3. Board director demographics and attributes

Question 1

Define board demographics

Answer 1

The basic facts and information about individual directors, being the more visible, public and often formal artefacts of effective directorship that pertain to an individual director’s past and current qualifications and performance

ie.
What a director looks like ‘on paper’

Question 2

Define board attributes

Answer 2

The behavioural aspects of the directors, which have not historically garnered much attention, but are increasingly seen as being vitally important, in particular the behavioural competencies, psychological commitments and ethical character

Question 3

Where might one find a view of the individual director demographics that make up board demographics?

Answer 3

In the abbreviated profile/biography which can be found in the annual report

Question 4

Where might one find a view of board demographics?

Answer 4

In the Chair’s governance report

Question 5

After which of the other 4 11Cs quadrants, is board demographics most often used as a predictor of good governance?

*in reality, psychological/behavioural factors (attributes and dynamics are far more important)

Answer 5

Board structures

Question 6

How do board demographics influence board dynamics? (2)

Answer 6

• Agency, stewardship and stakeholder theories suggest that having the optimal mix of individual director demography will provide the optimal Board dynamics to drive an organisation forward
• 11 Cs model suggests that the ‘three C’s’ enable a good holistic structure – capacity, capability, connections

Question 7

3 Cs of board demographics

Answer 7

Capacity
Capability
Connections

Question 8

Board demographics - brief definition of what is meant by director capacity (question)

Answer 8

Should the individual be allowed to be a Board director?

Question 9

Board demographics - brief definition of what is meant by director capability (2 questions)

Answer 9

Is the individual capable of being a director on this specific Board?

Can the individual help in the achievement of the strategic objectives and purpose of the company?

Question 10

2 considerations when determining director capacity

Answer 10

Fit and proper test - are they legally allowed to function on a board? are they in good health? do they have appropriate qualifications?

External commitments - how many other commitments do they have? are these central and time consuming roles such as chair or CEO?

Question 11

5 considerations when determining directors capability?

Answer 11

Independence - do they need to be for requirements?

Professional capital (work-related credibility)

Financial expertise (needs a good grasp at minimum)

Technical expertise (relevant to org strategy)

Diversity - which areas of diversity does one director bring?

Question 12

One increasingly sought-after skillset within technical expertise. Why?

Answer 12

Expertise in ESG issues

ESG now accounts for significant organisational risk

Companies who perform well on ESG outperform others on various criteria, such as reduced likelihood of lawsuits (13%)

Question 13

3 aspects of director connections to consider

Answer 13

Professional networks
Alumni networks
Social networks

Question 14

Significance of director connections to value of a director:

Answer 14

Research by BoardEX has indicated that the predictive power of social capital was negligible compared to more psychological attributes of board directors

Question 15

3 Cs of board attributes

Answer 15

Competence
Commitment
Character

Question 16

Aspects of competence to consider re. board attributes (3)

Answer 16

Specific board role competence (eg. chair, CEO, NED, etc.)

General leadership competence

21st century leadership competence

Question 17

Competence usually requires an appropriate level of: (2)

Answer 17

Intellectual intelligence (as measured by through academic and professional routes)

Emotional intelligence

Question 18

Two aspects to consider within general leadership competence

Answer 18

Emotional intelligence
Leadership style

Question 19

For whom is general leadership competence most important?

Answer 19

The Chair

Question 20

Definition of emotional intelligence

Answer 20

The ability to identify and manage one’s own emotions, as well as the emotions of others

Question 21

What does research say on high emotional intelligence significance

Answer 21

The top performers within all job categories have the highest emotional intelligence

Question 22

4 aspects of emotional intelligence

Answer 22

Self-awareness
Self-management
Empathy
Social skill / influence

Question 23

Which aspect of emotional intelligence has been found to be key to high performing teams

Answer 23

Empathy (average director empathy)

• women on average have greater empathy

Question 24

What type of leadership styles are best on boards?

Answer 24

Those that are the least ‘ego-based’, characterised by their own humility which inspires others

*not gone into depth in this chapter’s flash cards as touched on in chapter 1 and again in chapter 10

Question 25

4 aspects for consideration within 21st century leadership competence

Answer 25

Resilience Learning agility Cultural Intelligence Digital Intelligence

Question 26

Why is there a need for a focus on 21st century leadership competence specifically?

Answer 26

We are living in an increasingly challenging environment, that combines volatility, uncertainty, complexity and ambiguity (VUCA)

Question 27

2 reasons why resilience is an important competence for a board member to have

Answer 27

- need for increasing levels of director commitment - significant uplift in board scrutiny

Question 28

3 methods to improve personal resilience - organisations may provide training

Answer 28

- focus on positive lifestyle factors (exercise, nutrition, sleep) - use of cognitive techniques (gratitude, mindfulness) - access to social support networks

Question 29

What is meant by learning agility as 21st century competence

Answer 29

Ability to adapt at pace and assist org with pivots in strategy

Question 30

Obvious reason why cultural intelligence is an important 21st century competence

Answer 30

Organisations becoming increasingly global

Question 31

Obvious reason why digital intelligence is an important 21st century competence

Answer 31

Ever increasing pace of digital transformation

Question 32

Very simply, what is asked of directors re. 11 Cs commitment?

Answer 32

Do you have the right disposition and motivation?

Question 33

Why is director commitment necessary?

Answer 33

To ensure that they allow and apply appropriate levels of time and energy to the role

Question 34

For what type of director is commitment most often considered in relation to?

Answer 34

NEDs, as they will usually have executive roles elsewhere

Question 35

Why is director commitment relevant for Execs too?

Answer 35

Because they must be able to commit sufficient time to Board governance role, as well as their role as an exec

Question 36

Very simply, what is asked of directors re. 11 Cs character?

Answer 36

Do you have sufficient ethical character?

Question 37

One reason why strong director character is important?

Answer 37

Research at Cass Business School has identified a close relationship between failures in character, high-risk corporate behaviour and ethically dubious decision making

Question 38

What has more potential influence board governance outcomes? director demographics or director attributes?

Answer 38

Director attributes - a whole board of competent, committed individuals with strong character is a great sign (but the board's dynamic can mediate these strengths)

Question 39

Which of the 3 Cs of board demographics are the 3 Cs of board attributes reasonably linked to?

Answer 39

Capability - a competent, committed director with good character will usually be a capable director