EDITORIAL: FUTURE-PROOFING BOARDS FOR DISRUPTION

A new report from Egon Zehnder offers some interesting and thought-provoking material for directors. 

Based on a couple of Egon Zehnder Global surveys the report asks, if today’s boards are prepared to lead through a future defined by sustainability challenges and technological disruption. And argues that for many, the answer is no.Many boards are not fully prepared for demands as outdated structures and mindsets make it challenging for directors to prioritise emerging areas like technology, disruption and ESG alongside the CEO. The question is no longer whether boards must adapt but how swiftly they can evolve to meet tomorrow’s challenges.

Expectations placed on boards are shifting – boards are now required to serve as a strategic force, helping companies navigate complex and unprecedented challenges. However, for many boards, say Egon Zehnder, this shift remains aspirational rather than operational. Traditional governance structures often do not incentivise directors to proactively drive change, leading some board members to refrain from raising sensitive issues, unless encouraged explicitly by the Chair, to avoid rocking the boat. As a result, a culture of avoiding challenging discussions can develop, stalling progress on critical issues.

The report found that 68 per cent of CEOs say that the metrics their boards use to steer decisions have remained consistent over the past three years, despite the huge changes that have taken place in the same period. In ranking six key metrics, ESG metrics came in last, behind financial metrics, growth, talent management, innovation, and health and safety.

Boards need to up their game and understand what it takes to lead in complexity. In the 2024 Global CEO study, CEOs ranked their best resource for discussing and making sense of navigating challenges to be leadership teams first (35 per cent) and other CEOs second (28 per cent), while independent board members ranked third at 17 per cent, and their Chairs came in at 13 per cent.

The full report can be accessed here.