The recession of the past two years clearly pointed to weaknesses at the Board level of many financial institutions- not just those that publicly got into trouble! Unfortunately, we continue to see relative inaction in addressing the core issues of Board competencies, strategic insight, planning, operations, director assessments as well as tenure. Surely the recession and the new business dynamics in the post period necessitates an objective review and re-invention of Board dynamics? Unfortunately in some small and medium sized institutions where change is very important we find the most inertia.
The Board has to demonstrate a greater appreciation of risk management, roles and responsibilities plus the disciplines required to protect and grow their organization in a sustainable and secure way. The makeup of the members should represent the diversity of the market the institution serves as well as its business and social responsibilities. The members themselves need to reflect an integrated set of mandatory skills and knowledge which can deal with the present, and focus on the future.
Tenure and turnover guidelines are often neglected due to tradition, relationships or egos, which if continued can place governance at risk. If there are difficulties having people realize today's challenges and the need for change, it is time for self and peer evaluations as well as strategic retreats with professional facilitators who are "in the know" and have an objective value proposition.
CEO's have a responsibility to lead this elimination the governance inertia. Professional assistance will be required by many.
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