A Global Network of Director Institutes governance survey reveals how boards in Australia and around the world responded to the challenges of the pandemic.
Seven in 10 directors say they spent more time on board work in 2020 over 2019, with most reporting increasing their time commitment by 50 per cent, according to a new survey by the Global Network of Director Institutes. Recalibrating strategy in response to short- and longer-term changes in the COVID-19 operating environment was the top challenge (56 per cent), followed by ensuring the success of virtual meetings (39 per cent) and responding to new regulations (39 per cent).
The Global Network of Director Institutes represents more than 150,000 corporate board members from director organisations such as the AICD. The survey, Board Governance During the COVID-19 Crisis, was held between August and November 2020, and involved 1964 directors around the world, including 428 from Asia and Oceania.
Global director feedback
89% of directors report their boards have been able to govern effectively during the crisis
69% of directors expect to see a greater role for outside experts in risk scenario planning and decision-making
53% of directors view a growing emphasis on corporate purpose as likely and the same percentage think there will be an increasing emphasis on board diversity
14% of directors reported having pandemic or mobility restrictions as risks in their board-level dashboards before COVID-19
Among the key findings:
- Directors give high marks to themselves and to their management teams Although only 14 per cent of boards had “pandemic risk” listed as a top risk before the crisis, 72 per cent of directors were pleased with the performance of their crisis response plans and their own ability to provide oversight during the crisis. Many credit prior scenario planning with providing a good foundation for an effective response to the crisis.
- There will be an increased emphasis on risk in 2021 and beyond Directors anticipate expanding their risk dashboards to incorporate new kinds of risks next year and plan to consult with more outside experts to gain a broader perspective on future risks. The crisis will likely have the most significant long-term impact on how boards engage their companies on strategy and risk and assess employee health and safety. However, just 26 per cent of directors think they will need to improve their crisis management plans to address the new risk landscape ahead.
- Virtual board meetings work, but they are second-best A minority of directors view virtual board meetings as just as effective as in-person meetings. The lack of non-verbal communication is the highest-ranked challenge of virtual meetings. However, even in this second-best environment, most directors believe they have been able to perform their work effectively.
Strong majorities of directors expect to see virtual board and committee meetings in the future. They also view virtual board engagement as a useful tool to enhance board effectiveness. Most boards across the globe do not anticipate meeting in person until the first or second quarter of 2021.
- Directors give high ratings to their own time management Nearly seven in 10 directors report spending more time on board work this year than last year — most saying they increased their time commitment by 50 per cent. Directors serving on more than one board were nearly unanimous (96 per cent) in saying they were able to manage their commitments across their multiple responsibilities. Just eight per cent reported they had either left — or desired to leave — a board due to lack of time.
The five top areas of governance to have the most significant impact due to the crisis were:
- Incorporating a new set of broader risks into scenario planning (60 per cent)
- Ensuring the ongoing health and safety of employees (44 per cent)
- Oversight of strategy (40 per cent)
- Oversight of risk management (36 per cent)
- Oversight of the organisation’s financial health (32 per cent).
Find out more at gndi.org
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