While our Global Board Index report focuses on the representation of international directors on the boards of U.S. companies and implications for successfully implementing global strategies, it may be helpful to view these trends within a broader context. In an increasingly interconnected world, developments and practices in one market are likely to have an impact on others, and there are lessons to be shared. 

Thanks partly to the prescience of Sir Adrian Cadbury, whom many view as the architect of the corporate governance movement, the U.K. has long focused on improving the oversight of corporate boards and how well they function. The Cadbury Report, which included a code of best practices, was issued in 1992 — nearly a decade before the collapse of Enron helped to focus the attention of the U.S. authorities on the need to define and codify similar practices for their boards.

Since we are fortunate to be relatively advanced on the governance curve, we have had a longer period to assess the significance of various trends and the issues arising when it comes to recruiting directors who will add value to boards. From that vantage point, it’s safe to say that greater diversity on U.K. boards, including the addition of foreign nationals, is a trend that is likely to continue.

In the U.K., certain economic and cultural conditions have made our boards particularly receptive to including foreign nationals as directors. Because we are a small country, with a contained small market — and partly due to the legacy of the British Empire and our position in world trade — companies of any size have had to expand beyond the U.K.. We, therefore, have a very open attitude to appointing the most appropriate people to senior roles irrespective of their nationality. This has lead to an established tradition of foreign nationals heading U.K. companies as well as serving as directors.

Like the U.K., several other Western European countries — most notably Belgium, Holland, Switzerland, and Sweden — also have a high proportion of large companies relative to the size of their population and economy, and long ago recognized the need to seek markets and talent beyond their borders. These countries also share a cultural openness and facility for other languages that have encouraged them to think and act globally. Many other European countries lag a bit behind in globalizing the leadership of their companies and their boards for an assortment of historical, cultural, and political reasons that have served to limit the recruitment of foreign nationals. 

For years, market importance and cultural affinity between Britain and the U.S. have made American directors desirable additions to U.K. boards, as well as to the boards of companies in Holland, Sweden and Switzerland, where English has more frequently become the language of business, including at board meetings. Representation of directors from other key markets has also been growing, including Asian nationals, for whom there is great demand in Europe. Under the overarching diversity umbrella, women directors are highly sought after, although there is a smaller pool of experienced women executives from which to choose than in the U.S., for example. 

The BRIC (Brazil, Russia, India, and China) economies are increasingly being targeted for directorships in European countries, although there are additional hurdles in recruiting executives from these countries: it is not easy to identify prospective directors who have both the quality of relevant experience and can devote the time that serving on a board requires. We are finding a gap currently in the attention paid and value attached to corporate governance in these rapidly emerging economies, although there are signs that more attention is being paid to this today. Success in recruiting these executives for boards requires understanding their values and priorities, and defining the benefits that serving on an international board can mean to them. 

While U.K. boards, and the boards of some other European countries, have been recruiting foreign nationals for some time, identifying exceptional board members with the time and enthusiasm to serve will be an ongoing challenge. Clearly, companies stand to benefit significantly from having this background and experience on their boards, and since this is indisputably the direction in which global business is moving, there is no turning back.

This article is part of the Global Board Index by Egon Zehnder International. The complete study can be found at www.egonzehnder.com/global-board-index.