The first half-decade of the 21st century has witnessed a dramatic sea-change in the expectations for corporate boards and their role in governance. In light of major securities scandals and the government’s response to them – particularly the Sarbanes-Oxley Act – much of the focus has been on compliance and the board’s fiduciary responsibility for protecting shareholders from financial fraud. More quietly, boards have continued to demonstrate a growing commitment to their role in company strategy. This commitment is based on members’ recognition that they need to satisfy themselves that the company is pursuing sound strategies that will build value for shareholders over time. As a result, boards and management teams are continually looking for more effective means of engaging the boards in evaluating and approving company strategy.

At the invitation of Directors & Boards magazine, Numerof & Associates, Inc. recently investigated the current state of board involvement in strategy development. As a central element of our research, we conducted structured, confidential interviews with senior executives from approximately 20 major companies across a broad range of industries. Almost all of these individuals served in the role of chairman, and several also had experience as non-executive directors for other companies. What emerges from these interviews is a remarkably consistent perspective on the proper role of the board in company strategy, what it takes to engage the board effectively, and the demands placed on directors and management by such engagement. The investigation has also uncovered some important lessons for boards to consider as they determine how best to fulfill this critical responsibility.