Boards facing ‘significant barriers’ – KPMG
A new report from KPMG exposes a worrying amount of contradictory statements and a lack of forward planning when building an effective board.
KPMG surveyed a wide range of business and finance leaders, asking them what elements are essential to building a great board.
75% said that a strong and transparent alignment of board talent with the strategy of the company is imperative.
The report says that in the face of “increasing scrutiny by investors, regulators, and the media - it comes as no surprise that a critical priority for boards today is to align boardroom talent with company strategy”.
A need for diversity in the boardroom is seen as “critical to a company’s long-term success” said Timothy Copnell, head of the UK Audit Committee Institute. However, 61% of directors said that their board needed a greater amount of diversity in relation to viewpoints and backgrounds.
One of the survey respondents said: “Real diversity of thought requires diversity of experience…so diversity is a much larger issue than just gender or age. There’s a broader strategic context and importance to diversity that boards need to consider."
With the majority of directors realising the benefits of having a diverse board, it is somewhat surprising that only 36% of business leaders said that they are satisfied with their boards combination of skills, backgrounds and experiences.
What are the barriers?
67% of respondents said difficulty in finding a director with both general business experience and specific expertise was seen as the most significant barrier to building a high-performing board.
Following on the theme of a need for greater diversity, 43% cited that a resistance to change due to “status quo” thinking was a major problem.
Worries about the future were also highlighted in the report, with 55% of those surveyed stating that there was a degree of uncertainty when trying to predict the talent their board will need in the next three to five years.
Succession planning also seems to have gone by the wayside as only 14% said that they have a formal succession planning alignment with future needs.
This low figure is somewhat contradictory as 77% of respondents said that having a formal succession plan was integral in achieving right mix of skills and perspectives on the board.