How To Handle Underperforming Directors

View of boardroom table from above
AdobeStock
Addressing a fellow director's poor performance can be awkward and uncomfortable. Here are some measures the board can take.

The recently released PwC 2024 Annual Corporate Directors Survey reveals that director discontent with their colleagues is at an all-time high. According to the report, 49 percent of directors surveyed said at least one director on their board should be replaced and 25 percent said two or more directors should be replaced. Is the high level of dissatisfaction with other board members’ performance a major issue for boards?

For most boards, the short answer is no—dissatisfaction with colleagues is not having a major impact. However, there may be cause for concern on the 25 percent of boards where directors say two or more members should be replaced. For example, if three members of a nine-member board are viewed as underperforming, there could be some aspects of governance that fall through the cracks.

One positive note about these seemingly negative findings is that they prove that directors are paying attention to the productivity of those who serve with them on corporate boards. That is positive because it means that the quality of board directors in the future is more likely to improve, assuming that boards are 1) serious about replacing underperforming directors and, 2) willing to help underperformers who are cooperative improve their performance.

Unfortunately, removing underperforming directors isn’t simple. According to the PwC report, “Asked to name top reasons for not removing underperforming peers, directors cite collegiality and personal relationships, the awkwardness and time involved in replacing a director and board leadership’s reluctance to engage in difficult conversations with underperforming directors.” The report then goes on to suggest boards should develop clear plans of action that ensure accountability after a full board assessment, conduct their own individual director assessments, consult with outside experts for solutions and have board leadership set the right tone concerning board performance. These measures could make removing peers more efficient and less personal or awkward.

Perhaps one other thing corporate directors could do is be brutally honest about their own performance on the board. A periodic self-assessment could be a very useful practice for directors. Being dissatisfied with the performance of other board members could make directors feel overburdened or dissatisfied with their overall experience on that board. However, asking themselves “How engaged have I been on various board committees?”, “Is my expertise making a difference at this company?”, “Am I contributing insight or questions that are helping the board make better decisions?” and “Is there any additional responsibility that I can take on to help this board be more effective?” could help individual board members determine how they might be viewed by other colleagues. Being willing to make adjustments based on questions like these could set an example for others while improving overall board performance.


  • Get the Corporate Board Member Newsletter

    Sign up today to get weekly access to exclusive analysis, insights and expert commentary from leading board practitioners.
  • UPCOMING EVENTS

    SEPTEMBER

    16-17

    20th Annual Boardroom Summit

    New York, NY

    NOVEMBER

    13

    Board Committee Peer Exchange

    Chicago, IL

    MORE INSIGHTS