With many companies having had to rethink their pre-pandemic strategies, the role of the board is changing rapidly. Companies are demanding innovative, hands-on boards and strategic directors. The question is, what strategic skills do directors need to develop?
The old perception of the board as a room full of retired executives who meet a few times a year just to ratify decisions made by the CEO is fast disappearing.
Forward-thinking companies want boardrooms populated by directors who can bring innovation and growth strategies to fruition.
New research led by Prof Patricia Klarner, director of the Institute for Organisation Design at the Vienna University of Economics and Business shows that ‘enlightened’ CEOs want more support from their boards. They want board members to support and drive innovation while also managing and mitigating risk.
“Modern CEOs want members of their boards to understand current issues including regulatory regimes and cybersecurity threats,” says David W Duffy, CEO of the Corporate Governance Institute. “However, they also want board members to really contribute to strategic growth.”
The days of the non-executive ‘all-rounder’ director are coming to an end. Companies now increasingly seek board members who have specific skills and experience. They want directors who can contribute effectively to the company’s strategy.
“Businesses also want directors armed with the knowledge and skills to perform their role properly. They want directors that understand up-to-date best practices and governance,” says Duffy.
What do you mean by soft skills?
Companies with innovative strategies exhibit specific governance behaviours, writes Prof Klarner.
They pool their skills in committees and engage in dialogue with managers and employees, seeking to understand the company’s current activities and contributing their own expertise.
The board members of innovative companies also seek spontaneous interactions with employees to foster the exchange of ideas. A director who talks to employees overseeing R&D, for example, is an important source of information for the entire board.
“In order to play an active role in discussing strategic issues with the board and the executive team, directors need strong soft skills such as self-motivation, communication, leadership and problem-solving,” says Duffy.