Of the conclusions made in the report, the authors highlighted the following:
- Most boards say they want to spend more time on strategy development, risk and talent management, which may require meeting more days per year and companies compensating directors for their extra time spent. Boards could also shift time in each category toward high-impact areas – in strategy, for example, toward long-term trends that could disrupt the current business model.
- Enhanced training of new directors and better information is one way forward, but boards may also need to shake up their composition by increasing the number with a background in the company’s industry, where board knowledge seems particularly lacking.
- Many directors are calling for more constructive board discussions. High-quality debates can be fostered by methods such as challenging the key assumptions behind management’s proposals, exploring various biases that board members bring to the table and conducting annual evaluations of individual directors.
Some of the most interesting findings in the survey include:
- Forty-four percent of directors say their boards simply review and approve management’s proposed strategies.
- One-quarter characterize their board’s overall performance as excellent or very good.
- Seventy percent say they would shift the amount of time the board spends on strategy over the next two to three years, followed by 67 percent spent on talent management and 64 percent spent on business risk management.
- One-third of boards never evaluate individual directors, and among those that do 42 percent found those evaluations to be ineffective.
- Twenty-one percent of directors claim they have a complete understanding of their companies’ strategy.
- Directors say that they are putting in 28 days’ worth of work annually and should spend 38 days to discharge their responsibilities effectively while chairs put in 36 days and feel they should spend 47 days.
Enhanced training, a change in composition and more constructive discussions may help boards get back to their top goal of focusing on company strategy, the McKinsey Quarterly global survey on governance finds.
The survey, released Thursday by the global management consulting firm McKinsey & Co., reports that directors queried have not increased the time spent on company strategy since the firm’s previous survey in February 2008. In this year’s survey, the first since the collapse of Lehman Brothers and the peak of the financial crisis, directors said they devoted 23 percent of their time on strategy vs. 24 percent in 2008. Meanwhile, this year’s survey found that 78 percent of directors want to spend more time on strategy.
This year’s survey, which was written by Chinta Bhagat, Martin Hirt and Conor Kehoe of McKinsey, was taken online from April 5-15 with 1,597 responses from corporate directors, 31 percent of which were chairs. Respondents were asked to focus on the single board with which they are most familiar. McKinsey has made its report available free to anyone who registers on its Web site. Here is the