Strategy & Operations » Governance » Lack of diverse boardroom thinking cramping UK plc, says GT

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.

Download our Whitepapers
Accounting Software
Finance Process
Finance Process
FD Surveys
Read more

Be socially responsible or perish!

By Professor Collins Ntim | Southampton Business School