Conventional notions of leadership are no longer fit for the future.
Organisations have entered a new era of change. A confluence of trends — from AI to regulatory flux and the net zero transition — is generating huge opportunities and challenges that demand strategic action and response.
Public scrutiny is also on the rise, with many stakeholders demanding more in every aspect of director performance. Behaviour, culture, financial performance, transparency and responsibilities are all under the microscope. So, how are directors shaping future leadership and the boardrooms of tomorrow?
Michelle Redfern GAICD, diversity, equity and inclusion (DEI) strategist and author of The Leadership Compass, says that as expectations of boards have changed, leadership skills are evolving.
“There’s a lot more scrutiny of boards today. There are also increasing requirements from legislative frameworks, such as the changes that followed the Respect@Work report and new pay gap reporting requirements. There are real capabilities and capacities required of board directors that simply weren’t required even a decade ago. That means there are different skills, aptitudes and lived experiences required on boards to ensure the governors of an organisation can keep steering it in the right direction.”
Vital leadership ingredients
Leaders need to worry about “messy” shifts in values, technology, accountability, trust and energy, notes Sandra Peter, associate professor at the University of Sydney Business School and a director of Sydney Executive Plus.
“These shifts cause fractures, complexity and uncertainty, but they also spawn ideas, creativity and innovation,” she says. “So while the future is messy, it’s also filled with opportunity, and once you understand today’s shifts, you can focus on shaping the leaders and boardrooms of tomorrow.”
Making the most of the mess comes through upskilling, says Peter. “Prioritise professional learning and development actions in your organisation by considering timing, resource implications and integration into individual development plans and performance reviews.
Foster a culture of lifelong learning and curiosity. This is crucial in preparing the next generation of leaders in your organisation to face and lead through change.”
Redfern adds that cultural competency is another must-have attribute for directors. “I recently attended an AGM of a listed board and there was a question from a very involved shareholder to the chair of the board about a matter relating to First Nations peoples,” she says.
“The chair was quite dismissive of the question and it was clear to me this chair did not have the cultural competency to understand there are shareholders who want to ensure the board takes into account the needs of all stakeholders when they’re creating and sustaining a successful business. The flip side of this is that when management is presenting their next strategic initiative, who around that board table is going to ask, ‘Have we taken into consideration the impact on First Nations communities?’ Possibly no-one, because cultural competency is not baked into the operating rhythm of that board.”
New challenges, new perspectives
Michael Fingland MAICD, CEO of corporate advisory firm Vantage Performance, says that as the impact of influences like AI increases, boards will need to sharpen existing skills and bring fresh insights into the fold.
“Few organisations really understand AI, so they’re not incorporating it into their strategic planning and haven’t done the legwork to realise how powerful it is,” he says. “AI is a productivity initiative on steroids, and productivity improvement is the Holy Grail for every country in the Western world. The pace of change is going to ramp up from here in life and work, and boards will need a greater diversity of skills. The younger generation are more versed in technology, generally speaking, so you’re going to have some younger board members who have that AI skill base — because every strategy of a business is going to have to be driven by or enhanced by AI. If a board doesn’t understand that, it will not excel and hold the business to account.”
Fingland adds that a broader diversity of skills in the boardroom can foster two-way learning. “With a greater mix of ages on a board, younger board members will learn from older directors about governance and dealing with CEOs. Older directors will learn more about things like AI.”
Redfern says while gender diversity will also remain important to board composition, the boards of tomorrow will need to become “far more competent in understanding intersectionality”.
“Women are not a homogenous group,” she says. “There are a lot of women in their fifties who are white, educated and quite privileged, sitting on a lot of boards in Australia. When we’re looking at boards, we’ve got to ask, what’s the strategy of the organisation? Where are we heading and who are the stakeholders we need to take into consideration? Will our board be able to hold our management to account to ensure those stakeholder needs are met? Do we know the right questions to ask about that from a legal or political perspective?”
As the pace of change accelerates, Fingland says a clear understanding of organisational purpose will help directors to chart the course.
“Companies with a strong purpose are the ones that win out in the end,” he says.
Directors who really understand why a company exists will make sure that purpose is fully integrated into recruitment collateral and sales and marketing material to attract customers who believe in what you believe.
“If you’ve got a purpose-driven organisation, your customers and your staff will stick with you,” says Fingland. “So you hire people who are passionate about what you’re doing.”
This article first appeared under the headline ‘Lead By Example’ in the December 2024/January 2025 issue of Company Director magazine.
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