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GCs ‘ineffective’ on director management, says poll

A new survey paints a troubling picture of the effectiveness of general counsel in conducting or facilitating board management activities.

user iconJerome Doraisamy 27 September 2022 Corporate Counsel
GCs ‘ineffective’ on director management, says poll
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Stamford-based technological research and consulting firm, Gartner, has released the results of a survey, conducted recently, of 125 general counsel (GC), examining the extent to which they are effective in the conduction and facilitation of board management.

Findings

Corporate approval processes are where GCs feel most comfortable, with 87 per cent saying that they are effective or very effective in this space.

 
 

This was closely followed by corporate filings and disclosure processes, as well as agenda planning (both 81 per cent), keeping board and committee charters up to date (80 per cent), and board packets and pre-read (74 per cent).

However, there were a number of tasks surveyed that indicate that GCs are ineffective — and they all pertain to director management.

Just over three in five (63 per cent) GCs say that they are effective at director onboarding, but after that, less than one in two of those surveyed feel that they are effective on director management.

When it comes to sourcing and recruiting directors, for example, only 38 per cent of GCs feel that they are effective or very effective.

Elsewhere, just 44 per cent feel they are effective on director education, followed by evaluation of existing directors (46 per cent), evaluation of director candidates (47 per cent) and identifying skills and experience gaps for open director positions (49 per cent).

Reflections

Speaking about the findings, Gartner Legal, Risk & Compliance senior research principal, James Crocker said that engaged and well-qualified directors and positive board dynamics are fundamental to a well-functioning board of directors.

“This depends on director management activities that are often part of the general counsel or corporate secretary’s responsibilities,” he said.

“Director management is especially important in times of change and volatility to make sure the board is well equipped to handle a shifting environment and new business priorities.”

Director management can be significantly improved, Mr Crocker suggested, by taking a “life cycle” approach. Each element of director management is treated as a part of a larger whole that contributed to all other stages, he said.

“Performance evaluations should help to identify skill gaps and inform director education, as well as the search and recruitment phase of director management,” he advised.

“Keep things relevant by basing skills and expertise assessment on the organisation’s strategic direction.”

ESG

Effective director management will be especially pertinent, Mr Crocker added, given the increased focus on environmental, social and governance (ESG) matters.

While companies are taking meaningful steps on ESG, he mused, many still have a long way to go to live up to the standards of new proposed legislation.

“Most general counsel accept the importance of ESG expertise on the board. Yet, just 30 per cent of boards actually possess any ESG or environmental expertise,” he said.

“Key to improving the situation will be director ESG education on the most relevant ESG topics for the business, which can be delivered by in-house experts.”