Board Effectiveness in Action: Optimizing Governance for a Government Contractor

Situation:

An NYSE-listed government contractor has partnered with TMG since 2021 to assess its board’s overall effectiveness, including board composition, committee performance, CEO and management team evaluations, and succession readiness. Focused on best practices and with a history of M&A activity, the Company understands the value of external feedback and continuous improvement.

Approach:

Partnering with the Chair of the Nominating and Governance Committee and General Counsel, TMG began the process by developing a customized questionnaire and discussion guideline focused on critical areas of board governance as outlined above. TMG conducted one-on-one confidential interviews with each board director, gaining their respective insight. The interviews, lasting 45-60 minutes, were designed to encourage open dialogue and to capture candid insights on a confidential basis.

In these discussions, TMG prioritized key governance themes, focusing on broader topics like board composition, committee leadership and succession planning, long-term strategy, and CEO succession planning. Through open-ended dialogue, TMG surfaced more meaningful feedback than would be provided through a mere survey. TMG curated and synthesized the insights from all the interviews, identifying common themes, challenges, and opportunities for potential changes or improvement. TMG reviewed these insights with key stakeholders to confirm alignment before presenting the findings to the entire board in a detailed, in-person debrief.

Outcome:

Since TMG’s initial engagement in 2021, the Company has implemented several nuanced governance changes. The Company and TMG developed a skills and experiences matrix identifying 15 critical competencies, effectively guiding the recruitment of new directors to address expertise gaps. This tool has been instrumental in advancing the Company’s governance. The board has welcomed new directors and has increased its emphasis on committee chair rotations, fostering leadership development, and enhancing experiential and skillset diversity within the board. In addition, leveraging insights from the directors and advice from TMG, the management team’s presentations have become more concise and efficient, improving the relationship between the board and management.

In 2024, TMG conducted a follow-up assessment. TMG found that the board had developed into a high-functioning, collegial, and effective board, with a stronger, more collaborative relationship with both the CEO and the management team. The evaluation revealed additional opportunities for growth through TMG’s 1:1 conversations with board members, including expanding expertise in some areas, creating more robust onboarding for new directors, and holding more regular discussions about the Company’s long-term strategic direction to sustain alignment and momentum. TMG expects to revisit the board process every three years going forward to ensure implementation and compliance with our curated insights and to uncover additional, ongoing opportunities for improvement.