A CHRONIC lack of robust thinking that challenges accepted boardroom norms is impacting negatively on company performance.
That’s the claim from Grant Thornton International, whose report suggests a woeful lack of diversity among corporate board members that goes way beyond the fact that just a sixth of directors globally are women.
The report, Corporate governance: the tone from the top, examined three core aspects of corporate governance – the role of culture, board composition and strategic planning – and how they impact on businesses globally. It drew on interviews with over 1,800 business leaders across 36 economies and 82 in-depth discussions with board directors.
Simon Lowe, partner and chairman of the Grant Thornton UK’s governance institute said: “Whilst gender is an important aspect of the diversity debate, taking a more holistic view of diversity – including attributes such as backgrounds, knowledge, culture, etc. – can lead to better decision making in any walk of life. By incorporating new perspectives onto boards, businesses can tackle problems from different angles and create a more open, inclusive mind-set which then cascades down the organisation and avoids the blinding effects of ‘groupthink’.”
The research found a “significant disparity” between perceptions and reality in terms of the skills board members and company managers feel boards need, leading to a possible disconnect in strategy development and implementation.
For company management teams, relevant industry experience is deemed the most desirable attribute in a board member (60%), and close to a third (30%) would like them to be currently employed as a senior executive in their industry. Board members recognise the importance of relevant industry experience (62%), but few believe that their peers need to be actively employed in the same industry (7%) and are more concerned that their peers bring new ideas to challenge management and the board (86%). This falls to just under half (47%) for management teams.
Lowe said: “The fact that boards and their management teams don’t exactly see eye-to-eye when it comes to some fairly important attributes, such as bringing new ideas to the table, is worrying and points to a significant misalignment of priorities which could impede a company’s performance. If the board and management teams aren’t aligned in their strategic priorities, the company’s sense of purpose and underlying objective could easily be lost.”
Some 90% of respondents globally thought company culture was an important attribute for a robust governance framework, although regional variances were noted in Africa and emerging Asia-Pacific countries, with one in five business leaders confessing that their boards do not spend enough time on culture.