as across the broader organization. Boards are evolving constructs. The best boards recognize when they need external expertise, drawing on skills honed outside your sector. They keep an eye on new trends in board makeup, like the advent of board technology committees to tackle changing risks. In 2023, flexibility is one of the top board management best practices. Don’t let an inflexible approach hinder your board.

6. Challenge yourself on your diversity of thinking

The days of boards being dominated by a single demographic are changing. Businesses now realize that diversity of thought delivers strategic advantage and is the basis of an ethically sound company, as outlined in a Diligent Institute report.

How do you structure a board? The answer is to provide a diverse range of thinking. Explore the benefits of reverse mentoring as a way to leave behind old thought processes. Question whether there are barriers to equality on your board, and ensure your succession planning techniques enable you to build a diverse board pipeline.

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7. Get on top of governance

Whether this is following best practices in separating the roles of CEO and chair or ensuring a robust audit trail for your board decisions, best practices in governance and risk and compliance should be a vital focus of every board.

Running more effective board meetings is a core element of this governance, ensuring timely information sharing before meetings so that decisions are made with a 360-degree vision and capturing actions to execute all compliance and board duties.

8. Address risk enterprise-wide

As corporations face risk from all sides — cybersecurity, fraud and climate change, among others — boards must develop a more integrated view of risk. Rather than waiting until risks arise, successful board management will push directors to identify risk and the opportunities it can present proactively.

Boards that embrace enterprise risk management (ERM) can more clearly define risk-related roles and responsibilities and make more strategic decisions that protect the organization from costly threats.

9. Integrate technology to enhance board management efficiency

According to PwC, “Business is in a third wave of corporate governance evolution.” The Sarbanes-Oxley and Dodd-Frank Acts spurred new strategic challenges many boards have struggled to surmount. In recent years, however, technology has made a difference.

Consider Aegon, an insurance, pension and asset-management provider headquartered in The Netherlands. Managing over 475 billion of their own and their customers’ investments, Aegon quickly amassed a daunting number of weekly and quarterly board meetings. Preparing for them required long working days and hundreds of pages of print board books with complicated security and versioning protocols.

“At one point, we put materials online using a basic tool, but that did not replace the need for hard copies,” said Henk Snijders, Deputy Company Secretary for Aegon.

Then, they integrated a premium solution. Enterprise board management technology from Diligent saved Aegon’s company secretariat a week’s worth of labor over a year of board meetings by centralizing the data and collaboration in a single platform.

“It took [the board] a few months to watch everyone else using the iPad-based solution before they were ready to adopt Diligent Boards themselves,” Snijders said. “They never asked for paper again.”

10. Proactively learn and adopt artificial intelligence (AI) tools

Workplace technology expert at Harvard Business School Karim R. Lakhani said that AI can be applied anywhere you can apply thinking. In recent years, Generative AI has only increased its foothold in the boardroom, and many CEOs are preparing for radical change.

68% of CEOs say generative AI will significantly change how their companies create value over the next three years. That means effective board management must harness AI. What can that look like in the boardroom?

As PwC share in their recent report, board management must position boards to both oversee emerging technologies to safeguard the company and influence how the board executes on strategic opportunities. To meet both needs, boards should educate themselves about AI’s opportunities and limitations and tap into internal specialists and external resources to keep AI on the board’s agenda.

Board management AI can be used to shave time off board meeting preparation as well as in-meeting tasks, enabling the CoSec to take a more strategic role. They can use AI as a tool to support the agenda creation process as well as instantly creating meeting minutes. It can even able directors to ask the right questions ahead of meetings!

Discover how Diligent AI, a purpose-built AI and secure solution, can support your board management processes. Learn more here.

11. Explore how board management software boosts effectiveness

This discipline in running board meetings doesn’t just benefit your governance processes. Boards of directors are busy people, balancing their board responsibilities with the other challenges of their role.

Board meetings and the business that follows them need to be carried out most efficiently to maximize effectiveness and best use of board members’ time. This is why introducing the right technology makes our board management best practices list. Board management software facilitates collaboration, streamlines meeting organization and bolsters security — saving directors’ time and driving better data-driven decisions.

Implement best practices to accelerate your board management

Board management is an evolving craft; however rigorous your approach, occasionally revisiting best practices is a good discipline. The eleven board management best practices above provide a good baseline for any board wanting to challenge itself. Yet, no board management approach would be complete without technology.

Technology is the single best tool boards have to stay afloat amid the rapid tides of change. Growing numbers of boards recognize the benefits of both AI and technology in streamlining and future-proofing their board management. While it’s true that not all board management software is created equal, the right solution can transform your boardroom for the better.

Discover Diligent Boards, part of the Diligent One Platform, and how it can help you run your board confidently, minimize admin and manual processes, and create a more secure, robust environment for your board.

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