Toward a Requisite Board Competencies Matrix

• Published date: 01 March 2017
• Author: Axel Kravatzky
• Date: 01 March 2017
• DOI: http://doi.org/10.1002/bl.30072

MAR.–APR. 2017 5

Board Leadership’s mission is

“to discover, explain, and

discuss innovative approaches to

board governance with the goal

of helping organizations achieve

effective, meaningful, and suc-

cessful leadership to fulfill their

missions.”

Board Leadership aims to ful-

fill this mission by engaging its

readers in a lively and illuminating

inquiry into how board gover-

nance can be made more effec-

tive. This inquiry is based on three

key assumptions:

• Boards exist to lead

organizations; not merely

monitor them.

• Effective board governance

is not about either systems,

structures, processes,

theories, practices, culture, or

behaviors—it is about all of

them.

• Significant improvements are

likely to come only through

challenging the status quo

and trying out new ideas in

theory and in practice.

Uniquely among regular pub-

lications on board governance,

Board Leadership primarily

focuses on the job of board lead-

ership as a whole, rather than on

individual elements of practice

within the overall job.

Over time, Board Leadership

will provide a repository of dif-

ferent approaches to governance

created through its regular “One

Way to Govern” feature.

Here’s what a few of the key

terms we use mean to us:

• Innovative: Creating

significant positive change.

• Approaches to:

principles, theories, ideas,

methodologies, and practices.

• Board governance: The

job of governing whole

organizations.

WHEN WE SAY ...

Toward a Requisite Board

Competencies Matrix

by Axel Kravatzky

Having a competent board is vital to every organization, but what does that mean?

Here, Axel Kravatzky—in the rst of a two-part article—examines the necessary

collective and individual competencies and advances in the design and use of

Board Competency matrices.

Introduction

In an increasingly connected and

complex world in which the digital

transformation will continue to produce

an unprecedented rate and depth of

transformation, boards play very impor-

tant roles in creating and assuring orga-

nizational success through the way they

are directing, assuring, and accounting

for the organization’s behavior. Kiel et

al. argue that there has been a “dual

increase in both task breadth (or num-

ber of tasks) and depth (or degree of

competence in carrying out tasks),”

which has led to a multiple increase

(e.g., quadrupling) in what is expected

of modern directors.1

Boards of directors are always com-

posed of several persons who must

act together.2 There are no decisions

of the governing body that are taken

by any of its individual members alone.

That means that the members of the

body must be able to come to deci-

sions together, bringing together their

perspectives for the benefit of only one

consideration: the best interest of the

organization they are governing.

This requirement creates a chal-

lenge: we must create and assure that

governing bodies have collective capa-

bilities to address all the business of the

organization coming before it, but our

instruments of assessment and experi-

ence are largely concerned with the

assessment or the classification of the

capabilities of the individuals of govern-

ing bodies.

This challenge has at least two com-

ponents: (1) how do we articulate the

collective requirements against which

we assess the collective capabilities of

the governing body? and (2) how do we

combine the assessment of the capa-

bilities of individual governing body

members to determine the collective

capability of the governing body?

Most corporate governance codes

of good practice, listing, and regulatory

requirements articulate and emphasize

the need to have adequate diversity of

skills and perspectives on boards. They

speak of collective capabilities based

on the capabilities and attributes of

individuals, but there is little guidance

for determining the collective require-

ment or assuring its adequacy. At the

individual governing body member

level, we often find lists that mix cat-

egories of capabilities and individual

capabilities: leadership, ability to listen

and work together, industry knowl-

edge, financial literacy, ethics, and so

on. Some of the individual skills and

competencies are also mandatory for

some board members—for example,

most codes and regulations require the

Board Audit Committee to have at least

some financially literate persons.

In addition to the mix of require-

ments and desirable features, there is

also little guidance on how to standard-

ize the assessment of individuals or the

collective, other than using a collective

scale. But what do the different scale

ratings really mean, and how should

they be assessed?

The Board Skill or Competency

Matrix is the tool almost universally

recommended to be used in the

composition and refreshment of

boards of directors. These matrices

almost invariably consist of rows of

skills/competencies/values that are