Today's economy continues to offer extensive growth potential for engineering and construction (E&C) companies. Yet, a shortage of available resources can ultimately limit organizations’ abilities to maximize these opportunities. With a short-term focus on completing active projects and meeting current client demands, companies can easily overlook the power of effective corporate governance in helping them reach success.
The Power of Effective Corporate Governance
Enter: a high-performing board of directors, which can provide reliable insights and tactics for executive leadership strategy while advancing shareholders’ best interests. In short, companies should look to move beyond a sole focus on high-level financial health and instead, integrate an effective board to assist in addressing strategic issues such as succession planning, talent retention, enterprise risk management, and innovation.
These issues all play critical roles in preserving long-term viability. With this in mind, the Construction Industry Round Table (CIRT), an association of America’s leading design and construction companies, partnered with FMI to produce the report, The Untapped Potential of Corporate Governance in Engineering & Construction: 2018 FMI/CIRT Corporate Governance Study (available at www.fminet.com/special-reports). The purpose of this broad study was to explore industry-specific governance practices and how they fostered board efficacy.
An array of factors was investigated to support this goal, including leadership, demographic composition, board processes, director training, development methods, and time management. Throughout the study, researchers considered the fundamental question: Which factors support great governance?
The study’s findings were based on survey responses from 133 CIRT board members, as well as over 40 follow-up interviews. Key study findings were grouped into four main themes:1
- Leadership Matters
- Different Is Better
- The Big Training Gap
- Reordering the Priorities
This article is the first of a four-part series providing insight into each theme and will address the importance of leadership matters within the boardroom.