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William D. Anderson, a managing partner in Goldman Sachs’ M&A Group, explains what makes a great director today. Anderson, who has worked extensively with boards on a number of market-moving issues, outlined five characteristics that pave the way to success:
- A willingness to commit substantial time to the company. Companies frequently need to respond to significant business challenges, turbulent markets, regulatory change, and shareholder pressure. Directors must be willing to help management anticipate opportunities and challenges, and ramp up their level of personal involvement when issues arise.
- Sensitivity to multiple perspectives. Board decisions impact a number of important constituencies – investors, employees, regulators, suppliers, and customers. Directors who are sensitive to the likely impact of corporate decision-making on these constituencies can help avoid unnecessary friction.
- Stature and Experience. Directors need to have credibility when they speak in the boardroom. Directors with strong executive track records are more likely to influence other directors and their decisions.
- Persistence. The challenges facing companies today require boards to not only develop company goals; but also maintain a consistent focus – including establishment of a framework for achieving objectives and benchmarking the company’s progress. However, persistence does not mean staying the course when the facts suggest that a change in direction is needed.
- Diligence. Directors should supplement information provided by management to obtain a complete picture of how the company is perceived. This work includes reviewing research reports, shareholder feedback, and industry trend data.