Terry DavidCorporate governance that actually works: practical priorities for boards and executives
Strong corporate governance is a competitive advantage. It reduces risk, builds investor confidence, and supports sustainable growth.
Organizations that treat governance as a strategic function—rather than a compliance checkbox—are better positioned to navigate disruption, attract capital, and protect reputation.
Core governance priorities
– Board composition and independence: Boards should balance deep industry expertise with independent perspectives. Independent directors reduce conflicts of interest and strengthen oversight. Regular skills-mapping helps ensure the board has the right mix of finance, technology, legal, and sustainability knowledge.
– Diversity and inclusion: Diverse boards and leadership teams improve decision-making and resilience.
Gender, racial, cognitive, and experiential diversity correlate with better financial outcomes and stakeholder trust.
Set measurable objectives for recruitment and retention tied to board refresh cycles.
– Risk oversight and cyber resilience: Risk management must be board-level focus. Cybersecurity, supply-chain vulnerability, and third-party risk require regular reporting and scenario testing.
Boards should receive concise dashboards highlighting key risk indicators and response readiness.
– ESG integration: Environmental, social, and governance factors are material to long-term value. Move beyond disclosure to integration—tie ESG metrics to strategy, capital allocation, and executive incentives to ensure accountability and measurable progress.
– Executive compensation and accountability: Compensation structures should align with long-term performance and stakeholder outcomes. Clear clawback policies, transparent pay ratios, and performance metrics that include non-financial targets reduce short-termism.
Operational practices that strengthen governance
– Regular board evaluations: Use structured self-assessments and independent reviews to identify gaps in governance, information flow, and decision-making. Treat evaluation outcomes as the basis for targeted development and succession planning.
– Enhanced transparency and reporting: Investors and stakeholders demand clear, timely information.
Adopt concise, principles-based reporting that links performance to strategy.
Use data visualization and executive summaries to make complex information accessible.
– Robust whistleblower and ethics programs: Protect and encourage reporting of misconduct with secure channels, independent investigations, and anti-retaliation policies. Ethical culture starts at the top and requires visible enforcement.
– Succession planning and talent pipelines: Continuity at the CEO and critical roles reduces operational shock. Maintain up-to-date succession plans with emergency and long-term scenarios, plus development programs for internal candidates.
– Digital governance tools: Virtual board portals, secure document-sharing, and real-time KPI dashboards improve decision quality and meeting efficiency. Ensure technology choices meet privacy and cyber standards.
Engaging stakeholders effectively
Meaningful engagement with shareholders, employees, regulators, and communities builds trust. Design engagement strategies that are two-way: solicit feedback, explain decisions, and demonstrate how stakeholder input informed outcomes. Proactive communication reduces the risk of activism and reputational issues.
Culture and tone at the top
Culture is a governance issue.
Boards should assess culture through metrics—employee surveys, turnover patterns, compliance trends—and embed cultural goals in executive performance reviews. Visible commitment from leadership to ethical behavior and inclusion shapes day-to-day conduct.
Action steps for boards and executives
– Map current governance strengths and gaps against strategic risks.
– Update charters to reflect modern risks (cyber, ESG, geopolitical).
– Implement dashboards for risk, ESG, and performance reporting.
– Commit to regular board refreshment and diversity targets.
– Test succession plans and crisis response through simulations.
Adopting these priorities creates governance that is resilient, transparent, and aligned with long-term value creation. Boards that act decisively on governance today protect their organizations against surprise, build stakeholder confidence, and create a foundation for sustainable success.