By Barry S. Bader
Building a board with the right skills, diversity, and culture
Even before the Enron scandal, which featured directors who didn’t understand the company’s complex financial transactions, and before the Sarbanes‐Oxley Act required publicly owned corporations to disclose whether their boards include directors with financial expertise, it should have been self‐evident that relevant knowledge and experience are prerequisites for effective governance.
Until recently, though, many governing boards, including those at community hospitals and health systems, approached the nominating process without a great detail of precision or planning. Community hospital boards filled vacancies from the same social and business circles as current members.
Without question, many visionary, dedicated, and accomplished individuals have joined boards through this pathway over the years. However, as the expectations for governance accountability and effectiveness have increased, the limits of traditional, informal board recruitment are becoming apparent.