Boardroom Behavior

IS THERE A DISPARITY between European board directors and their North American counterparts?
Boardroom Behavior

Yes, according to a benchmarking survey of nearly 300 European directors conducted by the Corporate Governance Initiative at INSEAD of Fontainebleau, France, and the Clarkson Centre for Business Ethics and Board Effectiveness at the University of Toronto’s Rotman School of Management in Canada.

One of the survey’s primary conclusions is that European directors demonstrate a lack of understanding of their industries. In addition, directors act more like managers than board members and fail to devote sufficient time to their director duties. In all, the survey examined nearly a dozen factors deemed to be impeding director performance.

The survey highlights the fact that Canadian directors seem to place greater importance on key governance areas—such as industry expertise—than do their European counterparts. In particular, Canadian boards give importance to executive forums where directors can express themselves freely and privately. By a 3-to-1 ratio, Canadian boards believed such forums were more important than their European peers did.

The study recommends that European directors improve their performance by, among other things, developing a greater sense of duty toward the organization than to stakeholders, gaining greater industry knowledge, and paying more attention to process skills such as board evaluation practices.

More information is available at www.insead.edu/facultyresearch/centres/governance_initiative.