United Kingdom

Board Dynamics and Dynamic Boards 

There needs to be greater emphasis on ensuring that the maximum value is derived from the wealth of talent that the board represents.

The rarefied air of the boardroom is no escape from the challenges faced by the wider organisation when it comes to getting the most from its people and working effectively – and attracting the right staff or board members can be a significant issue. There’s a wide range of factors influencing who is best placed to be part of a board which will include diversity of thinking and skills. 

 
But very talented people can recoil at the thought of taking a highly visible role in a large and complex organisation where, for instance, the regulatory burdens can be immense. An organisation also needs to be a naturally engaging prospect to the individuals being wooed. After all, playing a significant role in an organisation or a sector which you feel passionately about can be hugely rewarding.  

 
Picking the team

 

The need to form a well balanced board with diversity of thinking and expertise is a classic example of being easy in theory but hard in practice. It requires significant effort to get it right and so much of this rests with the chairman to arrive at the right balance. The key objective is to appoint an effective team which is right for the business in question. While high-level academic credentials or supply chain expertise may be of value to one organisation, these needs will clearly not be universal.


I believe that individuals currently in senior executive roles, such as chief executive officers, can add a great deal of value to other boards in a non-executive capacity. However, chairmen of boards and executive directors themselves are all too aware of the fact that they can simply be unable to commit the necessary time to fulfil such a role – and this is a growing concern.


The burden, in terms of time, for managing issues relating to greater regulation is often cited as a leading culprit. Then there is the sustained challenging economic climate which can discourage senior executives from diverting their gaze from their main role.


As businesses expand their global reach, having a multinational team of board members with market-specific expertise can also be hugely beneficial. However, I would suggest that it’s essential to take the steps necessary to ensure that having board members based overseas doesn’t adversely affect board dynamics and effectiveness. Practical matters need to be tackled, such as ensuring that these members are able to commit the necessary time to the role.


I have also seen diplomatic skills being increasingly valued by boards, again, as a result of businesses expanding operations overseas (especially in less familiar high growth markets) and the need to navigate the legislative and political implications of entering and expanding in a new region.

 

Time to perform

 

Getting the dynamics of a board right and ensuring that it plays an effective role in supporting the success of the organisation isn’t limited to pursuing and recruiting a ‘dream team’ of board members. It is to ensure that the maximum value is derived from the wealth of talent that the board represents, and to achieve a unitary sense of purpose. Board members need to have the time to fulfil the role effectively and this is likely to be more than the twenty-something days they may have had in mind when considering the position.


Real benefits can be achieved by board members spending greater time with management - time spent understanding the business is as key as making sure the board committees are appropriately represented. Development and evaluation programmes for board members are also important and can have significant benefits in the way boards operate. One factor which is always critical to any board is succession planning which needs to cover the board committees as well as the chief executive officer.


The board has to support the chief executive officer to lead the organisation, drive and promote its ambitions, cultures, values and behaviours. It also has to take a leading role to protect it from risk and safeguard and promote the interests of shareholders and the long-term success of the company. This is quite a challenge but investing in creating an effective board, I’m prepared to be so bold as to suggest, will offer a good return on investment.

 

 

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

What's your view?

Share this

Share this

Contact

Richard Reid

Richard Reid
Chairman, London
richard.reid@kpmg.co.uk
020 7311 8956