Has your board significantly changed the way it works over the past year? Will it continue with these changes? A new global survey shows the pandemic accelerated operational changes and on average, directors spent 20 per cent more time on board work in 2020 than in 2019, with the trend continuing this year. Boards and management are also collaborating more and a yearly process for setting strategy is no longer seen as sufficient.
The results of a recent McKinsey Global Survey of more than 800 board directors and executives showed that better discussions and collaboration between the board and management are among the most common changes made during the crisis.
More than one-third of survey respondents (36 per cent) strengthened collaboration between the board and the senior management team and 27 per cent strengthened collaboration between the board chair and CEO, while 23 per cent realigned the board and management team around a shared vision for the company’s future. 12 per cent also increased the diversity of the board’s skills and/or capabilities.
In addition, 79 per cent of respondents—including directors and C-level executives—say the collaboration between these groups was effective or very effective during the pandemic, up from two-thirds in 2019.
Moreover, an annual process for setting strategy—which was a long-standing norm for many boards in the past—is no longer sufficient.
Innovation and growth remain the most common agenda item in the latest survey—although corporate resilience has assumed more importance as well.
“Boards have also implemented new structures and processes, become more flexible in their agenda setting, doubled down on strategy, focused on corporate resilience, and, at the director level, committed more time to board-related work,” the report says.
“Whether these changes—in particular, a more seamless relationship between the board and the management team—will remain after the pandemic is not fully clear.”
The results suggest that nearly all boards made at least one change to their operating models to better manage the crisis. The most common changes include investing in technology and tools to enable more digital collaboration (45 per cent), establishing ad hoc crisis committees (25 per cent) and implementing new crisis management processes (24 per cent), increased responsibilities of standing board committees (14 per cent) and created new board committees (11 per cent).
In terms of the future, the most likely changes are that boards will continue running at least some meetings remotely (62 per cent), and their use of technology and digital tools to collaborate will increase (50 per cent).
Features of the most adaptable boards
The biggest differences between the most adaptable boards and all others relate to collaboration between the board and senior management, as well as collaboration within the board. A significantly larger share of directors at the most adaptable boards say their boards’ decisions and activities have a high or very high impact on the organisation’s value creation during the crisis.
Time commitment: At the most adaptable boards, overall time spent on board work is much greater. These directors report a 50 per cent higher number of days spent on board work in 2020, compared with all others.
Faster agenda-setting: The most adaptable boards appear to be faster at changing their agendas to meet the moment.
Corporate resilience: According to directors on adaptable boards, they are much more focused on corporate resilience than their peers (69 per cent say it’s on the agenda, versus 54 per cent for all directors in the survey), and they are almost twice as likely as others to cite disruptive business models.
A new way forward: The more adaptable boards are more likely to stick with the newer ways of working in the long term – for example, including strategy as a topic on every meeting agenda, strengthening collaboration, and increasing interactions between boards and management teams in between meetings.