Boards of the Future – Global Board Survey 2018
Predictability has been replaced by exponentiality and disruption. All businesses are now facing the challenge of trying to navigate through a political, societal and economical fog – at a speed that resembles the experience of jet fighter pilot.
Written by Jakob Stengel , LL.M., Founder & Chairman, Board Network
When everything around you is changing faster and faster, standing still starts to feel like moving backwards. Inevitably, boards of today must be much more agile than any of their predecessors to prevent their businesses from failing.
This puts tremendous pressure on business leaders. They are the ones with the ultimate responsibility for setting the course, navigating through rough waters. Some we can look to for inspiration, others will rather seek to be inspired themselves.
In January and February 2018, Board Network – The Danish Professional Directors Association together with InterSearch – Worldwide Organization of Executive Search Firms asked around our sizeable combined, global network of chairmen and board members, and assembled all the findings in our Global Board Survey 2018 – Boards of the Future.
We looked at what’s hot, what’s not and what’s next within Corporate Governance and Board Leadership – because we know that what drives the board will cascade down to executive management and from there further down the organization.
We dug into how boards are composed, how they work together, how they enhance their effectiveness, how much time they spend, and which tasks they prioritize. We asked them about their view of the future from a societal perspective, from the company’s standpoint and in relation to the board’s own development. We investigated where they feel comfortable, and in which areas they could innovate or improve. We looked into their position on various elements of the strategic picture, and on competencies they feel they are lacking. In other words, we investigated how boards prepare for the future.
InterSearch – Worldwide Organization of Executive Search Firms and Board Network – The Danish Professional Directors Association jointly performed the Global Board Survey 2018 in January and February 2018 among 1,056 corporate chairmen and board members from 55 countries around the world.
Respondents represented every imaginable industry, all sizes of company up to annual turnovers exceeding USD 20 Billion, and all kinds of ownership structures.
Across countries, industries and company sizes, some common trends and key take-aways were clearly apparent:
1. Boards spend increasingly more time on their tasks – and yet still think they could benefit from working even more.
2. In terms of which Megatrends would most significantly impact society and the economy, two stand out from all others; one was disruptive and exponential technologies in general, the other was geopolitical instability and political dogma shifts.
3. When asked which board trends are expected to have the most impact, three trends stand out; one is IT/Digitalization, the other is more focus on the future of the business, less on compliance/risk/control tasks, and the third is cyber crime.
4. Respondents express a very optimistic and confident view of future financial performance, with a staggering 75% expecting their company’s financial performance to improve in the coming 2 years compared to the preceding 2 years, and 59% expecting to outperform the competition in the same period.
5. Boardrooms are still predominantly male, despite an increasing focus on demands for future diversity, in respect of competency, as well as gender and internationalization. Interestingly, there is a huge difference between how men and women view the issue; 73% of women support some kind of quota, while this is only true of 31% of men.
6. As many as 82% of all boards have already had to deal with one or more disruption scenarios, and an overwhelming 90% are planning for such scenarios during the next 2 years.
7. 32% think that their own board needs changes in its composition – and the most desired competencies to be added to the current board are IT/Digitization, Innovation/R&D, and Customer/Consumer orientation and understanding.
8. Despite more than half of all boards now performing regular and formal board evaluations, 25% think that their own board’s performance ought to improve.
Know the way, show the way, go the way
For a board to add value, it is critical for the board members to come to a clear and shared view of their firm’s competitive advantage. Research indicates that over 85% of board members do not have, or do not share, a view on their firm’s competitive advantage. This is typically due to a lack of focus on how the organization functions and lack of insight into the reality of how the culture impacts on strategy and the degree to which top management themselves are divided on strategy, mission and vision.
In addition, some board members over-attend to their monitoring function, but don’t spend enough time stewarding the organization. As a result, it becomes more and more difficult for them to challenge the management.
Boards must remember that control is not leadership, management is not leadership – leadership is leadership. And the board must be the one leading the business.
You may also like to read: Are Boards on board with digital?
Blog post written by Jakob Stengel , LL.M., Founder & Chairman, Board Network – The Danish Professional Directors Association, Managing Partner, Case Rose / InterSearch, Global Head of Board Practice, InterSearch and Co-founder & Partner, Board Mentors.
For further insights and findings, please og here to access the full survey report.