Developing more effective boards of directors

Recent corporate governance crises involving well-known firms such as General Electric, Wells Fargo, WeWork and Wirecard among others have called into question the functionality and efficiency of the current dominant model of boards of directors. In most OECD countries, large and mid-size companies have adopted this model, which incorporates a large number of independent directors appointed by shareholders.

While the model offers advantages, it also presents critical weaknesses. In this paper, I will review the origins and main qualities of this model, then trace how changes in ownership and new disruptive challenges have raised concerns about its effectiveness. I will also describe the main contextual factors that companies should consider when choosing a board of directors' model. Finally, I will present the steward model, in which the board as a whole develops competencies that ensure effective governance of the firm.