In just 14 months, daily life has gone from ‘normal’ to ‘unprecedented’. Everything has changed, from the way we work to our preconceived ideas about personal and organisational priorities. The future looks very different, and the board room must follow suit.

Organisational leaders and board members are on the front line of change. Their leadership needs to reflect an awareness of ever-changing trends and issues, and more importantly, adapt to them.

Charlie Grubb (Senior Managing Director, Robert Half Executive Search) facilitated a discussion with Ian White (General Counsel) and Martin Spencer (occupational psychologist and former HR Director) regarding key issues which should inform board-level strategy and decision making. How can the boardroom remain effective while shifting to adapt?

What does boardroom effectiveness look like?

In essence, ‘boardroom effectiveness’ is measured by how well the members can work together to lead an organisation. But, of course, this simple overview is loaded with nuance.

Ian believes that an effective board should adapt the way it operates to suit specific circumstances in the organisation, neither being entirely strategy-focused or entirely detail-oriented. For example, an M&A board will naturally be more operational.

“From a theoretical perspective, people often feel that the board's there to deal with strategy, and the executive team is there to implement that strategy and be operational,” says Ian. “In practice, boards occasionally have to be much more operational to be effective,” he says.

Effectiveness can also be aided by having the right skills around the table, covering off the major areas that the organisation typically faces. Of course, this all hinges on how well the board members can work together as a team. “Having all the right skills is good, but if you've got people who can’t work together, you will have a dysfunctional board,” says Ian.

For many boards, an external review every three years is a standard process, with an internal review bridging the gaps on years one and two. An example of a robust review framework is:

  • Examining the process: this can be done through a blend of anonymous questionnaires, one-to-one interviews, paperwork audits, meeting observations, and peer comparisons.
  • Use of psychometrics: testing individual personalities and aptitudes to ensure better boardroom diversity across all members.
  • Exco: reviewing and assessing the relationship between the board and the executive committee.
  • ESG: examining attention to environmental and social governance on investments and organisation activities.
  • Stakeholders: looking at the wider stakeholder group as well as the group as a whole.
  • Diversity: looking at the bigger picture: gender, ethnicity, disability, social background, etc.

Measuring your effectiveness

When we look to conduct effective meetings, the role of the chair is critical. Not only are they key in shaping board dynamics and culture, but the UK corporate governance code recognises the chair as pivotal for creating conditions for effectiveness. They set the expectation regarding meeting tone and are relied upon for decision-making.

This leadership ultimately promotes effectiveness through good habits and the outcomes of those behaviours. For example, practising active listening, intelligent prioritisation of meeting agendas, and making decisions rather than rolling them over. “If a topic comes up time and time again, it’s a sure sign that effective decision making isn’t taking place,” says Ian.

Uncovering the positive and negative impacts of technology on board operations

The transition toward virtual meetings is already underway, but it comes with its own set of challenges. For example, approximately 89% of the conversational subtext is lost without body language.

The switch to virtual meetings could also negatively impact the link between the board and the workforce. “It's often a recommendation we make,” says Ian, “the board does need to get around to see employees much more.”

Without regular physical meetings, it's harder for board members to form relationships that help facilitate effective meetings and interpersonal synergy. Virtual sessions should have a ‘warmup’ period built into the running time so members can bond before starting business.

Ian says: “One of the things I noticed when you're observing boards and committees is the warmup before the meeting actually starts. It’s really important. Just people saying, ‘how are you, what have you been up to’?’ If you just start your virtual meeting from the top, you don't get that.”

What are the main drivers of change?

There's currently an underlying set of issues that both exacerbate and focus board members. Moreover, the pandemic has overlaid these, further crystallising them as essential focus areas.

Diversity

Research has already shown that diverse organisations outperform their less inclusive counterparts by a significant margin. However, there’s still much more work to do. “We're not just talking about diversity of representation in terms of gender or ethnicity,” says Martin, “we're talking about diversity of thought and it's a huge and screaming priority across society.”

Technology

Organisations will always be faced with an ever-changing array of technological challenges. Cybersecurity, big data, AI, there will always be a new change that needs to be acknowledged and addressed.

Societal change

Demographic time bombs are beginning to go off in our lifetime. People’s aspirations are changing, and the pandemic has only impacted this. Demand for speed and access to services and products is higher than it’s ever been and needs addressing.

Workforce patterns

Emergent patterns before the pandemic, such as the gig economy and the meaning of employment, are still true now. “We've got people facing the changing purpose of the office. Organisations are facing into those decisions about ‘where are we based? What's the policy?’, you know, all of those things.”

Accountability changes

There’s new pressure from investors and employees that’s beginning to surface in big organisations like Alphabet and Amazon, in which boards are being forced to consider resolutions brought by employees. There's growing evidence that employees feel it's okay to speak out and have their voices heard.

Special UK Report: the evolving COVID landscape

Has the pandemic changed expectations?

Contrary to popular belief, the pandemic hasn’t elicited a common set of responses from the general population. In fact, each generation has reacted differently, bringing forth a multitude of new expectations for board consideration. For generations aged over 50, retirement has become an attractive prospect, whereas 87% of under 25s are re-considering their motivation for working.

Stakeholder engagement has changed in an online world. It’s no longer just a job for investor relations — it requires different approaches and new skills outside of the traditional set.

Wellbeing took centre focus during lockdown, and it remains a key expectation. Work needs to be done to establish policies that consider the impact of hybrid working, furlough, or return anxiety on employees. “Unless we are aware of these kinds of issues, we're not going to bring the thought leadership through to the senior levels of organisations,” says Martin.

Read more on employee wellbeing

Risk planning has also come to the fore. Before COVID-19, 82% of businesses didn’t have pandemic planning among their top 10 risks and now incident management, resource deployment and the future of work is very much a key consideration.

Board succession planning

Succession planning is paramount for an effective board. Especially as non-executive directors have a finite life on the board, particularly with listed and regulated companies.

Ian says: “There’s a code in the financial services sector supervisory statement published by the Bank of England which says you must cater for sudden departure. I’ve certainly come across boards where people have had to go for all sorts of reasons. And sometimes it's been the chair!”

Of course, a robust pipeline is only half the challenge. The board must invest time in proper onboarding, which means initiating proper introductions and relationship building, rather than simply sending over a dossier of material to read. Ultimately, the board has to own succession planning because they’re the ones responsible for it — it can’t be left to the nomination committees.

For more in-depth insights into the changing future of work and its impact on leadership, visit our C-suite advice blog. Follow us on social media to be one of the first to know about future webinars.