Effective Boards of Directors: A New Approach (I. Belikov, Сетевое издание "Электронный журнал "Корпоративные финансы" Journal of Corporate Finance Research", N 1, 2019 г.)

Belikov I. Effective Boards of Directors: A New Approach

I. Belikov - Director, Russian Institute of Directors, Moscow, Russia

The goal of this study is essentially twofold. First, it seeks to improve the efficiency of management in Russian companies through a revitalisation of perspectives on the makeup and activity of boards of directors. Second, it seeks to develop a motivation among controlling shareholders to strengthen the actual role of such boards in managing companies. This combined approach is intended to be applicable to both public and private companies.

The objective of this study is to search for ways to refocus on standard recommendations for international best practice regarding the work of boards of directors. These recommendations should consider best practices in terms of general company control and supervision, the in-depth study of key business processes, management innovations, technologies, and tools to promote new management approaches. A feature of this investigation will be the identification of ideas to ensure the best paths towards overcoming psychological barriers that impede the adoption of innovative and novel ideas by management.

This article provides a comparative analysis of the classic Anglo-US model of corporate governance (which features the role of boards of directors as the body exercising control and supervision over the company's activities and its management), with the Russian model. The Russian model is characterised by a structure which nominally replicates the practice of developed countries, whereby the real power rests with the controlling shareholders and management, with the boards playing a secondary role by approving the plans of the company activities and their results.

Given this situation, the boards of directors of Russian companies should prove their capability to contribute to the creation of economic value. Examples of essential management areas in which boards of directors should implement the function of management development are: strategic planning, creating and improving competitiveness, building up and developing the company's human capital, risk management, and internal control. This article suggests efficient practices and tools which can be used by a board of directors for management development.

Keywords: board of directors, controlling shareholders, management, business council, experience economy, company's risk culture

Effective Boards of Directors: A New Approach

Author

I. Belikov - Director, Russian Institute of Directors, Moscow, Russia

Сетевое издание "Электронный журнал "Корпоративные финансы" Journal of Corporate Finance Research", N 1, 2019 г.