An emerging governance perspective is the need for boards to assume greater responsibility for positioning themselves to respond to the rapidly evolving legislative and regulatory environment. This is, essentially, a "continuous improvement" message directed at boards that have historically been too sluggish or passive in response to industry and governmental change.
This perspective is championed by the NACD, which describes it as "Building the Strategic-Asset Board." The underlying theme is that boards are more likely to be successful in adapting to significant change if they hold themselves—collectively and individually—more accountable for their levels of performance and engagement. The most traditional methods for implementing such accountability are through the "refreshment" tools of periodic full board, and individual director, self-evaluation; tenure and age limitations; succession planning; enhanced director recruitment and retention limitations on outside board service; "fitness to serve" standards; "onboarding" practices and specific meeting attendance and director education requirements. While NACD does not formally endorse any particular refreshment tool, it encourages directors to consider whether their board's composition, director skill sets, and core governance processes remain fit-for-purpose in a dynamic environment where the board's mandate is dramatically evolving.
NACD's message of director preparedness is particularly relevant to sophisticated nonprofit corporations, such as health care systems, that are confronting a changing financing model, significant shifts in health care public policy, increased operational complexity, rapidly changing technology, increased competition from multiple sources, and greater levels of media and public scrutiny. The implementation of a board-level continuous improvement program would serve as a clear demonstration of the board's good faith intent to satisfy its fiduciary obligations.
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