A new report from Grant Thornton points out the key role of the corporate governance to meet the challenges of the next decade and, at the same time, the need and opportunity to adopt changes in the Board of Directors skills, in selection processes and in the corporate culture.
The latest International Business Report from Grant Thornton – a quarterly survey conducted with interviews with more than 2,500 chief executive officers, managing directors, chairmen or other senior executives from all industry sectors in 36 economies - finds that there is the need to adopt radical changes in corporate governance processes, in order to meet the challenges and opportunities of the next decade and ensure the companies of the future survive, adapt and ultimately thrive.
The report finds that businesses are under pressure to manage a complex blend of forces including technological advances, regulation, demographic changes and globalisation, to ensure they are fit for purpose and able to compete. But it questions how businesses can compete and stay in the market and whether boards are moving quickly enough, and uncovers two burning priorities for boards and shareholders worldwide which need addressing as a matter of urgency: ensuring diversity of thinking and boosting digital capability.
Grant Thornton’s report identifies boosting diversity as a key challenge for boards over the next ten years. Nearly nine in ten (88%) respondents to its International Business Report (IBR) recognise their board needs to do more to encourage more diversity. However, the report also finds that diversity needs to go beyond gender. It identifies a need for diversity of experience – arguably harder to measure than gender or ethnic diversity, but critical to guard against groupthink and encourage better decision-making.
It points out that boards and manager need to map the challenges you think you will face over the next decade, map the skills you think you will need to address them, identify the gaps you need to fill, and make sure you have a diverse group to do this effectively.
Prioritise the forms of diversity which you need to build on your board, in order to reflect your organisational culture, your markets and your customers.
The second key challenge identified is boosting digital capability, but evidence suggests there is a way to go until this becomes a reality. Only one in four (25%) business leaders said that digital expertise is an area where their board should increase focus over the next 10 years.
If there is no cyber strategy currently in place, waste no time in developing one, because cyber-crime will become the norm, and staying one step ahead of the criminals will be a necessity.
What did Italian directors and managers answer concerning the growth and the capability of boards to meet the future business challenges? They give importance mainly to the development of a better corporate culture (62%), but also to sustainability (38%) and to improve strategic planning horizons (35%). As concerns the composition of boards and the capability to encourage more diversity and skills among directors, 38% of interviewed people believes that it is necessary to identify future executives earlier in their careers, while 32% thinks that their board does not need to encourage more diversity.
