What makes a great board director? It’s hard to define, but it has rarely been more crucial
As corporate crises become the rule, not the exception, more responsibility falls on the boards.
In normal times, a big corporate board seat is a sweet gig. The pay is lavish—often $300,000 a year or more. The schedule is light: quarterly meetings, a smattering of committee calls. If all’s well, your job is only to observe, not intervene. “Noses in, fingers out," as governance expert John Carver put it.
But who among us lives in normal times?
In the past five years, a gaggle of black swans has buffeted corporate boards. Among them:
A global pandemic and lockdowns that emptied offices and rewrote workplace norms.A police killing that sparked an employee uprising. A war that forced billion-dollar divestments overnight. Supply-chain meltdowns that left shelves bare.“Once in a millennium" climate disasters that arrive annually.A U.S. president bent on widespread and often incoherent changes in policy.And a relentless wave of tech disruption threatening every industry, everywhere.
In short, the corporate crisis has become commonplace. And when the crisis hits, it’s the board that bears responsibility. That’s why The Wall Street Journal is publishing its first-ever list of the 250 Top Board Directors. They matter.
In their influential book “Boards that Lead," Ram Charan, Dennis Carey and Michael Useem divided the board’s responsibility into three parts:
1. Lead
The most important job of the board is choosing a new CEO. That might seem simple, but it’s fraught with peril.
Sometimes it requires the skills of a master diplomat, when the current CEO, for instance, doesn’t accept that it is time to leave, or isn’t eager to receive feedback. Imagine Tesla Chair Robyn Denholm’s plight when her company’s iconic CEO went AWOL earlier this year, and the company’s performance tanked.
At other times, it involves impossible choices—between, for instance, an internal candidate who knows the company well, and an outside candidate, who can bring the oft-needed fresh perspective. How do you compare the apple to the orange, when billions of dollars are at stake?
And inevitably, it leads to mistakes—consider the board of Kohl’s, a company that is now on its third CEO search in three years and has lost three-quarters of its corporate value in the process.
2. Support
The best boards don’t just govern, they guide—offering their experience and wisdom to the management teams. That’s why former CEOs are the go-to choice for board seats. They’ve been there and done that, and can share lessons they have learned along the way.
In recent years, boards have also helped manage an ever-widening set of stakeholders. They still owe fiduciary responsibility to the shareholders, to be sure. But they are buffeted by employees, customers and the communities they operate in, as well as the insistent demands of environmental and social activists. And the election of Donald Trump, with his backlash against ESG and DEI, didn’t make things any easier. Instead, he’s simply become the newest and biggest stakeholder in an ever-growing list—as evidenced by the steady stream of CEOs and directors who leave the corporate campus to seek an audience at the White House.
3. Monitor
Finally, it’s the board’s job to oversee corporate risks. That’s the most thankless task, because risk never sleeps and it constantly mutates. Hospital boards had to help find protective equipment for endangered employees during the pandemic; global boards had to manage the sale of subsidiaries when Russia invaded Ukraine; media-company boards are the arbiter when a critical merger is threatened by a president who doesn’t like its news coverage. And ultimately, it’s the board that has to balance the radical risks introduced by AI—the danger of moving too fast and possibly threatening a loss of critical data and intellectual property, or moving too slow and ceding ground to a disrupter.
Boards have responded to these increased demands by developing “skill matrices" to identify what they need from new directors. But such lists often leave them fighting the last war—hiring a health expert just as supply chains become the threat; or seeking an SEO-schooled e-commerce expert just as AI takes off; or hiring geopolitical expertise when knowledge of Washington becomes the need.
So what does make a great board director? It’s a magic mix of confidence and humility, technical skills and social prowess, plus a boundless curiosity for the new combined with a healthy appreciation of tradition. It’s having the courage to act alone, and the wisdom and patience to seek consensus.
In the end, the good corporate director may be the last job that AI can replace. Directors don’t need technical expertise or professional experience as much as they need good character and sound judgment.
They are the ultimate humans in the loop.
Alan Murray is president of The Wall Street Journal Leadership Institute. Email him at alan.murray@wsj.com.
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