All boards need a self-renewal plan.

• Position: BOARD REPORT

Ed Note: A 20-member blue-ribbon panel, the Study Group on Corporate Boards, released in April 2011 a report designed to improve board performance and effectiveness. Titled "Bridging Board Gaps," the report calls for a renewed commitment to the purpose of corporate boards, and suggests guidelines to improve board practices and standards along seven core dimensions; Purpose, Culture, Leadership, Information, Advice. Debate, and Self-Renewal. The Study Group was co-sponsored by Columbia Business School and the John L. Weinberg Center for Corporate Governance at the University of Delaware. The co-chairs were Glenn Hubbard, dean of Columbia Business School, and Charles Elson, director of the Weinberg Center The Rockefeller Foundation provided funding for the report. Following is an excerpt from the report that addresses a board's need for self-renewal.

Board composition must continue to evolve to suit a company's strategy. The average tenure of directors is now about seven years, but some of the turnover is due to mergers rather than to actual rotation of directors. Furthermore, the presence of managers other than the CEO on some boards presents another opportunity for positive change. If managers will be providing their views to the board anyway in their management roles, why should they occupy a voting board seat? The board can thus expand its pool of expertise by increasing the percentage of non-management directors.

Boards today tend to be small, and rightly so: Deliberative groups much larger than a dozen members tend to become unwieldy. Given a limited number of seats, and given the great range of expertise and experience needed by every hoard, each board seat counts, making board composition a vital concern for every board.

Boards can engage in affirmative succession planning for their ranks. Every board should have a self-renewal plan. If boards could calibrate director tenure to maximize director usefulness, they could keep their boards vital. Furthermore, there could be a positive chain reaction. With more board seats opening up, individuals who have a chance to serve as directors on other boards would be less inclined to cling to their current board seats and more able to move on when the time seems right.

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To select the most useful directors, boards need to pay as much attention to the person as to the resume, striving for diversity in both dimensions. An effective group will be diverse in many ways, including...