Whether a business achieves sustainable success for the benefit of its stakeholders and wider society is critically influenced both by the board’s decisions and, also very importantly, by how board members act in the boardroom.
Boardroom behaviour has a crucial impact on corporate culture since how the executive and non-executive directors treat each other reverberates across the organisation.
Four types of board culture
We have identified four different types of board culture based on a 2×2 matrix that considers the degree of support and challenge respectively that exists in the boardroom. Ideally, there will be an ‘engaged’ board with high levels of both, but alas the three other options are also found in practice and in their different ways each will hold the business back from achieving its full potential: the ‘cosy’ board with high support and low challenge; the ‘us and them’ board with low support and high challenge; and, the ‘semi-detached’ board offering neither challenge nor support.
1. The ‘engaged’ board
There will be strong degrees of openness and trust between board members on an ‘engaged’ board with high-quality information made available to the board and its committees in a timely fashion. There will be no issues ‘off agenda’ and challenging situations will be discussed at an early stage of arising with the collective intelligence of the board being brought to bear in determining the best way forward. Board meetings will be well-structured with time allocated for discussion and clear decisions taken after. In addition to dealing with regular board issues, time will be set aside for an annual ‘away day’ to provide an opportunity to review progress towards achieving the longer-term strategy and to consider other issues requiring significant time for reflection and discussion. The board also needs to know when it would be helpful to have external advice to assist in making decisions possibly, for instance, on issues related to cyber security or wider aspects of technology.
Personal data security is increasingly important, but many companies may not be ready to comply with the EU’s tough new data protection laws, which must be implemented by May 2018.
All EU businesses that handle data will have to comply with the General Data Protection Regulation (GDPR), which will require investment in systems and training for employees. As the deadline for implementing GDPR approaches, data privacy is rising up the agenda for senior management and board directors. The GDPR will affect many departments and goes beyond any border within an organisation, so the relevant level for accountability has to be at board level. As a minimum, boards must ensure that their businesses remain compliant with the GDPR. Companies will have to constantly monitor their systems and processes against the regulation’s requirements, avoid data breaches and manage the risks. Large companies may want to create privacy committees to improve oversight or link data privacy objectives to directors’ performance management. (more…)
A modern company needs a modern board—one that mirrors its workforce and customer base. Companies still fall short of this ideal but their stakeholders, including investors, will increasingly expect to see a shift.
Progress towards greater gender diversity on boards is happening but change has been slow. My colleague, Marianne Sandén Ljungberg, is the CEO of Mazars’ operations in Sweden and leads Mazars Group’s thinking on diversity. She acknowledges the power of established, male-dominant board structures but sees their influence being eroded. She sees more women are being appointed to be CEOs which creates the opportunity for more people to assume senior positions at board level. (more…)
We should always be cautious in saying we are living through periods of unprecedented change. At this time of year one is very conscious that in the 20th century there were two world wars but there can be little doubt that historians will look back on 2016 as a year of major political change in the Western World that was not generally foreseen and the full political and economic outcomes of which will not be known for some time yet.
So, what are the implications for boards of listed companies and other significant businesses? (more…)