A new business report has called for a refresh on the type of directors often placed on company boards and highlights the growing need for new competencies and thinking patterns from Board members.
The Blenheim/MGSM Insight Series Paper The Challenges of Attaining Growth is a compilation of feedback from more than 75 Australian chairman, non-executive directors and chief executive officers on how to meet the challenges of attaining growth for Australian companies.
The report reveals a shift in thinking around the competencies and attributes of directors on Boards, with a list of “old” competencies now considered “vastly overrated” by many report participants.
Traditional Board competencies of accounting, legal, compliance and risk were considered by many to be over-represented, while new skills in social media, technology and digital experience were considered greatly underrepresented, along with international, industry experience, and executive leadership experience.
In a statement from Blenheim Partners, it was noted that there was a split between some participants who felt these competencies are still required on Boards, while, others felt these competencies were now unnecessary, and could be outsourced.
“These [new] competencies fall into the category of what may be termed 'experiential competencies', or those involving or based on experience and observation,” said Gregory Robinson, managing partner of Blenheim Partners.
“This is an interesting shift from the traditional educational/professional based competencies”.
Another key takeaway was that a combination of all skills, rather than a speciality in one, was more desired for Board members, as 'silo mentality' often meant a lack of capability to contribute to the broader spectrum of issues faced by Boards.
“Board members who sit there and wait for their specialisation to arise on the agenda or steer the agenda to this are not the preferred director,” the report stated.
The report also critiqued the current level of diversity in Boards, with current needs extending beyond just gender balance, along with a need to drive more risky activity.
The report explored the issue of “gun shy” directors that have refused to do anything controversial for fear of attracting attention from regulators, the media, investors and special interest groups.
“This desire to avoid the spotlight results in ultra-conservatism in Board decisions, missed opportunities for Australian businesses and potential frustration for CEOs,” the report said.
According to numerous report contributors, the strong focus on governance and compliance is diverting the focus of Boards and executives from the growth agenda, and “killing the entrepreneurial spirit”.
It was also noted that governments cannot hope to legislate against risk taking when it is required in competitive and innovative markets, while Boards should recognise that good compliance will not mitigate business failure.
“It was not as if participants wanted a carte blanche approach to risk, or did not believe that accountability should rest with Boards, but rather that there was an imbalance in the system that was ultimately impacting growth” added Mr Robinson.