How Boards Work – and How They Can Work Better in a Chaotic World

According to author Dambisa Moyo, well-run companies can bring stability to the economy. They can meet the needs of the people they employ – and those they serve. They can take the lead on issues that have a positive impact on the world. But only if their governing boards step up their game.

"How Boards Work" is written with both knowledge and passion. With many years' experience gained on a variety of boards – and despite many difficulties – Moyo remains convinced that being a board member is a privilege. It's given her the chance to shape strategies that improved the lives of staff, served communities better, and moved toward a more sustainable and socially just future. She believes that all boards can make a positive difference – if they're properly equipped to do so.

So, keep listening to find out what it's like to be a big-company board member; which areas boards need to focus on right now; and why the choices they make matter so much to us all.

"How Boards Work" may not be the most exciting title on the shelf. And the black-and-white boardroom on the cover, with empty chairs and a long, shiny table, will likely feel far removed from many readers' lives. But look a little closer and you'll see a recommendation from Arianna Huffington, former Uber board member. And another from Mellody Hobson, who's been on boards at Starbucks, Dreamworks and Estée Lauder. These are people whose work clearly connects with our everyday lives.

A quick scan of the author's own credentials reveals a wealth of similar experience. She's served on the boards of Chevron, Condé Nast, and the 3M company. And her book is peppered with first-hand stories from across the corporate world.

When explaining takeovers, for example, she tells us what it was like to be on the board of brewer S-A-B Miller during its sale to a rival for $100 billion. And in a section on whether boards are diverse enough, she describes what happened in one rather uncomfortable shareholder meeting, when she was singled out as the only woman of color. It feels like a rare glimpse behind the boardroom doors.

The author's life story is also fascinating. When she took her first board seat aged 39, she was, in her own words, "an unconventional candidate." Young (for a corporate board member), a woman, Black, and from Africa. She was very different from the others around the table.

But she clearly thrived in her role, and then moved on to further board posts in a wide range of organizations, during a tumultuous 10 years. She's able to describe what it feels like to be on a board, as well as the things that happen there.

She's also well qualified to explain the current financial and political landscape. A renowned economist, Dambisa Moyo specializes in macroeconomics and global affairs. Time magazine named her one of the 100 most influential people in the world. And she's keen to use her influence here from the start – to inform and inspire, and to get us insider access to the boardroom.

The people we'll find there, she says, aren't just in it for the stock options or the glory. They take significant financial and reputational risks, too. They have to work hard to stay informed, and then make sure they get their voices heard – while also collaborating and negotiating to agree the best overall strategy for their organization. Many of the meetings she describes sound like intense and complex affairs. Certainly not for the fainthearted!

It's refreshing that she doesn't assume any prior knowledge. In the Introduction, there's a useful section called "board basics," which introduces us to the three most common board committees – Nominations and Governance, Audit, and Compensation – plus a likely fourth: CSR, overseeing risk, finance, and corporate social responsibility.

This also helps explain the level at which boards operate. The committees take an active role in appointing C-suite executives. They scrutinize accounts, make recommendations about compensation, and check how well risks are being managed. Increasingly, they're also involved in how the company is seen, and how its impact is felt.

Full board meetings pull all of this work together, on the way to setting overarching strategies.

Effective strategies find the right balance between short- and long-term planning, and we hear more about this in Chapter One. It's crucial to take technology into account, Moyo says, to avoid going the way of companies like BlackBerry and Kodak, who got left behind in their fields.

Boards also need excellent business sense – to spot the right time to accept a takeover, for example. Yahoo is another cautionary tale. Its internet business was sold to Verizon for $4.5 billion. But the board had rejected an offer from Microsoft for more than $44 billion nine years before.

Moyo emphasizes the importance of data during strategy talks. Boards need to get a full set of relevant data. They must understand it properly. And then they have to act on it, by shaping their strategies accordingly. That way they'll end up with robust plans they can monitor – checking that managers implement them fully, and then evaluating their impact.

Chapter Two is about hiring and firing – in particular, getting the right CEO in place. Boards shouldn't assume that a company's underperformance is solely the CEO's fault, Moyo says. But nor should they automatically link good performance with the work of the C-suite. Again, it's about getting and scrutinizing the right information, and acting decisively when the picture becomes clear.

Doing that requires the right mix of board members, and for Moyo, the key is diversity of expertise and experience.

She explains how she brought value to the boards she served on. At Barclays, for example, she helped make the huge decision to withdraw from Africa. It was a continent she knew well from personal experience. But she also drew on her specialist knowledge of emerging-market economics. These days, boards need experts in all relevant aspects of the economy, plus geopolitics and technology, she says.

They also need other types of diversity. The D&I agenda – Diversity and Inclusion – has to be taken much more seriously. There's persuasive evidence that truly diverse boards make better decisions, and perform better as a result.

