A recent study by PWC and The Conference Board reveals some worrying deficits in core competencies, as perceived by senior executives. In particular:
- Only one third believe that board members ask probing questions
- Only 29% rate the performance of their board as good
- 57% think their boards don’t understand key stakeholders, such as employees or customers.
Part of the challenge is that board development is a low priority for the board itself and for the organisation. A typical graph of developmental; investment shows it gradually increasing from junior to middle levels, then tapering off to little or nothing at the top. The more costly the mistakes people might make, the less investment in their continued development. It might have been a valid argument 50 years ago or more that boards and executive committee members had learned most of what they needed to know by the time they had reached the top of organisations.
That’s certainly not the case now. A study I conducted for The Conference Board last year with Marion Devine revealed deep concerns amongst HR professionals that senior levels in their organisations were not adapting to the needs of a fast-changing world. In particular, their style of leadership and their ability to think systemically (let alone in the context of complex, adaptive systems) were often lagging far behind.
Some 25 years ago, I was hired by 3i to conduct a study of board meetings. Most of the problems we identified then are still with us now. For example, the structure of the standard board agenda ignores all the evidence from neuroscience about how to manage mental energy to focus on what’s most important. And it’s rare indeed to find a board that applies current understanding of effective decision-making. (“Let’s talk around it till we think we have a consensus then vote” doesn’t cut it!)
Around the same time, I co-wrote with Peter Waine, one of the first books on the role of the non-executive director. A prevailing assumption was that the NED did not need to understand the organisation. Instead, they brought a wealth of experience that enabled them to ask probing questions. That’s a perspective that was debateable at the time and even more so now. A fundamental role of NEDs should be to ensure the organisation is connected to the world around it, in ways that enable agility.
The power structures in organisations are part of the problem. HR has, by and large, the competence to design board development approaches fit to the times. What it lacks is the authority and reputation to do so.
Artificial intelligence and other technologies are reshaping organisations in radical ways. Every function in organisations is being – or will be – affected. Yet the board remains aloof, sequestered in 19th century mental models.
In a VUCA world change that starts at the bottom and works its way up is too slow. It’s no good waking up the feet when the brain is still asleep. Yet, top-down change isn’t effective either – the organisational immune system has ample opportunity to derail change and cynicism (often justified) suggests that the smart response is to bide time till the next fad trickles down. What’s needed is systemic change, where the board is not isolated from the organisation, but intricately engaged with simultaneous evolution.
So, here are some challenges every HR director can give to his or her board:
- How will you collectively be the role models for an adaptive, technology-enabled organisation?
- How do we want our NEDs to add value? What does that mean in terms of the depth of their engagement with the organisation?
- How do we make sure the head is firmly attached to the body of this organisation?
And here is one simple intervention from HR that can get things rolling:
- Every director should have a personal development plan about how they will role model the changes they want to see in the organisation
- Progress against that plan should be reviewed quarterly
- The board should publish annually how it is progressing in its own development.
The ancient origins of the word board lie in a flat roof, where people stored things they’d didn’t need at the time. It’s time for HR to rehabilitate the modern board into a function that facilitates and exemplifies constant change – to bring it down from the roof and into the house.
 Board effectiveness: A survey of the C-Suite published by PWC and The Conference Board, 2023
 The Independent Board Director, (1993) McGraw-Hill, Maidenhead
© David Clutterbuck 2023