Strategy setting and execution remains top board priority

23 March 2016 Consultancy.uk

Globally, the average board directors sees its major contribution to organisations as the development of strategy, with the largest time spent on the subject. Of all functional areas it is also the one that is viewed by directors as the area in which the board is the most effective. In the coming two to three years, focus will continue to be placed on strategy, although organisational health and talent management will see a significant increase in focus, according to a new report.

The board remains a key pillar in determining the strategic direction, as well as the healthy culture, of organisations. In a new study from McKinsey & Company, the consulting firm explores changes in board room in terms of focus on a number of functional areas as well as expected policy changes in the coming years. The survey garnered responses from 1,119 board directors representing the full range of regions, industries, company sizes, and board roles.

According to the study, the number of days spent by directors on board work has trended upwards in recent years. In 2011 the average spend was 28 days, while the ideal was seen as 38. Four years later the average time spent on board work was up five days, closing the gap with the ideal time (again 38 days) to five. The McKinsey research notes however that there is considerable variation across boards and their respective directors, with more effective boards tending to spend more time on board room work.

The survey further explores what the directors spend their time doing at board level, as well as the effectiveness of their respective activities. According to the research, focus on strategy has increased in recent years, with an average of 8.9 days spent on the area – up two days from the 2013 survey. The respondents also said that strategy is the functional area in which the board of directors has been the most effective.

Performance management too has seen an upswing in attention, averaging 7.2 days in 2015, up from 5.2 in 2013. 19% of respondents conclude that it is the area of their most effective work. The least time was spent on organisational health and talent management at 3 days, with only 5% of boards saying that it is their most effective functional area.

Driven by the recovering economy, and the swath of changes hitting company frontiers, the direction of board meetings may undergo change in the coming years, although a focus on strategy will remain paramount. As it stands, the functional area that was the least concern in 2015 may become a more prominent issue in the years to come, with 18% of respondents wanting to significantly increase the time spent on organisational health and talent management, while 34% want to see a slight increase. Risk management too has considerably more board members seeking to increase time spent on pertaining matters, at 9% seeking significant increase and 36% a slight increase.

The area of least concern – although still expecting to see increased attention – in core governance and compliance, with 27% saying there needs to be an increase while 20% say that focus needs to be spent elsewhere. Shareholder and stakeholder management too is seen as a functional area with little expected movement in the coming years.

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