3 key traits of effective future boards
There is broad agreement on what makes an effective board. A good board will be one that adds value strategically. It will be balanced. It will have complementary competencies. It will fully understand its roles and responsibilities. And it will fully commit to ongoing learning and development.
These things are not likely to change. They are best practices that will stand the test of time. But does this mean that boards should be standing still?
Absolutely not. Business is changing dramatically, driven by new technological, political, societal, economic and environmental challenges that are transforming the landscape rapidly. Boards are going to need to change too, developing new characteristics and traits that will help to adapt to this new reality.
So, with this in mind, we’ve come up with three key traits that boards are going to need to become successful and admired in the future.
1: They will demand more competency in digital and IT
Indeed, the issue of disruptive technology is clearly playing on boards’ minds. In the same InterSearch survey cited above, board directors said that new technology is the biggest megatrend that will impact them in 2020 and beyond. This puts the issue ahead of geopolitical instability and climate change.
They also said that if they could add one additional board member, they would prioritise competencies in IT and digital skills plus innovation and R&D. This is hardly surprising considering the potential of technologies like AI to be the next game changer that could transform industries.
Businesses are going to have to ask themselves:
- Do we understand the risks around new forms of technology?
- Have we got sufficient controls in place to ensure that machines do not control inappropriate decision making?
- Do we have staff with right technology and change management skills to ensure we stay competitive?
If the answer is no – which at the moment is quite likely to be the case – businesses will have to change their makeup to ensure they can provide governance over a completely altered landscape.
2: Boards will be more diverse than ever before
Of course, diversity as an issue has been around for a while now. It’s rightly seen as a great way to widen perspectives and improve decision making. And progress has been made, particularly in relation to gender diversity. In the UK for example the Hampton-Alexander Review set a target for 33% of all board and senior leadership positions to be held by women by the end of 2020. Current estimates suggest that FTSE 100 businesses are on track to meet this target.
But will be the end of the issue?
Unlikely. A recent survey by InterSearch of over 1000 global board members found that as many as 83% of women support further gender diversity quota-initiatives. Overall the support for gender-diversity supporting initiatives has seen a remarkable change from only 41% in 2018 (73% of women, 31% of men) to 50% today.
The story is almost certainly not going to end here. We could see moves toward the Nordic model of governance. In Norway, boards of listed companies are required by law to include a minimum 40% of either gender.
In the next few years, it’s also likely that we’ll see similar, highly focused moves to increase ethnic and age diversity – particularly if this helps to fill competency gaps around the new technology that is driving so much change in the markets and businesses that boards govern.
3: They will need to collaborate more effectively and speed up decision making
Aside from recruiting new people, boards are also going to need to think about how they can adapt to the digital age by transforming their existing outlook and ways of working.
This will partly be about committing to ongoing learning and development. There is no doubt that the best boards are those that are committed to ongoing development of their members, both as individuals and as a team. This ensures that knowledge is up to date in terms of modern governance requirements, and also new paradigm shifts. Technologies like AI are going to demand new levels of governance around their use. Boards need to be up to speed with that.
More significantly, boards are also going to need to accept that they need to move on from the old traditional way that boards have always worked in the past. In practice, this will mean replacing traditional paper-based ways of working in favour of digital systems that offer better security, easier collaboration and more control over workflows. A digital board portal, for example, offers a smart and secure collaboration platform for boards, management and other key stakeholders.
Discover more predictions on the way boards will need to adapt to ways of working in our new guide: The boardroom in 2020: what boards need to know and how they need to adapt.