Boards are changing; you need to change with them

Boards are changing: corporate governance norms you may have been used to in the past might not be enough anymore. 

The modern boardroom is a hotbed of high stakes. As a director, people depend on you to make tough decisions that ultimately benefit the company, but it’s difficult. You have to understand the fluid, chaotic nature of business today, grasp many different interlocking developments and boil them down to actions that you can be confident in and defend when necessary. 

On top of that, the modern business landscape is highly disruptive. The 2020s are becoming a defining decade, where old systems are put to the test, sometimes even overwritten completely. In this unforgiving world, it’s still up to you to be adaptive and produce success in what you do. 

That’s why boards, on the whole, are changing. Challenges are diversifying, and the skills and expertise needed at the boardroom table are fluctuating rapidly.  

Fail to adapt, and you’re encouraging one of the most damaging yet avoidable risks in business: inept leadership.

Boards are changing because external factors are forcing them to. The last five years have brought huge earthquakes to global business, giving us no choice but to rewrite our playbooks. 

Some of these earthquakes were unexpected, others were expected, even if we didn’t really appreciate their magnitude until they arrived. All of them have the power to make boardrooms a very different landscape in 2029 than they were in 2019.

It was always “a future innovation” until one day in 2022, when ChatGPT hit workplaces worldwide, astounding everyone from young workers to veteran board members. Its ability to generate content that looked human-made and turn once mammoth tasks into bite-sized operations, set us thinking: what’s the potential? Where are the risks? And how do we manage it? 

Now, just a few years later, AI is reshaping how companies operate… or at least it should be, if boards are serious about answering the above questions. To do so, they need members who understand the risks and opportunities AI presents, including ethical governance, bias mitigation, intellectual property issues, and productivity potential. Directors don’t need to be data scientists, but they do need to ask the right questions and understand the implications of AI-driven strategy. The problem is that so many boards still avoid the inevitable task of tackling AI. It has to stop if you’re serious about moving your company forward.

Just take a moment to grasp the enormity of the last five years in geopolitics. The world shut down because of a pandemic. In its aftermath, supply chains were strained and costs soared. The wars in Ukraine and Gaza began, forcing companies to get vocal even if they didn’t have a position. In the middle of it all, old political alignments disintegrated in favour of nationalist, anti-globalist rhetoric, which has direct impacts on the policies boards champion vs the ones they ignore. 

If you haven’t realised already, this is forcing many boards – especially those of large, cross-border companies- to focus on corporate resilience in ways they never thought necessary before. How do you navigate geopolitical chaos, and what board members are going to lead you through it?

In the 2010s, the language around climate change was far more united. Governments and corporations committed themselves to halting global warming and reducing their emissions. 

Now, things are a lot less clear. Here’s an example of the muddled circumstances an average company might face:

• There are still climate targets that companies need to help reach. 
• There may be more reporting rules, forcing companies to invest in new resources. 
• There may be more debate about climate change and our focus on it. Some of that debate may turn heated and nasty, forcing companies to get quieter about their commitments, so as not to anger either side. 
• The approach to climate now differs more across borders, like between the EU and the USA. 
• Many companies may have to please multiple stakeholder groups with polarised opinions because of all this. 

For many, climate change will still be an important issue, but tackling it just became a whole lot less clear. 

Realistically, it’s the need to report that might command most of the board’s attention, because it’s a huge task that demands specific – and often new – expertise among directors.

Diversity is fast becoming a trigger word in this tense, politicised global climate. However, the term still carries a lot of truth as far as boards go. 

Companies are starting to recognise that if their boards more accurately reflect the diverse nature of stakeholders, they become more representative and able to spot challenges and key decisions. So, trying to reflect that diversity among directors becomes a key goal. 

Bear in mind: this diversity goes beyond things like background and gender, it also refers to diversity of skillsets, socio-economic backgrounds and ages.

If you don’t think your credentials qualify you to tackle the issues above, or if you think your board as a whole lacks the new skills to maintain success, don’t worry. These changes to business have happened rapidly; it was always going to be difficult for boards to catch up in a timely manner, especially since some of their ways of working stretch back decades with little problem. 

The good news is that essentials still matter too. Integrity, strategic thinking, financial literacy, and sound judgment are crucial now as they were fifty years ago. Boards still need directors who can weigh long-term interests against short-term pressures, who understand governance fundamentals, and who bring calm in a crisis.

The better news is that, whether it’s old essentials or tough new challenges, you can still upskill to fill in any gaps in your skill base. Training can be the vital missing link. If you bring on a new board member who knows a lot about geopolitics but not much about the day-to-day jobs of a director, the only thing missing is dedicated training to get them on track. 

Learning is leadership. Boards don’t want directors who think they have learned all they need to know in life. They want directors who are willing to explore what they don’t know and adapt.

Businesses haven’t faced pressure like this in decades. There are so many external factors forcing us to re-evaluate our leadership models and areas of focus. 

Good boards will know this and accept that they need to change, but that’s the easy part. Ensuring you can change is the main challenge, and while it may seem daunting, it is very possible with the right people and support.

Boards are changing: The Corporate Governance Institute