Of the many questions I get about board service, one looms larger than all others. Experienced directors and new candidates alike want to know what should be expected of an outstanding director. Perhaps I am asked more often these days now that the Boardspan platform has launched. But evidence suggests something even more momentous is happening:

Boards are where the buck stops.
Expectations for strong board performance have gone up and
tolerance for weak board performance has gone down.

Activist investor involvement is at an all time high. Anyone notice the alliances between traditional institutional investors and activists? On the defensive side, here’s a staggering statistic: 82% of US public companies have faced a lawsuit in the last 12 months. Nearly 70% of those companies have litigation budgets exceeding $1 million.

Scary statistics aside, you might wonder what’s driving this new reality and where does the board fit in. In the past, boards existed primarily to meet regulatory requirements, approve the CEO’s plan or watch over an investment interest. Sure, many boards had upstanding directors who embraced their fiduciary responsibilities but the vast majority did so in a reactive mode, at best.

Expectations have changed. The barrage of available information (accurate or not), impact of technology, globalization of business, influence of the media and many other developments have permanently altered how we lead organizations and how we govern them. The decisions we make and actions we take are directly tied to the outcomes we deliver. It really does come down to talent:

A high performing board requires effective board members.

So what makes for an effective board member? I’ll jump to the punch line for the busy reader who is short on time (hint: that may be part of the problem.) Three defining characteristics are MUST-HAVE for any board:

1. Board members must contribute at a strategic level. Gone are the days when the most important boardroom vote was to re-hire the auditors. If a board member is not engaging in strategic discussion around the table, she or he is taking up valuable space. And if a CEO and Chair don’t build their board looking for strategic dialog, they are putting their organization at a competitive disadvantage. Where the organization is, where it’s going, how it intends to get there are as much the responsibility of the board as management. Simply said, strategy at the board level is mandatory, not optional.
2. Governance matters, now more than ever. Working strategically doesn’t get board members off the hook for the governance needs of the organization. Au contraire – the bar has gone up as directors face the scrutiny of shareholders, regulators, and business partners. Independence, thoughtful judgment, diverse perspective, values-driven decision-making, true commitment, embracing the board-management lines and clear communications are among the hallmarks of strong governance. Those principles are here to stay.
3. Culture fit is critical to effective contribution. Perhaps least understood of these three considerations, the reality is that boards are collections of individuals who do their work on an occasional basis. Nonetheless, they are expected to address critical issues, often at a high level, around the most important opportunities and challenges facing the organization. Thus, boards must be collaborative to be effective. That doesn’t mean, however, they are expected to always agree. Respectful intelligent dissent should be encouraged in the boardroom so long as the participants are aligned around their values, goals and ground rules. Identifying a culture fit is often the most concerning part of bringing someone new onto a board. Thus, it’s the single biggest blocker in growing a board. How to address that will be the topic of a future post. Though, here’s another hint: much like hope is not a strategy, neither is avoiding change.

I’ve always maintained that being on a board is hard work. It’s also immensely gratifying for a host of reasons, including the chance to give and the opportunity to grow. For some people, it really is their job. But being on a board and not focusing on what’s required – the strategy, the governance, the teamwork – well, why bother? 

Abby Adlerman is CEO and Founder of Boardspan, a digital platform that helps boards and board members improve performance and reduce risk.