What do board directors at the best-performing companies do?

Leadership advisory and recruitment firm Russell Reynolds Associates recently examined the behaviors and tendencies of board directors at the best-performing companies. The firm’s second annual Board Culture and Director Behaviors Survey polled 750 corporate directors of large public companies worldwide.

The report focused on so-called “Gold Medal Boards” that rate themselves as operating highly effectively and oversee high-performing companies (i.e. have outperformed total shareholder return benchmarks for two or more consecutive years).

Russell Reynolds’ study found that Gold Medal Board directors spend the same amount of time on their work as their peers, but prioritize strategic, longer-term-focused discussion; they’re also more likely to understand other perspectives and build deep relationships with management and investors.

Overall, the average director spends 200 hours a year on board activities, excluding travel, per company. Directors, however, allotted that time differently.

Gold Medal directors spent more time on forward-looking, value-creating activities and less time on compliance activities than directors on other boards. They were more likely to pick strategic planning, oversight of M&A, and CEO succession planning as the top three areas where they spent most of their time. Other board members were more likely to spend time on compliance-related activities and audit-related activities.

Directors on Gold Medal Boards also reported higher satisfaction with their board culture, with 98% rating them a 9 or 10 of 10 – twice the frequency of their global peer set.

The study found distinct behavioral characteristics in directors on Gold Medal Boards. The Russell Reynolds report uncovered that GMB directors are open-minded but focused, wanting to hear a multitude of viewpoints but driven to find a common ground and actionable conclusions. Additionally, GMB directors build strong relationships inside and outside the boardroom. This is important because effectively cultivating relationships with investors impacts whether a board is likely to be a Gold Medal one, according to the study. 

The report also examined the topic of strong board cultures and how to achieve them. Boards with strong cultures spend more time discussing corporate culture as a part of their regular agenda; as such, they occur as a result of directors focusing on building a positive culture.

Boards with strong cultures build and demonstrate trust with their peers and are more open-minded to new ideas and way of doing things, the report found. Their directors are also more likely to constructively challenge executives, when appropriate.