Survey statistics published by Mckinsey in an Article “Towards a value creating Board” makes one introspect and visualize how Independent Boards can be more effective and value added and more significantly, leave a foot print as they exit the organizations, whose board they have served. The Mckinsey survey exhibit -6 of the Article, lays down comparison on various criteria between Directors at Striving Boards, Directors at Complacent Boards and Directors at Ineffective Boards. I will pick three important parameters having wide disparity between the type of Boards. And I quote from the exhibit –
- “There is a culture of trust and respect in the board room – While it is as high as 88 % at Striving Boards, it is only 39% in Ineffective Boards.
- Board and Management team members constructively challenge each other in meetings – While it is at 76% in Striving Boards, it is a meagre 44% in Companies with ineffective Boards.
- Board members seek out relevant information beyond what the management provides, to deepen their knowledge. The percentage is 62% in Striving Boards versus 31% at Companies with ineffective Boards “
It is even worse in case of family businesses where Majority of Board are family members picked merely to meet statutory regulations and most decisions tend to get taken on dinner tables. More often than not, personal interests take priority over Corporate interests and so decision making tends to be a long-drawn process, thereby hurting company businesses in multiple ways. That said, the onus rests equally on the Company Management and the Independent directors to ensure that full potential of the directors – both Individual and Collective – are unleashed towards Company growth, Culture and Long-term sustainability.
Few thoughts on how the gap reflected by the Survey above can be bridged –
From Company perspective :
- Organisations need to have a formal and strategized selection process for evaluating and inducting Board members based on Company Vision, Current gaps and Expertise and Skill sets needed to bridge the gap. This way optimum leverage could be achieved in terms of Collective contributions.
- There has to be a 360-dig evaluation of Board contributions periodically to assess contributions and also continued fit with a futuristic approach. This would inculcate a sense of accountability and responsibility.
