“There is a spirit of governance. This spirit is inextricably linked to the culture and performance of an organisation.”


Key to all this is a belief that corporate governance is not an act of compliance but that there is a spirit of governance. This spirit is inextricably linked to the culture and performance of an organisation. The best companies explore what this spirit really means and what its implications might be. As they think about how the company is governed, they consider what it means to be well governed and what stakeholders require. It is not minimal compliance, but maximum engagement and impact.


For some this is a daunting prospect. Dynamic governance requires a more adult conversation between stakeholders and board members, as well as between board members. The question must be whether boards are up to this level of debate and willing to invest time in making it happen.


Dynamic governance demands that boards be more externally focused. They need to be connected with a broadening range of stakeholders and society. As Sir Adrian Cadbury argued, corporate governance “should recognise the rights of stakeholders established by law or through mutual agreement and encourage active co-operation in creating wealth, jobs and the sustainability of fi nancially sound enterprises”. 3


This also requires judgement rather than the one- dimensional application of a rule book. It embraces the reality that there are grey areas to governance and that they need to be navigated with integrity, insight and intelligence.


What, then, are the characteristics of dynamic governance? Our biennial research identifi es six characteristics that boards need to develop and foster if they are to achieve dynamic governance.


Of course, compliance is necessary and important. But, the route to excellence in corporate governance lies in understanding and acting on these six elements to achieve truly dynamic governance.


3 Cadbury, Sir Adrian, “Widening role of corporate governance”, Corporate Governance, 6 (3), 2006


THE SIX CHARACTERISTICS OF DYNAMIC GOVERNANCE


Deep business knowledge


Board members must understand the commercial DNA of the company.


Diversity of thought


The most critical attribute consistently identifi ed as important to board eff ectiveness is having the right balance of skills, knowledge and experience to constructively challenge management.


Engaged leadership


The chairman is the guardian of dynamic governance. The chairman choreographs a board and provides leadership.


Strategic alignment and execution


Boards must use their knowledge and experience to help executives develop robust and sustainable strategies.


Capacity to adapt


In changing times, boards must be able to change direction and to tack with strategic, fi nancial, market and human changes.


Leadership talent


Identifying, developing and utilising talented people lies at the heart of governance. Talent and succession planning need to top the boardroom agenda and be acted upon.


Heidrick & Struggles 3


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48