Boards cannot delegate their own succession and composition to management. It would create unacceptable conflicts of interest for a management team to select the people responsible for their own oversight and remuneration. Board composition has become one of the most contentious topics in governance. In the PwC annual Global Directors’ Survey almost half of directors believe that someone on their board needs to be replaced; a majority of those directors also believed that nothing was being done about it.

To help directors who want to build an organisation that is capable of sustainable high performance, we’ve published this comprehensive checklist to prompt your thinking and help to proactively identify issues. The questions will help even if you are an experienced director, and/or if you have already served on this board for a while.

The questions below provide comprehensive coverage across:

  • Identifying needed skills
  • Planning tenure and terms
  • Sourcing skills for the board
  • Accessing skills by the board
  • Performance and succession
  • Mentoring and guiding management
  • Progression planning

The questions are designed to start you thinking about issues that you may have noticed but not yet considered addressing as well as to help you to notice issues of which you may currently be unaware. The answers are not necessarily good or bad; they should reflect the current and desired state of your unique board and company.

Don’t ask all of the questions. Trust yourself to recognise and ask the most important ones. You can return to the list at intervals to consider your progress. We recommend using the list to stimulate your thinking:

  • Before or after a change in strategy
  • After an unexpected change in board composition
  • When preparing for the AGM or other shareholder meetings
  • When preparing the skills matrix and other governance disclosures

At the end of the check list, we have listed some references that you may wish to investigate for additional reading on the topic. We have also included some suggestions for putting into action the ideas that result from considering the checklist.

Identifying needed skills

1. Is there a strategic plan that sets out the anticipated future activities of the company
 
1?
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2. Does the plan identify the future learning requirements (for example, in a Balanced Business Scorecard)?
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3. Is it clear from reading the plan what skills the company will need to retain, develop or acquire in order to successfully deliver the strategy?
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4. Does the plan identify which skills are needed at board level and which can be provided by the executive team and/or expert consultants/contractors?
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5. Is it clear from reading the plan what relationships the company will need to retain, develop, or acquire to successfully deliver the strategy?
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6. Does the plan identify which relationships are needed at board level and which can be provided by the executive team?
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7. Do you trust the plan? If you have any reservations, what are they?
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Sourcing skills for the board

8. Does your board operate with a vacancy so that a director with required skills can be appointed quickly?
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9. Where has your board traditionally recruited directors in the past?
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10. Are those sources likely to provide the skills you need in the future?
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11. Where are the necessary skills in strongest supply? Can you recruit directors there?
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12. Are the necessary skills held by people with the maturity and experience that would enable appointment to your board? If not, how can you develop people with the required skills to help them become suitable for board recruitment?
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13. Who else is competing with your board for directors with the skills you will need? How does your board’s offer compare with what your competitors can offer?
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14. Can you train your existing directors to acquire the required skills?
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15. Does your board have a reliable skills matrix that can help it manage the skills portfolio as it implements succession plans? Does the matrix map director skills to tenure?
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Accessing of skills by the board

16. Do any of your current directors have networks that include individuals skills the board needs? Can they reliably seek expert advice on specialist topics?
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17. Do any former directors possess skills the board needs? Can they be invited to help your board with relevant decisions?
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18. Are skilled consultants available to advise your board on areas where the directors lack the necessary skills?
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19. Can the board create a committee and recruit skilled external independent members to address specific strategic issues? How will the committee engage with the board when decisions are required?
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20. Is there scope to appoint a director to a casual vacancy or to use an alternate or deputy director for a short time? How will you handle the risk and skill asymmetry?
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Performance and succession

21. Have you reviewed your board’s performance recently? Did the review consider individual director performance?
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22. Does your board have a statement of values or a code of conduct? Do all directors embody the spirit as well as the strict legal definition of those statements?
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23. Which directors would you wish to see leave the board soonest? What skills will you lose when they leave? When do their current terms expire? What are the limits on their tenure?
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24. Which directors would you like to retain for longer? What skills or behaviours make retention desirable? When do their current terms expire? What are the limits on their tenure?
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25. Are any directors approaching a health, personal, or legal issue that might require them to leave the board? What skills might you lose if they leave?
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26. How will shareholders respond to a request to remove a director? How will they respond to a request not to renew a director at the end of the current term?
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27. How are shareholders likely to respond to a request to retain a director?
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28. How are shareholders likely to respond to a request to elect a new director?
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Mentoring and guiding management

29. Which directors are active in guiding and mentoring management?
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30. Which directors have skills that management need?
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31. What are the protocols for executives who wish to seek advice from an individual director? Do they notify the chair, the CEO, or both?
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32. How do you balance the need for executives to access the skills of the individual directors with the need to ensure board unity
 
2 and the need to retain an arm’s length distance between board members and management?
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33. How do your current board committees transfer skills and experience from the board to the executive team (and vice versa)?
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Progression planning

34. Do you know the individual career aspirations of your fellow directors?
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35. If they perform well on your board, how will that help them to progress their aspirations?
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36. What projects could directors become involved in, what committees could they chair, or conferences attend and/or present at, that would help both their career aspirations and your board?
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37. What useful introductions can the company, board, and executives make to help departing directors move to subsequent satisfying roles?
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38. Would your former directors say that this board had been a satisfying and useful experience? Does your board help directors build their professional networks as well as through formal education and development?
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39. Is your board a good place for directors to develop their careers or a place where directors will be used and then discarded?
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40. What action do you need to take to prepare directors for a successful departure?
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Taking action

Read the questions and note which ones you can confidently answer. Make a record of any actions that you wish to take to help answer any questions that you were not confident about.

Consider your responses

If you are the chair, you may wish to have a conversation with the board about the most relevant questions at the next meeting or at the board’s next strategy workshop. If you are not the chair, you may wish to have a conversation with the chair about your observations.

If you are the chair – or a member – of the remuneration or nomination committee you may wish to discuss your observations with that committee. If you are not the chair of that committee you may wish to have a conversation with the chair.

Additional reading and reference sources

Boards That Lead, R Charan, D Carey and M Useem, Harvard Business Review Press, 2014

Tomorrow’s Boards: Creating balanced and effective boards, A McIntyre, Australian Institute of Company Directors, 2011

Planning for Succession: A Toolkit for Board Members and Staff of Nonprofit Arts Organizations, M Liteman, Illinois Arts Alliance Foundation, 2003

Who Comes Next? Leadership Succession Planning Made Easy Paperback,  M Kelly and M Elliott Powell, Productive Leaders, 2020

Leaders at All Levels: Deepening Your Talent Pool to Solve the Succession Crisis, R Charan, Jossey-Bass, 2007

Executive Appointments and Disappointments, J Colvin, J Turnbull and M Blair, Australian Institute of Company Directors, 2013

Reviewing Your Board: A Guide to Board and Director Evaluation, G Kiel, G Nicholson, J Tunny and J Beck, Australian Institute of Company Directors, 2018