What Makes a Board Effective? Insights from FTSE 350 Directors

Organisations care deeply about who sits around the boardroom table. But they rarely ask whether those people can actually work together. 

Research published in the International Journal of Disclosure and Governance found that a board functioning as a team is eight times more predictive of corporate performance than individual director demographics. Yet 90 percent of directors rate their individual performance as very effective, while only 30 percent rate overall board performance at an equivalent level. 

To explore what makes boards effective, we interviewed four highly experienced non-executive directors, all former FTSE 350 C-suite executives with extensive boardroom experience across sectors and geographies: 

• Richard Hookway – Chair of Swim England; Non-Executive Director roles in energy and infrastructure. Former Divisional Chief Executive at Centrica and BP 
• Jo Hallas – Non-Executive Director at Smith & Nephew plc; Former Chief Executive of Tyman plc; Non-Executive Director at Norcros plc 
• Anna Vikström Persson – Non-Executive Director at Bytes Technology Group plc and Videndum plc; Former Chief Human Resources Officer at Pearson plc 
• Colin Matthews – Chair of Extra MSA and The Nehemiah Project; formerly Chair of Highways England, Renewi plc, and EDF Energy Ltd; and CEO of BAA, Severn Trent plc and Hays plc 

We asked them: Do you consider boards to be teams? What are the biggest challenges in the relationship between NEDs and executives? And what differentiates an effective board from a less effective one? 

Their answers span a spectrum of views on whether boards should operate as high-performing teams. While some emphasise the primacy of individual expertise and structured oversight, others stress the importance of trust, psychological safety, and interpersonal dynamics. All agreed that shared purpose, alignment, and clear measurement of goals are what bind boards together. 

Key Takeaways

• Team dynamics matter more than individual talent. A board functioning as a team is eight times more predictive of corporate performance than individual director demographics.
• Psychological safety separates effective boards from ineffective ones. The best boards are spaces where directors can admit to not knowing something or acknowledge mistakes without fear of judgement. 
• Informal interactions build trust. Board dinners, coffees, and regular NED-only time give directors space to build relationships and compare perspectives before formal meetings. 
• The Chair sets the tone. When the Chair listens, creates a safe environment, and ensures the quietest voice in the room is heard, everyone contributes. 
• Assessment should go beyond compliance. The most useful board evaluations identify a few priorities for genuine improvement rather than serving as a reporting exercise. 

Why Does Board Effectiveness Matter More Than Board Composition?

Boards of Directors play a central role in any effective organisation: setting direction, hiring and guiding the CEO, overseeing governance, and ensuring ethical and legal compliance. Traditionally, effectiveness has been defined by diversity of skills and experience, with the Chair orchestrating debate and ensuring balanced contributions. 

Yet some argue that boards must now operate less as collections of experts and more as high-impact teams. Corporate governance codes around the world reinforce this view. The UK Corporate Governance Code requires boards to evaluate not only their composition and diversity but also how effectively members work together to achieve objectives. The National Association of Corporate Directors in the United States recommends that boards adopt a continuous improvement mindset, conducting full-board and committee evaluations annually alongside individual director evaluations at least once every other year. 

The gap between composition and effectiveness shows up in the data. According to PwC’s 2024 C-suite survey, only 35 percent of executives rate their board’s effectiveness as excellent or good, and just 32 percent believe their board has the right mix of skills and expertise. Meanwhile, 93 percent of executives say at least one director should be replaced. Our conversations paint a more nuanced picture of what might be going wrong. 

How Do Team Dynamics Shape Board Performance?

Views on whether boards should function as teams varied considerably among our interviewees. 

Colin Matthews offered the most cautious perspective: “Boards are fundamentally different from executive teams. Our role is to review and improve, not to collaborate day-to-day.” For him, effectiveness lies in breadth of relevant skills and the Chair’s ability to orchestrate debate. 

Richard Hookway placed greater emphasis on psychological safety: “The most effective boards I’ve seen are psychologically safe spaces, where people can admit to not knowing and making mistakes.” He added: “The Chair must ensure the quietest voice in the room is listened to, allowing all views to emerge but then steering the conversation to a conclusion.” 

This aligns with research by Harvard Business School professor Amy Edmondson, whose work on psychological safety shows that teams perform better when members feel safe to speak up, take risks, and admit errors without fear of blame. Google’s Project Aristotle, which studied 180 teams to identify what makes them effective, found that psychological safety was the single most important factor, more important than individual skills, seniority, or personality. The research found that teams with high psychological safety were rated as effective twice as often by executives and were more likely to harness the power of diverse ideas from their teammates. 

