All too often we only hear about company boards when something goes wrong. When there is a scandal we ask ‘where was the board?’ and we expect them to perform as a public punchbag. Look back 30 years, and UK boards were often trophy cabinets: the great and the good, there to show the evidence of the company’s gravitas. Look back 10 years, and the board’s role was more focused on keeping an eye on the management and making sure the company met its legal and compliance requirements.
These narrow views of the function of a board are dying out fast (though they aren’t quite dead yet) and what boards need and look for is changing as fast as businesses are.
So how has the role changed?
Society is now granting companies their “licence to operate”. In the traditional view of the board it was taken as read that companies should prioritise making profit for their shareholders. It is hard to overestimate how much attitudes towards this have changed, with a clear message to business now that if they focus only on making profit they will risk losing public support, and ultimately, losing customers. As a society we have much higher expectations of business to behave in a more ethical way, to address issues like climate change and to take care of their employees. This is not just CSR or PR: more and more businesses pivoting their entire ways of running to focus on social impact and purpose. The largest companies now have to report on how they take into account the views of their wider stakeholders in decision making.
In making decisions and choices, directors must also consider a non-exhaustive list of factors including the company’s business relationships with suppliers, customers and others; the interests of its employees; and the likely consequences of any decision in the long term.”Companies Act, Section 172
People really are the biggest asset. Issues that were previously only discussed within a HR department are now making their way to boardroom conversations. Culture is seen as a key factor to company success (and a potential risk, if the culture isn’t right). Employee diversity and inclusion is a key driver for success; and mental health, well-being, engagement and productivity are all on the agenda more than ever before. Boards are going to need different kinds of people with different kinds of skills to be able to ask the right questions and discern the changing culture of the organisation.
The pace of change has never been faster. Where board roles historically may have focused on protection and risk, given the pace of technological advancement it is imperative that the boards of 2020 and beyond help inform the vision and strategy for the future of the business. Nothing has driven us to be quick and nimble in our ability to change as much as the current Covid-19 pandemic. This year board discussions may involve considerations of how to pivot the business operations to react to this pandemic (like Dyson making ventilators for the NHS), how to influence increasingly complex supply chains, or how to totally change the route to your target business or consumer market. Oh, and those discussions will happen on zoom.
Investors have higher and broader expectations. The idea of investors only being interested in short term profits is becoming a thing of the past. The concept of ‘stewardship’ has gained more traction in recent years particularly in the UK, where our Stewardship Code (the principles that investors are expected to follow) outlines the need for investors to behave in a way that ‘creates long-term value for clients and beneficiaries leading to sustainable benefits for the economy, the environment and society’. Investors are increasingly interested in ESG (Environmental, Social and corporate Governance) as a way to assess the long term viability, risk, and potential of a company. As a result, they are now asking companies to demonstrate their impact on the world around them.
So what does this mean for UK board composition? We believe that the world is moving too fast to have anything but a dynamic board, and boards are starting to wise up to this, too. We need future fit boards. And that’s why we’ve created Dynamic Boards.
We want to help companies find people with technology experience, the digital natives, innovators and trend spotters. As well as marketing experience, those who can help ensure a disciplined and creative approach to Google SEO, facebook and PCC. We need board members that can represent all generations and demographics of society. We need people who believe that business can be a force for good, who understand climate change and the need to make sustainability a priority. We need people who understand employee needs and engagement as well as those who have consumer insights and supply chain experience. We need Dynamic Boards.
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