Companies with global aspirations need boards with global capabilities.
Egon Zehnder created the Global Board Index™ (GBI) in 2008 to track and evaluate trends among S&P 500 boards relative to board composition, global capability, and business performance.
The 2014 Egon Zehnder Global Board Index™, like its predecessors, provides an assessment and analysis of global capability in the present-day S&P 500 boardroom. Where possible, GBI 2014 makes comparisons across past data to reveal trends. In addition, the 2014 report offers new analyses and ways of interpreting global board capability, strategic resonance, and the deficit of global talent in corporate America.
In GBI 2008, Egon Zehnder identified this deficit of globally minded board talent and framed it as the “Board Global Capability Gap.” Defined as the disparity between a company’s global footprint and the ability of its board to guide and advise leaders on global matters, the Board Global Capability Gap underscored the need for change in the board composition of U.S.-based companies.
In 2008, the Egon Zehnder team hypothesized that increased awareness of the Board Global Capability Gap would engender corrective action in American boardrooms. The rationale was that calling attention to the shortage of global talent—and also linking board composition to business performance—would prompt and inform actions to close the Board Global Capability Gap.
But as the GBI 2014 data presented in the following pages illustrate, change is slow. The reforms needed to optimize board composition and effectiveness in the fast-moving global construct are difficult to address. Creating boards with directors who have the right mix of skills, experiences, perspectives, and mindsets requires fundamental overhaul that starts, but certainly doesn’t end, with recognition alone.
Given the importance of global board capability and the lack of progress toward reducing the global talent deficit, more direct treatment seems warranted. In addition to framing the current data analysis in terms of opportunities and imperatives, GBI 2014 presents a conceptual analysis addressing the barriers to change that may exist for companies seeking to develop boards with more global directors.
Closing the Board Global Capability Gap requires an effective process—one that recognizes the value of global talent and how to identify and attract it.
Closing the Board Global Capability Gap requires an effective process—one that recognizes the differentiated value of global talent, and fosters an understanding of how best to identify and attract it. Building boards with global capability is clearly not about checking a box. If it were, the U.S. boardroom would already look very different. Building boards with global capability for today and tomorrow demands expertise— including skilled reconnaissance—knowledge, and resourcefulness.
Companies with global aspirations need boards with global capabilities. And in turn, boards need directors with global mindsets who can add diverse perspectives of thought and experience. Ultimately, GBI 2014 provides data-driven insight to motivate board assessment and recommendations for development activities so that with ongoing effort, American corporate leadership can close the Board Global Capability Gap and enhance the competitiveness of U.S.-based companies.
More information: George L. Davis: Boards Aren’t as Global as Their Businesses in the Harvard Business Review Blog Network (28 October 2014)