Anna Vikström Persson embraced the team analogy more fully: “When the Chair operates like a leader of the team (respectful, listening, creating a safe environment) everyone contributes ideas and leverages one another’s experience.” She also emphasised the value of informal interactions: “Board dinners and coffees are instrumental in building relationships and fostering mutual support.” 

Jo Hallas reinforced this view: “Board dinners the night before a meeting can be very helpful in building human connection and trust. NED-only time can also strengthen Board performance, giving directors space to compare perspectives so nothing is left to fester and the board can engage more coherently and productively.” She cautioned that NED-only time must be regular, not sporadic, with the Chair promptly debriefing themes raised with the executives to avoid creating a sense of division. 

What Do NEDs Need from Executives to Govern Well?

The relationship between NEDs and executives depends heavily on information flow. Jo Hallas noted that “NEDs need sufficient breadth and depth of information to feel confident they’re getting an unfiltered view of the business challenges.” She added that NEDs can help this by “spending time in the business to calibrate what they read in papers” and by “flagging any left-field questions ahead of meetings so the executive can be on the front foot.” 

Research from INSEAD on board chair effectiveness supports this view, finding that the most effective chairs maintain regular communication between board sessions and set clear expectations upfront about engagement and preparation. 

How Does Diversity Prevent Groupthink in the Boardroom?

One common concern about treating boards as teams is the risk of groupthink: the tendency for cohesive groups to suppress dissent in favour of consensus. Anna Vikström Persson acknowledged this risk but offered a counterpoint: “Groupthink can occur just as easily in a traditional board setting. A strong team questions itself more and is therefore more resistant.” 

Jo Hallas added: “Cognitive and gender diversity don’t impede consensus, they strengthen it. With trust and the courage to voice different perspectives, boards are better able to balance collaboration with constructive challenge.” 

This view finds support in McKinsey research spanning 1,265 companies across 23 countries, which found that companies with boards in the top quartile for gender diversity are 27 percent more likely to outperform financially than those in the bottom quartile, with ethnically diverse boards showing a 13 percent increased likelihood of outperformance. 

Research from the Harvard Law School Forum on Corporate Governance reinforces the importance of cognitive diversity specifically, finding that boards lacking diverse thinking styles and professional backgrounds are more prone to rubber-stamping management proposals or approving them following only cursory questioning. 

What Are the Best Practices for Board Evaluation and Assessment?

All four directors stressed the importance of board assessment, though they differed on approach. 

Colin Matthews favoured annual internal reviews interspersed with external reviews every three to four years, with value lying in identifying a few key priorities rather than compliance. 

Richard Hookway described effective reviews as “a kind of independent confessional, collecting views on a non-attributable basis to stimulate improvement.” 

Anna Vikström Persson argued that annual external reviews, well conducted, could be helpful to create genuinely high-performing boards. 

Jo Hallas agreed on the importance of reviews but cautioned that the requirement to publicly report actions can dilute their real value. 

What Separates Good Boards from Great Ones?

Boards cannot be neatly categorised as either oversight bodies or high-performing teams. Their effectiveness depends on context: the challenges facing the business, the personalities around the table, the dynamics between non-executives and executives, and above all the leadership of the Chair. 

What is clear is that dynamics matter. Boards that consciously build trust, transparency, diversity, and structured assessment are better placed to deliver impact. When boards embrace team behaviours, balancing collaboration with challenge, matching individual expertise to collective purpose, and creating psychological safety, they are equipped to act not only as guardians of governance but as high-impact teams producing real outcomes. 

At Stanton Chase, we understand that building an effective board starts with finding the right people, but it doesn’t end there. Our Board Search practice identifies non-executive directors and chairs who bring not only the right skills and experience but also the ability to contribute to healthy board dynamics. Rather than applying a one-size-fits-all approach, we adapt our search to each client’s business context, whether a fast-growing company requiring mentoring and structure, or a mature listed business seeking distinctive expertise to complement established capabilities. Our focus is not simply on credentials, but on how a new director will work with the existing board to contribute to organisational goals. 

About the Authors

This paper was co-authored by Alan Velecky (Partner and UK Head of Leadership Assessment & Development) and Eleri Dodsworth (Partner and EMEA Head of Diversity, Equity & Inclusion). 

Alan Velecky leads Stanton Chase London’s Board Assessment and Leadership Advisory practice, helping organisations evaluate board effectiveness, strengthen governance, and build high-impact leadership teams. 

Eleri Dodsworth specialises in Executive Search, working with Chairs and leadership teams to identify, benchmark, and appoint senior leaders whose diverse capabilities, experience, and perspectives produce organisational impact. 

Together, they bring complementary expertise in assessment, advisory, and search, ensuring that boards are not only composed of the right individuals but also operate with the dynamics and behaviours required to deliver results.