Accelerating change is putting more pressure on boards to be alert to disruption and respond quickly to it. A new study suggests how they can do that work.
Associations are often described as slow-moving ships, but the message to their boards is increasingly clear: Step on it.
Among the latest reports making that point is Fit for the Future: An Urgent Imperative for Board Leadership [registration required], produced by the National Association of Corporate Directors. NACD research says that 73 percent of corporate directors feel that board work is more challenging than it was three years ago, and 36 percent said that the accelerating pace of business is one of the key impediments to board effectiveness.
The review-and-concur approach that most boards have taken over the years can’t respond to the pace of change.
NACD CEO Peter Gleason suggests that organizations are starting to feel the friction between modern economic trends and corporate governance structures that were established centuries ago. “Operating in 21st century, the pace of change that we’re operating in with a model that is older requires that we rethink how we are comprising the board,” he says. “We need to rethink the various skill sets and talents that are there in order to be ready to make changes.”
Making those changes requires rethinking board recruitment and engagement, which is why Gleason says the report’s findings are as applicable to nonprofits as they are to the corporate sector. According to the report, the new breed of board leader is a change agent, a person who is mindful of the headwinds an organization faces—and makes sure the rest of the board has the knowledge and tools to respond. That person’s job is “to maintain a constant, critical focus on the mix of expertise and ability on their boards, and specifically the alignment of that mix with the company’s shifting strategic and risk needs,” as the report puts it.
But Gleason says that there’s no magic bullet, no off-the-shelf set of skills that board members need to succeed in this environment—except, perhaps, the recognition that each organization will have to work hard to identify its unique needs. (According the report, 81 percent of respondents said they expect “much deeper board engagement on entirely new drivers of growth and risk.”) And while each board cultivates its essential niche skills, it still needs to remember how to lead strategically.
“We’re seeing more and more boards look for skill-set expertise to fill gaps,” Gleason says. “So you may be seeing people who are going after cybersecurity experts or marketing experts or digital transformation experts, people who have these specialized skill sets that the board needs in order to execute on their strategy. The challenge with that is, as you get into that expertise, you really need to balance that with the ability to continuously learn to collaborate with the rest of the board members to function in a high-paced environment that is different from a management environment.”
To say that’s not easy is an understatement. But the report does provide some guidelines for how to make that work. One bit of advice is, to put it bluntly, work harder: 74 percent of the participants in the study said that directors will need to increase their time commitment. The old system of quarterly meetings interspersed with occasional phone calls may not cut it anymore, and a more iterative form of board engagement might be necessary.
“The review-and-concur approach that most boards have taken over the years can’t respond to the pace of change where disruption happens on a regular basis,” Gleason says. “You can have competitors come into your field that weren’t even in your industry before. It needs to be a continuous dialogue.”
But the report also prescribes working smarter. Boards will have to be more efficient, hold themselves more accountable, and be more transparent and more open to learning. When I half-jokingly suggested to Gleason that the report almost prescribes that board members pursue a degree in environmental scanning, he said nobody needs to go that far. But he understood it was only half a joke.
“Boards need to be able to see that the environment may change and require us to alter our operating plans. What’s out there? What are you seeing? What are you hearing? What does your experience tell you that you may have pulled from your other board seats or other experience that you’ve had that might help us avoid the rocks and shoals, and help us steer clear and change direction?”