Board succession planning is a key aspect of corporate governance for every organization. Not only is it a determinant of board composition, which assists the board’s effectiveness and ability to perform, but it is thus a way to ensure that the board has the skill set it needs.
“The Australian Stock Exchange Corporate Governance Council (ASXCGC) advises that board renewal is critical to performance. Specifically, in Recommendation 2.1 of the Corporate Governance Principles and Recommendations 3e (2014) , the ASXCGC recommends that a nomination committee be established to undertake the following activities:
- Board succession planning generally
- Induction and continuing professional development programs for directors
- The development and implementation of a process for evaluating the performance of the board, its committees and directors
- The appointment and re-election of directors
- The process for recruiting a new director, including evaluating the balance of skills, knowledge, experience, independence and diversity on the board and, in the light of this evaluation, prepares a description of the role and capabilities required for a particular appointment; and
- Ensuring there are plans in place to manage the success of the CEO and other senior executives.
This recommendation provides the nomination committee, or focus on succession planning board, CEO and other senior executives. “
The managing director of the Board of Directors, in a recent note, states that “the majority of board members are 57 years or older .
In New Zealand, the next 10 years are going to be critically important in relation to this subject, since it is estimated that up to 80 per cent of current business owners in New Zealand are looking to exit their businesses, ” warns the Auckland -based law firm Moore Stephens Markham.
In fact, having an effective board in place is the surest way to enable a smooth succession, as it wants to be clear.
Board Succession Planning Template
The company secretary should manage the succession planning process and the template. The first step is to reconsider the board matrix. Does the matrix show a well-composed board that is driving corporate strategy? The company secretary should ensure that the agenda of the nomination committee should reflect the latest company strategy and take into account current risk management. For example, if there is no one on the board who can expertly report on cyber risks, then there is a clear gap to be filled.
Similar cases may be made for succession planning that targets expertise in environmental, social and corporate governance (ESG) or social media and communications qualifications. Are any areas of expertise reflected in your current succession planning documents?
Once the template is updated, you can insert a list of directors, leadership roles and term dates. The template wants help to identify gaps, based on the matrix for board composition. Following board approval of the template and recruitment recommendations, potential new board members will be identified.
Those who are qualified to fulfill leadership positions on the board. You should prepare a list of these positions at your company, and note the year of retirement for each. As that time grows near, it should be discussed with those currently serving as chairman, vice chairman and committee chairmen. and then each of the committee chair roles, as well as the other board members and management.
The nomination committee may be longer, however, as these critical appointments take time. However, the company secretary should take care that the board’s needs change, new and more suitable candidates are reviewed.
The company secretary should include detailed job descriptions for each role. These should be discussed with the prospective candidates.
Throughout the process, your board succession can benefit from Enterprise Governance Management (EGM). EGM is the application of technical tools and resources to meet your board’s needs. Diligent’s Board Assessment Tool enables you to create and customize your board undertakes. You can distribute and collect evaluations, with the lead committee. Your lead committee can therefore turn to the portal for ready access to the board’s succession plan, matrices and related resources.
Diligent Governance Cloud: A reliable tool for achieving compliance
The Governance Cloud , the only integrated enterprise governance management system, is an organization that seeks to achieve best-in-class governance, is an ecosystem of software tools. Stringent, the scope of governance evolves. The Governance Cloud allows boards of directors to meet the demands in the boardroom and beyond with the ability to select the products they need.
Governance leaders, executives and board directors rely on the industry-leading diligent platform for the most secure and intuitive solution to material management and collaboration. Diligent Boards ™ is a board portal that electronically stores a board’s agendas, documents, annotations and discussions within a secure board portal. Board secretaries and board chairs can use the portal to put together books in minutes. The portal has been designated virtual rooms for committee work. Administrators can use the portal to avoid unnecessary problems with confidentiality. The ” Manage Meetings“Feature consolidates board directors’ contacts, calendars and the logistics of meetings. The program is a secure and intuitive solution for managing board materials and collaboration.
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