How to Improve Board Effectiveness in Saudi Companies

Only 36% of board members in the MENA region believe their boards are highly effective, according to a PwC survey. In Saudi Arabia, where economic transformation is accelerating under Vision 2030, effective corporate boards are critical to achieving strategic goals.

The Capital Market Authority (CMA) has introduced updated Corporate Governance Regulations that emphasize board independence, risk oversight, and strategic alignment. With increasing scrutiny from regulators and stakeholders, improving board effectiveness in Saudi companies is more than good practice—it’s a strategic necessity.

This article explores practical ways to enhance corporate board performance in Saudi Arabia, supported by local market insights, proven strategies, and real-world success stories.

Board effectiveness refers to how well a board fulfills its roles in guiding strategy, overseeing management, and protecting shareholder interests. A high-performing board demonstrates:

• Strategic Oversight
• Transparent Decision-Making
• Ethical Leadership
• Risk Management and Compliance Monitoring

Key Components of an Effective Board:

• Diverse and skilled directors
• Clear roles and responsibilities
• Open communication and accountability
• Continuous training and self-assessment

Board governance in Saudi companies must reflect not only global best practices but also align with local cultural and regulatory frameworks.

Aligning with Vision 2030

Saudi Arabia’s Vision 2030 promotes economic diversification, global investment, and private sector growth. Board governance is crucial to achieving these ambitions.

Regulatory Landscape

• CMA Corporate Governance Regulations: Set expectations for board structure, committee composition, and decision-making.
• SAMA Guidelines: Emphasize risk governance for financial institutions.

Investor Expectations

International investors evaluate companies based on governance quality. Strong boards boost credibility, attract funding, and reduce compliance risks.

Improving board decision-making in Saudi organizations directly impacts long-term performance, resilience, and market perception.

1. Lack of Board Diversity

Most boards are dominated by insiders or a narrow pool of directors, limiting perspectives.

2. Limited Independent Oversight

Boards often lack truly independent members, weakening checks and balances.

3. Infrequent Evaluations

Self-assessments or third-party evaluations are rarely conducted.

4. Overlapping Roles

Blurred lines between management and board responsibilities lead to inefficiencies.

5. Knowledge Gaps

Some board members lack experience in governance, risk, and industry-specific trends.

Recognizing these gaps is essential to deploying meaningful reforms.

How to Enhance Board Effectiveness in Saudi Arabia

1. Conduct a Board Effectiveness Review

Use a structured framework like CG BOD’s evaluation toolkit to assess:

• Strategic contribution
• Committee effectiveness
• Governance structure

2. Establish Clear Roles and Responsibilities

Define distinct duties for the board vs. executive management using charters and RACI matrices.

3. Improve Board Composition

• Recruit independent, diverse professionals
• Set term limits and rotate leadership roles

4. Continuous Training & Development

Offer localized training in:

• Saudi governance standards
• ESG and sustainability
• Emerging regulatory risks

5. Foster a Culture of Open Dialogue

Encourage transparency, constructive challenge, and active participation during meetings.

6. Implement Digital Governance Tools

Platforms like CG BOD streamline:

• Agenda setting
• Document sharing
• Decision tracking
• Compliance monitoring

7. Link Performance to Accountability

Tie executive incentives to board-evaluated metrics and performance.

Best Governance Practices for Saudi Boards:

• Annual board and committee evaluations
• Regular stakeholder engagement
• Succession planning and director onboarding
• Integration of ESG priorities

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Saudi Aramco: Board-Led Sustainability

Aramco’s board played a pivotal role in aligning business strategy with national sustainability goals, earning global investor confidence.

Alinma Bank: Digital Governance in Action

By adopting a digital GRC platform, Alinma improved oversight efficiency and regulatory compliance.

Ma’aden: Enhancing Risk Governance

The board of Ma’aden prioritized training in risk governance and established an independent audit committee—boosting their compliance record.

These examples show that improving board governance in Saudi businesses is both achievable and impactful.

Board effectiveness in Saudi companies can no longer be treated as a soft skill—it is a business imperative. As the regulatory environment intensifies and stakeholders demand transparency, boards must evolve from ceremonial bodies to strategic powerhouses.