|
© BBG, LLC 2005 |
|
136 Wenneker St. Louis, Missouri 63124 |
|
Contact information |
|
Research Bits
Competence/Experience Matters—Competence/Experience on the board matters in terms of profitability. The study measured competence/experience by determining if the CEO was also the Chairperson of the board, tenure of board members on the board, whether the board had a formal evaluation procedure for the CEO and whether the Audit Committee Chairperson had formal training in accounting.
Though recently much has been made about separating the role of the CEO and Chairperson, the study found that companies with separate roles were significantly less likely to be profitable than companies with a combined CEO/Chairperson. In other words, employing an executive with the skills that it takes to do both jobs helps ensure profitability. Longer tenure of board members also related positively with profitability.
Companies with formal CEO evaluation procedures in place were significantly more likely to be profitable than those without those procedures. Similarly, those companies where the Audit Committee Chairperson had formal training in accounting were significantly more likely to be profitable than those who companies where the Audit Committee Chairperson did not have that training.
Overall, there appears to be a competence/experience factor that directly relates to profitability.
|
|
Better Board Governance |
|
Creating Stronger Organizations by Providing |
|
Better Board Governance.com |