Chapter Three of "How Boards Work" addresses a core dilemma: should companies chase profits, or put more effort into having a positive impact? A 2019 statement by the CEO group "Business Roundtable" signaled something of a cultural revolution here. It moved the focus from serving the shareholders to benefiting all stakeholders – including the community. But Moyo makes it clear that social responsibility remains a huge, complex and rapidly changing idea.

Boards are trying different ways to tackle it. At Netflix, they've advertised their company culture publicly – saying, for example, that they don't hire "brilliant jerks." Other organizations have run employee surveys to test how people feel about the company's attitudes, and to highlight areas of culture to improve.

Moyo tells boards to be strong about removing people with outdated attitudes. She says they also have to push for fair pay structures, reducing the disparity between the CEO's salary and everyone else's. And they should pay close attention to gender pay equality, to do right by everyone – and keep hold of their best talent.

Boards can include environmental concerns in their decision making, too – when they choose which products to produce, for example, how to fuel factories or transport goods, and where to make their investments. However, while corporations must do more, Moyo says that society as a whole must embrace diversity, justice and environmental care. Otherwise, lasting change simply won't happen.

In Chapter Four we get to see how much boards already have on their plates. They face five critical issues today.

First, the world is becoming more siloed and protectionist, putting barriers in the way of international trade. Boards will need to have clear strategies to counter this.

Then there's the new investment landscape, with a high proportion of trades being carried out by algorithms. This is a new and complex way of doing business that boards will have to get their collective heads around.

On the technological front, cryptocurrencies also require specialist knowledge. And new forms of cyberattack threaten corporations at every level, so their boards must check that they're fully protected.

The fourth big issue is the global war for talent. Companies need to be competitive on every possible front. They also need to invest in local training, and create internal development routes.

Finally, short-termism. It's human nature to focus on immediate gains, or seemingly urgent, visible risks. But corporations are faced with long-term challenges, on a global scale.

So how should boards respond?

Chapter Five of "How Boards Work" is titled "Innovate or Die." It's a stark warning. But, thankfully, the author has some clear strategies for survival.

Boards must be willing to make major changes, she says. Disney's a good example of that. The entertainment giant altered its approach to streaming, to keep up with companies like Netflix and Amazon. But it also worked hard behind the scenes to modernize its culture. Disney's board played a key role in recalibrating the pay structure, rewarding people who help build capacity for the future.

Moyo suggests boards look for a new breed of CEO: more culturally sensitive, more able to build trust with stakeholders, more innovative and ambitious. So they need better ways of deciding who's right for the top job. Then they must demand more of their leaders from the moment they start.

And boards themselves need to change too. As the world becomes more siloed, companies should consider having separate boards in different territories, Moyo suggests, to better understand the situation on the ground. New roles may also be necessary. Boards could appoint leaders tasked with embedding social responsibility, say, or improving relationships with ever more demanding shareholders.

It all means that boards must plan for their own survival. Their crucial work will come to a grinding halt if they don't refresh their membership at the right times. They need to keep appointing people who understand the world now, with skills that match the organization's latest challenges.

So, what did we think of "How Boards Work" overall? For a book with no diagrams or illustrations, and only a few bullet lists to break up the text, it's surprisingly easy to read. The author's voice comes through clearly in her intelligent and highly knowledgeable prose, and there's a smooth progression to her argument.

We'd have liked more real-life stories, since Moyo has had such a varied and high-profile career. And the tales she does tell feel over-anonymized at times, suggesting that we haven't been given quite the open access we were promised.

But there's enough first-hand experience to maintain credibility and interest. And it's useful to have a bibliography, to follow up on particular stories or go further into the research. However, at 38 pages, this list felt far too long – especially as the text itself is so comprehensive.

This is a book that we'd highly recommended to would-be and existing board members. It's a practical guide to fulfilling board duties in difficult times. It's also a passionate plea for boards to be better, and it offers an inspirational vision for what they could achieve.

The author's confident that boards can now start to restore popular trust in big business, by using corporate power for the good of all their stakeholders. She shows how they can increase stability – in our communities and globally – and play their part in driving positive social change.

In that way, she's written a book we can all benefit from. Its ambitious scope provides a detailed picture of the state of the world now, helping us to understand the challenges we all face.

It also shows us what to look for in companies that we may or may not choose to support. Board-led attitudes to diversity, for example, workers' pay and conditions, investment choices – even the way a board responds publicly when things go wrong.

It shows that we can all help corporations use their power wisely. We need to understand their challenges, opportunities – and responsibilities – in order to properly judge their performance.

And then, through our investments, our purchases, even our decisions about which companies to work for, we can all exert some influence in the corporate world – whether we set foot in the boardroom or not.

"How Boards Work – and How They Can Work Better in a Chaotic World," by Dambisa Moyo, is published by The Bridge Street Press. 

That's the end of this episode of Book Insights. Thanks for listening. You can buy the book from Amazon here.