“Integrity and intelligence.” Whenever NACD asks directors what qualities they seek in their peers, these two top the list. That’s a good answer, but let’s dig deeper. Much is written about director integrity—aka tone at the top—but what about director intelligence? What does this mean? A high IQ? An analytical bent? The ability to learn quickly?
In my opinion, director intelligence is all about the ability to see correlations and patterns.
Because of this ability, intelligent directors can identify and interpret emerging trends, both external and internal. The field of technology offers a good example. Will the increasing speed of technological transformation trigger obsolescence or spell opportunity for the company’s products? And what will these changes mean for the company’s own information infrastructure and financial reporting? The intelligent director will have some ideas.
I’m also talking about the less visible patterns that directors may see as they prepare for and attend meetings. As an intelligent director, you question business plans or proposed expenditures that are not aligned with strategy and budget. When you serve on an audit committee, you keep an eye open for anomalies such as windfall revenues, or mismatches such as charts that show that a company’s bond price and yield are both rising (in fact, these two items are inversely correlated). On the compensation committee, you pose a question if a proposed bonus seems out of line with performance. And as a governance committee member, you develop concerns about subtler patterns in board dynamics—and raise them with the board’s leader.
Turning to the magazine at hand—a very special kind of “bimonthly meeting” that gathers boardroom intelligence on paper—I want to express special thanks to Jeff Cunningham, a former corporate director and NACD managing director by title, but spiritual director of this issue by acclamation. Jeff’s dogged determination to detect new patterns in union conduct and impact has yielded some important insights for boards and directors.
Let us know what you think—and what you are seeing. Together, we can see all the important patterns, and make informed plans and decisions accordingly.
Kenneth Daly is president and CEO of the National Association of Corporate Directors.