In the Boardroom


Create a "virtuous circle" by building an effective and diverse mining board.

By Jon Martin and Joe Saliba

In our previous Energy & Mining International column, we referred to our study examining the evolution of the mining board between 2011 and 2016. This time, we discuss what differentiates effective boards and how to increase board diversity in the mining industry.

Adding Diverse Perspectives

The effective board is comprised of balanced views and multiple perspectives and experiences. Ultimately, board success depends on diverse membership – representing different geographies, genders and generations – and a range of competencies – such as financial, technical and operational expertise. Building these skilled, diverse boards creates a “virtuous cycle” in that diversity in these areas contributes to greater company success, and success makes the board increasingly attractive to high-caliber, diverse talent.

When appointing new board directors, companies typically look for proven leadership capabilities, ability to engage in constructive debates, and experience and skills that fit the strategy. While our study confirmed that the mining industry is progressing towards a greater share of women on its boards, gender parity continues to be a challenge. This is due to the relatively small number of female mining company CEOs or other c-suite executives.

In our experience, it is more valuable to look across parallel industries such as the oil and gas or service industries such as mining equipment to widen the universe of prospective board candidates. Furthermore, in light of the significant shift of mining companies adopting manufacturing principles in operations, there is an opportunity to consider executives with relevant operational experience developed from within the automotive and broader manufacturing sectors.

Our analysis also revealed that mining boards possess less technical and/or operational expertise than we had expected. Given the many technological and operational challenges and opportunities the mining industry is facing, a technically/operationally qualified board director could add value by helping to evaluate capital allocation, risk and other strategic decisions from a technology perspective.

To this end, board development might focus on identifying executives from companies where technology disruption has been a significant factor to bring that experience to mining boards. In addition, mining equipment providers developing technology for autonomous vehicles/drilling can be a good source for insights into how to better control cost, develop better performance predictability, and improve safety in the industry. 

Increasing Board Effectiveness

Our study, Understanding the Behaviors that Drive Board Effectiveness, surveyed 369 corporate (supervisory) directors from large public companies across a dozen countries. Our analysis revealed that the most effective boards:

1) Possess the courage to do the right thing for the right reasons;

2) Are willing to constructively challenge management, when appropriate;

3) Demonstrate sound business judgment;

4) Ask the right questions; and

5) Possess independent perspective and avoid "groupthink.”

The ability of boards to act on these characteristics and successfully carry out these behaviors depends on a strong chairperson who is able to effectively facilitate the board; a collective view of long-term time horizons for strategic direction; and an environment that cultivates strong relationships with the senior management. 

Most directors globally agree on which director behaviors are most desired, but many boards struggle to incorporate those behaviors into the actual operating norms of the board. Interestingly, our analysis found that the amount of time spent in the boardroom is less important than how that time is spent; e.g., discussing operational issues.

Our advice for increasing board effectiveness includes the following five steps:

1. Undertake a board effectiveness assessment review.

2. Review board composition against the emerging strategy and key board behaviors.

3. Review the roles, skills and attributes of board leaders.

4. Ensure that the strategy development process is taking a long-term perspective and that the board adequately reviews and challenges the strategy to hold management as well as themselves accountable.

5. Review the CEO succession planning process and identify the board’s role in the development of top talent.

Jon Martin is a managing director in Russell Reynolds Associates’ Toronto office and co-leads the firm’s global mining and metals practice with Joe Saliba, a managing director based in Melbourne.


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