With most Fortune 500 companies anticipating the majority of their future growth in emerging markets, Tom Manning comments at Chief Executive that one critical skill missing in many American boardrooms today is international experience:
Even though most boards have directors who claim international experience, few of these directors (only about 14% according to the most recent Egon Zehnder Global Board Index) have either lived abroad or have led operations in overseas markets. Many directors are internationally savvy to be sure, but that might not be enough in the current hyper-changing global economy. Yesterday’s Europe is not the same as today’s post-Brexit EU, nor is today’s China the same China a director might have visited just five years ago. How much advantage might be gained if the board could better tune its skill set to match the future geographic profile of the company? Quite a lot, given the benefit of specific and accurate planning and execution in markets that are among the most dynamic and rapidly-evolving markets in the world.
Several quick tests would be valuable for American boards, beginning with the obvious—a check of the real international experience of its directors. Second-order questions are key, such as years lived abroad, languages spoken, frequency of travel, and current links with foreign business projects and overseas influencers. By estimating how much of the current and prospective business can be enhanced by more current and relevant emerging market skills, companies could shed light on the value of re-skilling the board.
The need to re-skill boards is a symptom of the larger issue of directors serving long tenures. The absence of corporate governance codes in the US, for example, is one reason why American directors serve an average tenure of 10 to 15 years. The longer the tenure, the less independent-minded board directors are, as their views begin to reflect those of the company’s management, rather than the interests of its shareholders. Lengthy director tenures also help explain why, as Manning observes, the international experience directors do have may not be very relevant or up-to-date.