A massive recalibration of expectations of boards and executives
There has been a massive recalibration of expectations of all boards and senior executives (not just in Financial Services) in relation to how organisations
| Just being a good board may not be enough in the current uncertain, complex and fast changing economic environment. Shareholders and other stakeholders are raising the bar in terms of their expectations of board performance, not to mention the ever-watchful eye of the media and general public, especially of large and well-known organisations. |
We surveyed 345 senior directors who sit on Australian and New Zealand boards for their suggestions on how to improve their own board. The best 101 suggestions for improvement were chosen from directors of some of the largest and most influential organisations in Australia and New Zealand (including boards of ASX listed companies and other organisations with assets or annual turnover exceeding $500 million).
Here we highlight the top suggestions that can influence an organisation’s strategic direction, leadership from the CEO, performance measures, risk and assurance and stakeholder management.
Direction, strategy and planning
Long term direction
- “Commit to a shared strategic vision for the future”
- “Perhaps more involvement/ownership on strategic direction (three to five years)”
- “I think we would do better if we had defined limits for new opportunities (i.e. country ‘no-go’ zones, set ‘size’ projects/companies to be considered or not, etc)”
More time and involvement in strategy
- “Enhance strategic planning process with additional time and a sharper focus in an external setting”
- “Have an externally-facilitated offsite board/management seminar to review operations and risks and to finalise an agreed strategy plan”
- “More time spent on discussing strategic issues earlier in the evolution of ideas/concepts”
Strategy and KPIs
- “Allocation of more time to follow up on strategic planning to ensure the next level of detail is developed and a timetable for key aspects is agreed”
- “Clearer KPIs identified in strategy process”
- “Improved alignment between strategy and (lead) KPIs”
- “Improved alignment between those KPIs and remuneration”
CEO, organisation performance and compensation
CEO and compensation
- “Make a serious commitment to properly assessing the performance of the CEO in a documented process involving all NED board members”
- “Need to better control the CEO”
- “I think there could be more rigour around the remuneration committee”
- “A simpler short term and long term incentive system”
KPIs and performance
- “Ensure we have the right performance metrics”
- “It is an excellent board but it doesn’t understand genuine high performance. It has good KPIs and performance metrics but this falls short of real high performance, though it has the potential to go down that path”
- “Spend more time with the CEO/key management in defining what strategies are needed to improve overall organisation performance, including changes in structure (i.e. significantly reducing the number of direct reports to the CEO) and how to attract and retain higher calibre people in the senior executive team”
- “Board approval of CEO KPIs and the KPIs of his/her direct reports and then reporting back against those KPIs”
Other (including projects, reviews and succession)
- “Better link between individual decisions and strategy”
- “More time on post implementation reviews”
- “Prioritising succession planning for future board positions and management”
- “Behave like a business that is regulated rather than a regulated business”
Risk, assurance and stakeholder management
Risk and assurance
- “Better understanding of risks to the business and stronger focus on risk appetite and risk management”
- “Greater preparedness to explore more aggressive but higher risk strategies to improve long term competitive positioning and performance”
- “Get a clearer understanding of the risk/return trade-off the board is prepared to accept”
Stakeholder management
- “Greater consideration of a strategic approach to stakeholder management”
- “More and better interface between the board and our customers/shareholders”
- “Ensure the board is involved in stakeholder engagement”
- “Increased liaison with major stakeholders by the directors and management”
Download the full report “Taking your board from good to great: the best 101 ways to improve“.
Click here for more information about our Board and Director Effectiveness Survey.
