Home > Risk > Under-performing boards seem to abound

Under-performing boards seem to abound

Is yours an under-performing board? According to a McKinsey survey, only 26% said their board’s performance was very good or excellent! (At public companies, their boards were rated excellent by 6% and very good by 25%.)

It seems that while the importance of these topics has been recognized, boards are not satisfied with the time they are spending on strategy, risk, and talent management.In fact, 44% of respondents said that their boards simply approve management’s proposals on strategy. Add this to the point made in the report that only 21% of directors claim a complete understanding of their company’s strategy. I don’t know about you, but this is not what I would expect from a quality board.

Oddly, the survey respondents said they want more and clearer direction from stakeholders. Doesn’t that sound like an excuse?

If directors are not happy with the time allocation, they need to speak up and make a change. If they are not educated in the business or the company’s strategy, they need to take the initiative and not sit back and hope somebody will do something about it for them.

Am I alone in reading this survey as indicating there are a lot of passive directors on boards?

What should be done? Comments welcome.

 

 

My thanks to Grant Purdy for sharing the link to the survey.

  1. June 2, 2011 at 2:21 PM

    Corporate and non-profit boards alike stand on the brink of irrelevance. Traditional approaches to remediation seem to have done little to restore their standing or strengthen their hand. What SEC chair William Donaldson characterized as the “cottage industry of superficial thought on governance” has done little to improve performance…either between Enron and the Fall of 08 or since. In my experience, the answer lies…not in abandoning traditional approaches like director development and regulator vigilance, but in driving their application to the place “where board and CEO meet”…the arena in which those “defining moments” that precede disaster are seized or missed. This would call for reframing the job as a working relationship between board and boss and conducting all the talk that passes for “governance” in a spirit of genuine dialog.

  2. Norman Marks
    June 3, 2011 at 12:11 PM

    Offline, a friend and I discussed whether solutions for GRC could help boards with their responsibilities. The answer is, of course, ‘yes’. But first there has to be a recognition by the board that they have a problem, and the will to do something about it. I was struck by some of the comments in the survey’s report that indicated a passive board, waiting for others to take the lead.

    Once the desire is there, the board and management need to identify the causes of the problem(s). Where better information or process is required, a solution to the problem should be designed and – where appropriate – enabling software selected.
    But putting in software without a change in attitude solves little. “A fool with a tool is still a fool.”

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