Has your company outgrown its board? Here's how to tell.

• Author: Carey, Dennis C.

By answering the following brief list of questions, CEOs and nominating committees should be able to gauge how well their board measures up.

Market dynamics continue to push companies in unexpected directions. For some, such as high-tech companies, the pressure comes from explosive growth. For others, such as those in the hospitality and automotive industries, acquisitions, roll-ups, and globalization are major forces. New markets, new products, and new definitions excite a host of industries, and equity carveouts, spinoffs, and demergers are regular occurrences.

The pressure on boards has never been greater, nor the expectations higher. Deregulation is everywhere (financial services, utilities, airlines, and telecommunications), and even reregulation (tobacco) is turning formerly sound strategies - and the executives who created them - on their heads. Even slow growth (as in some specialty retail segments) highlights the current necessity for boards of directors to play a critical strategic role in the guidance and governance of their companies.

Not all boards, however, are up to the task. Just as military leaders are often accused of planning for the last war, some boards may be best equipped to handle yesterday's issues. These boards, even those with directors who have been strong contributors over long periods, may not be fully prepared for today's stepped-up challenges.

Having completed more than 1,000 board searches during the last five years, we at Spencer Stuart have developed an appreciation for the extraordinary value the right board can add to a company. The most successful boards have CEOs and nominating committees that periodically take a comprehensive look at three critical concerns regarding the make-up of their boards:

* Fit - Is the board's current mix of talent equipped to handle the critical imperatives facing the company?

* Balance- Does board composition strike a happy medium among a diverse group of directors?

* Competitiveness - Is the board of directors, as currently composed, a genuine strategic asset to the company?

By answering the following brief list of questions, CEOs and nominating committees should be able to gauge how well their board measures up in these three critical broad areas. This diagnostic is not intended as a formal evaluation tool either for the board or for individual directors - but rather as a way to get a quick take on the board's collective ability to add the strategic value that is so...