The measures of success within business have changed. Now, swathes of regulatory compliance, changing consumer demands, and caring for the planet are just several factors that increase the complexity of board work and dynamics. Boards today need to adapt to win.
In this insightful article from Alumni Global, Heikki Otsolampi explores the multitude of increasingly complex pressure points facing boards today, ranging from geopolitical, environmental and digital disruption, to issues with time commitments and a lack of genuine collaboration.
As the number of intricate topics requiring board oversight continues to increase, it grows harder to allocate adequate meeting time and attention to each issue, particularly with directors often holding multiple board positions (known as ‘overboarding’). These over-stretched and poorly prioritised agendas leave too little time for robust discussion, leaving vital strategic discussions to be eclipsed by regulatory compliance.
Compounding this issue is the fact that board dynamics play a huge role in facilitating discussions, and yet there exists a distinct lack of trust and collaboration on boards; generative AI, remote work, and the spread of misinformation are just some of the factors contributing to this mistrust, and boards often find themselves working in parallel rather than truly collaborating. Ostolampi highlights how this leaves them without the diversity of thought, perspective and experience that is crucial to effective decision making.
Meanwhile, many businesses are feeling the operational impact of climate change and geopolitical insecurity, and the proper expertise to account for this protean landscape is often missing in the boardroom. Balancing social and environmental action against delivering the highest return to stakeholders and shareholders is no easy feat, and as Otsolampi warns, ‘If price is the only driving force in decision making, companies are bound to choose the partners who have a tendency to cut corners.’ This leaves boards insufficiently prepared in the face of unpredictable emergencies.
The fact that the majority of board members are not digital natives also means that there is often a similar lack of expertise to account for the rapid pace of technological change. Generative AI is creating a seismic shift for business. Boards can now use AI tools to enhance corporate governance strategies, but they will also have to create the legal and community standards that AI models adhere to, and are under immense pressure to meet regulations and demonstrate transparency.
With such a range of growing challenges and increasing pressure points, boards must rethink their approach to governance if they are going to remain effective in today’s business landscape, and this article offers essential insights for NEDs looking to do so.
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About Alumni Global
Alumni Global is a leading international executive search and board recruitment firm, with a broad base of corporate clients and contacts, especially at boardroom level.