David Malcolm, San Diego Businessman, and Philanthropist Breaks Down What Modern-Day Boards of Directors Need

A public company’s board of directors plays an essential and critical role as its governing body. Besides being a legal requirement, boards are elected by shareholders to meet and advise on key company issues.

Today, those boards should align the pursuit of success with community impact in mind, which has not historically always been the case. For this reason, the conversation revolving around the evolution of a board’s role highlights the need for new thinking regarding how public company boards operate in comparison to traditional ways.

In today’s business world, the responsibility that the board of directors was founded upon has developed beyond simply overseeing corporate financials. Factors such as technology shifts and impacts on the world are fueling the demand for innovative thinking and less traditional approaches.

According to seasoned business professional David Malcolm of San Diego, the demand for innovation is nothing short of essential. Malcolm has grown successful organizations in his 40-plus years of experience and served as a board member of numerous public and private entities, such as Giant Group (NYSE), Aegis Communications (NASDAQ), Payphone (AMEX), the UCSD Chancellor’s Community Advisory and St. Vincent de Paul Management. He believes public companies no longer face the challenge of change every 25 years but rather a significantly shorter time frame.

“The most significant challenges facing public companies seem to change every five to ten years. Today, the most important issue is ESG (Environmental, Social, Governance). This might or might not be as important to a private company, but a public company needs to take ESG very seriously. Those companies that have adopted ESG into their core values are the companies showing the best financial results,” said David Malcolm.

Public companies can significantly influence society, as demonstrated by Apple, Microsoft, Tesla, Johnson & Johnson, and more. However, Business Roundtable reports on the difficulties public companies have run into operating in their external environment over the previous years, causing a rise in complex problem-solving for both companies and their shareholders. The environmental collision generated by manufacturing and product production has pushed the focus on climate change to the forefront for public companies. Such a focus, part of what is known as “corporate social responsibility,” often falls on the boards of directors, a fresh addition to their purview.

“Having served on over a dozen San Diego nonprofit boards, I always had one goal: How can I leave San Diego a better place?” shared David Malcolm. “I believe this mindset can and should extend beyond nonprofits.”

Malcolm’s lens is today’s definition of good governance. Historically, a board of directors had to attend regular meetings, have financial skills, and participate on committees, but that is no longer all that is required. The focus has clearly shifted from strictly financial to include social.

Board members also have to participate in productive ways, individually and collectively.

“The key to being a successful board member is knowing how to communicate with your constituencies properly and timely. Stakeholders want to hear about accomplishments. However, many people don’t recognize and give credit to those board members who helped achieve the company’s success,” said Malcolm.

In addition to clear and concise communication, the members of a board of directors should build mutual respect with one another, leading to trust and candor. Such a virtuous cycle strengthens a team and creates robust chemistry, resulting in more strategic and constructive decision-making.

Establishing a foundation of trust, respect, and open honesty with board members and the CEO and senior executives supports an environment for all to play their part. Effective boards are made up of a wide range of individuals that learn to work collectively, accepting challenges and learning from different perspectives.

Malcolm suggests this uplifting and positive approach that he has seen successfully address such a barrier:

“I always try to compliment at least one board member who did something special for the company during each board meeting. This recognition helps motivate others to put a little extra time and energy into their board membership,” said Malcolm.

Embracing individual responsibility comes down to the board member above all. For a board member to strive to be a beneficial team player, Malcolm suggests, “A board member must always take less credit than they deserve and take more blame than they deserve. You will always earn more respect if you follow that simple advice in all areas of your life.”

As Malcolm eloquently points out, the human factor and social elements will continue to play a vital role in shaping the structure and obligations of nonprofit and for-profit boards of directors alike. Instead of merely asking about financials for this quarter, board members should ask: How did we improve our community for the better?

About David Malcolm

David Malcolm of San Diego is an influential real estate professional, entrepreneur, and community leader with over four decades of work experience. Malcolm is a graduate of Harvard Business School’s Presidents Program, a licensed real estate agent and broker, and a Certified Commercial Investment Member (CCIM). He has run and advised multiple public and private companies and held several municipal and statewide public offices.