Report Highlights How Boards Can Enhance Culture and Effectiveness

In a recent blog post on the Harvard Law School Forum on Corporate Governance, a Sidley Austin attorney shares ways for directors to increase their effectiveness by establishing norms around director behavior. The article, titled, “Establishing Norms for Director Behavior to Enhance Board Culture and Effectiveness” notes that “[a]ttentiveness to issues of board culture in normal times helps boards withstand stress in times of volatility and crisis.” The article sets forth certain characteristics that individual directors can practice in order to improve trust and respect, these include:

• Listen actively, with an open mind
• Be constructive in questions directed to management or other directors
• Protect board confidentiality
• Avoid acting or speaking on behalf of the company or board without authorization

Additionally, the article details behaviors that can lead to distrust among board members and harm relationships. The author notes that boards should “agree on behavioral norms that respect the limits of individual director authority.” The article provides practical guidance to aid in setting behavioral norms that foster a positive board culture and support appropriate director behaviors, including:

• Assessing board culture in the annual board evaluation
• Underscoring expectations about director conduct in individual director evaluations
• Considering a director’s behavior in making re-nomination decisions
• Discussing periodically in governance committee meetings and with counsel the avenues for addressing problematic behaviors