FCLTGlobal has convened member executives on the topic of next-generation corporate board governance throughout the first half of 2024, including in a session at February’s FCLT Summit, CEO roundtables in April and May, and a working group earlier this month. Members have been clear in each gathering that there is no one-size-fits-all solution to designing corporate boards. Companies’ time horizons, appetites for growth relative to risk, and directors’ relationships with management are all distinctive. Future-fit boards are those that match strategically with companies in these terms.

Long-term corporate boards must evolve to achieve their corporation’s future ambitions, rather than remaining anchored to the status quo. As boards evolve to meet changing market and economic conditions, understanding the development needs of a board becomes particularly important.

On June 10, FCLTGlobal convened a member working group to analyze the major decisions made by long-term corporate boards across both public and private markets globally. Based on these discussions, and the experiences of FCLTGlobal members’ executives, we have developed the following questions to pinpoint focus areas for long-term boards.

The key attributes of successful, long-term-oriented boards are:

  1. Having a clear remit
  2. Being a competitive advantage of the organization
  3. Having effective leadership
  4. Including diverse expertise
  5. Ensuring a strategic focus
  6. Having an ownership mindset

Boards that successfully evolve to meet changing conditions ask these questions and revisit their answers over time.

Future Fit Boards: Questions For Developing Strategic Governance

1. Clear Remit: Do your executives and directors have a shared understanding of the board's role?
Do you have a clearly written statement of the board’s objectives and role that anchors the board discussions?
Is it clear to directors whose interests they represent (e.g., shareholders, employees, country, etc.)?
Do directors have sufficient independence from management to represent those interests?
2. Competitive Advantage: Would you consider your board a key long-term competitive advantage of your organization?
Is your board seen as a forthright, problem-solving partner to management?
Have board members built strong working relationships with each other?
Is board effectiveness being measured, discussed and used to continuously improve?
3. Effective Leadership: Does the chair set the tone for the board?
Would board dynamics and culture represent the company well on the front page of the newspaper?
Is your board chair effective at handling challenging issues?
Have you considered trade-offs in combining or separating CEO and chair roles?
Does your board have a CEO succession plan in place for smooth and for unexpected scenarios?
4. Strategic Focus: Are you investing to pivot toward new profit streams and manage future disruptions?
Does your board spend most of its time on strategy and capital allocation rather than routine matters?
Does your board review long-term (3+ year) strategic roadmaps?
Does your board ensure that CEO compensation aligns with execution of the long-term strategic plan?
Do you use committees for discussion of routine matters such as periodic earnings?
5. Diverse Expertise: Does your board have the depth and diversity of skills, expertise, and experiences to make durable strategic decisions?
Is your board resourced to make these decisions?
Does the size of your board encourage both responsibility and active discussion?
Does your board promote diversity of thought and avoid groupthink?
Are there tenure limits, age limits, or other mechanisms to ensure board renewal over time?
6. Ownership Mindset: Does your board have a long-term ownership mindset?
Are board members motivated by a sense of ownership to serve the corporation?
Do your board members have meaningful equity ownership?
Do your board members have at least a 5-year holding period for their equity ownership?
Are significant investors represented on your board?

Boards of directors are the key to long-term value creation – strong governance provides the foundation for success. As we build upon our work on the attributes of a “future-fit” board of directors, view our library of resources on long-term governance to learn more.


Governance | Report

The Long-Term Habits of a Highly Effective Corporate Board

29 March 2019 - A well-functioning corporate board of directors wields the power to meaningfully influence the purpose, culture, and direction of an organization. This is often among a company’s greatest untapped strategic assets.

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Governance | Article

The Myth of the One Size Fits All Board

By Matthew Leatherman, Jess Gaspar

15 April 2024 - There is no one-size-fits-all solution to designing corporate boards for long-term value creation. Recognizing and understanding that choices are available is the first step toward making longer-term choices and establishing next-generation board governance.

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Time Visualization

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Time Visualization for Corporate Boards of Directors

29 March 2019 - Developed in conjunction with Behavioral Economics in Action at Rotman at the University of Toronto, this digital dashboard will assess how your Board of Directors spends its time during full board meetings.

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