Sherman & Sterling Releases Study “Evolving Notions of Board Effectiveness”

In a recent Sherman & Sterling study released at the end of 2023, the author Richard Alsop highlights the evolution of what corporate boards are viewing as effective oversight. The study notes, “achieving a high level of board effectiveness relies on the successful implementation of several key imperatives, including board leadership and composition, operational and deliberative processes, board culture and dynamics and performance evaluation and improvement.” The study breaks down certain characteristics that are found in effective boards, including board leadership that consists of directors with the right skills and experiences and board culture that creates a “safe space where respect and trust are mutual.” The study also notes that when it comes to performance evaluation and improvement self-evaluations should be “conducted in a way that generates actionable feedback and identifies any shortcomings in board effectiveness and leadership.” The study notes that cybersecurity threats and other increasingly complex risks such as the rise of artificial intelligence can impact board effectiveness. In order for boards to respond to these challenges, the study notes that this "requires an informed and analytical board that either has the expertise, whether through its own members’ experience or relies on management or other experts, to enable it to properly evaluate the risks, opportunities and challenges…” In order to be proactive, boards can focus on a robust self-assessment process, examine retirement and refreshment timelines, analyze board diversity, and use executive sessions to discuss challenges and risks on the horizon.

Click here to read the Sherman & Sterling report on board effectiveness.