Can AI Build a Better Board?

AI Can Measure Board Expertise. Can It Measure Judgment?

The board had a problem. Its directors brought decades of executive experience to their work, with credentials spanning finance, operations, marketing, and strategy. On paper, they appeared well qualified. But with the company lagging its industry peers, a troubling question emerged: Did the directors have the experience to navigate pressing strategic challenges—or only the right credentials?

The latest research suggests that AI may be able to help evaluate the true fit of a board. In a recent case study in the Harvard Law School Forum on Corporate Governance, researchers used AI to analyze a recent board overhaul demanded by an activist investor in a cruise company. The study found that the overhaul quantitatively improved the board’s fit, bringing it roughly in line with those of industry peers. The board also became somewhat less professionally homogeneous (though it remained more diverse than its counterparts). In other words, the study found that AI could expose two weaknesses that traditional-skills board reviews may miss: gaps in strategic expertise and a lack of diverse perspectives.

But measuring strategic fit at a particular moment is only part of the challenge. Activist investors typically have specific objectives and relatively short time horizons, says Tierney Remick, vice chairman and co-leader of board and CEO services at Korn Ferry. Hedge funds are skilled at reshaping boards around a particular investment thesis, she says, often with an eye toward results within three years. While activists may be “gone in two or three years, the board members are still typically there,” she observes. That means directors must not only fit today’s strategy but also possess the “agility and adaptability” to navigate whatever comes next.

That requires a more sophisticated assessment than simply checking off skills, Remick argues. Effective board selection depends on “real outcome-driven research” into the judgment directors bring to the table. Board members may possess impressive credentials on paper, but, as Remick says, “sometimes those directors haven’t necessarily had the right experiences that enable them to have the wisest judgment in the room.” For Jane Edison Stevenson, global vice chair of board and CEO services and global leader of board and CEO succession at Korn Ferry, the central question is who can make a meaningful difference in the company’s direction. “Whether you have to cash out in three years or eight years is less important than whether that wisdom is present,” she says.

"It’s true that there are often the wrong people in the boardroom."
‍Jane Edison Stevenson, board and CEO succession, Korn Ferry

The stakes can be considerable. “It’s true that there are often the wrong people in the boardroom,” Stevenson says, noting that identifying the right directors sometimes means challenging a board’s own assumptions about the backgrounds it needs. In one recent board overhaul at a prominent S&P 500 company, she says, experts had to argue for candidates whose experience differed from the profiles initially sought. “We had to push against some of what they were looking for to get to directors that could provide a different perspective,” she says. The changes were significant enough that an analyst report subsequently cited the board’s new composition as a competitive advantage.

To be sure, the usefulness of AI-based board assessments depends on the underlying assumptions and information, says Scott Atkinson, senior client partner of Korn Ferry’s Global CEO and Board and Technology practices: “It takes quality data—but if you have that, could AI help buoy the human aspect of selection? Absolutely.” Even then, the research doesn’t establish that greater alignment produces better governance or financial performance. And with corporate strategies constantly evolving, a director’s suitability can’t be judged against a company’s current priorities alone.

Still, the research points towarda shift in how boards—and investors—may evaluate director qualifications. As AI makes it easier to identify gaps in strategic expertise, boards may face tougher questions about why those gaps persist, and whether existing methods of assessing directors are adequate. But identifying a gap is not the same as knowing who should fill it. As Stevenson puts it, “Contextual human judgment has never been more important.”

Learn more about Korn Ferry’s Board and CEO Services capabilities.

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