In a world where uncertainty seems to hover over every business decision corporate executives make, a company is often only as good as its board of directors.Boards are expected to help companies protect against – and navigate through the aftermath of – potential fraud and financial scandals, changing regulations, shareholder activism, natural disasters, cyber threats, reputation risks and more.
Who’s prepared to deal with all of that? Your board had better be. Many directors will tell you they feel their responsibilities are expanding and the liability they are subject to increasing, so it is important that companies make sure their board members receive the best preparation available to help them handle a tough job that is only getting tougher.
Director education programs are one way corporate secretaries can help board members enhance their abilities to deal with today’s more complex business challenges. Whether through a program at a top university or a conference- styled program offered by a governance organisation or regulator, director education pays immediate dividends.
‘Unless a board’s members stay on top of governance issues, the company is going to become obsolete,’ warns Patricia La Malfa, associate director of executive education at the University of Chicago Booth School of Business. ‘They need to understand the emerging trends and conditions so they can improve the future performance of their company.’
Educated boards can affect profitability
When the world’s biggest commodity trader, Glencore, announced that it was going public earlier this year, the company was immediately pushed into the spotlight. Glencore’s $11 billion stock offering in May was the largest ever on the London Stock Exchange. But the historic event could have been far less successful because of a slip of the tongue by the Swiss company’s chairman, Simon Murray.
Murray’s comments in a newspaper weeks before the offering suggesting that women were a risk to hire because they get married and become pregnant had analysts and industry experts fearing the company’s initial offering price would be substantially lowered.
Furthermore, many analysts questioned whether Glencore’s board of directors was sexist and possibly unprepared to take on the pressures of going public.
Lord Davies, the former British banker who carried out the government’s review into women in boardrooms, told UK newspaper the Guardian: ‘I’m very surprised by the comments. They are disappointing and I think are illjudged and inappropriate.’ Although Murray was able to make a public apology that allowed Glencore’s offering to go off as planned, his slip of the lip shows how a board member who is not properly educated about dealing with the press can unwittingly sink an organisation.
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