The previously clear boundaries between non-executive directors and senior management have become increasingly blurred, with a significant number of business leaders reporting a lack of full confidence in their executive teams to manage operations effectively.
More than a fifth of managers surveyed, including those from FTSE 350 companies, expressed concerns about their executive teams’ ability to “get things done,” according to an annual report by global talent acquisition firm Heidrick & Struggles.
The report, which surveyed more than 3,000 CEOs and executives worldwide, highlights a growing trend of non-executive board members becoming more involved in operational processes. This shift is particularly evident in the UK, where nearly three-quarters of respondents reported increased board involvement in day-to-day operations, with 22% reporting frequent involvement and 49% reporting occasional involvement.
This increased engagement is due to a number of factors, including board members’ desire to gain a deeper understanding of the company’s operations (according to 43% of UK respondents) and the need to support CEOs who feel overwhelmed by the demands of their roles (21%). However, the most concerning finding is that 22% of respondents believe this engagement stems from a lack of confidence in the executive team’s ability to manage operations effectively.
The pressures on boards have intensified, driven by investor expectations, regulatory requirements and the complexities of modern business challenges such as artificial intelligence, cybersecurity and environmental, social and governance issues, said Kit Bingham, partner and UK board practice leader at Heidrick & Struggles. “The challenges and expectations on boards are ultimately greater than ever before,” said Bingham.
Alice Breeden, regional managing partner at Heidrick & Struggles, pointed to the resulting tensions in the boardroom. “Board members are likely to spend more time than they should on processes, just to reassure themselves that they know what’s going on and that the CEOs are aware of it,” she said.
The degree of operational engagement by boards varies across countries and sectors, with the financial services industry recording the lowest engagement globally. However, this trend is reshaping the role of boards across businesses.
“The role of the board is changing dramatically, much more than we imagined,” said Mark Cutifani, former CEO of Anglo American and current chairman of Valley Base Metals, who contributed to the report. Boards need to take a more active role in all aspects of the business, he said, because the complexity of today’s corporate environment requires more than the CEO can manage alone. “You’re going to need some of that from the board,” Cutifani concluded.
This shift in boardroom dynamics underscores the evolving challenges facing companies today and the urgent need for a collaborative approach to leadership and governance.