1. GLOBAL BOARD SURVEY 2012
Facts – Trends - Opinions
FROM BACKWARD-ORIENTED CONTROL TO FUTURE-ORIENTED STRATEGY
Significantly more time is spent on board work and the increased time is allocated to strategy in particular. The
boards are optimistic in regards to their expectations of the future and expect to perform better than the
competition. The most important drivers of value creation are improved understanding of company strategy,
the right mix of competencies and strong people dynamics in the boardroom.
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2. INTRODUCTION
Managing a business is much more demanding today than just ten years ago. The economic, technological and
societal development is moving rapidly, necessitating both an attitude and a step change in the boardroom.
Corporate governance is a demanding discipline. It is necessary to stay ahead and up on your toes as a sparring
partner for the daily management. The board must be abreast of developments, and often the international
vision and experience from other markets and industries are also musts.
Therefore, the issue of professionalization of the board is more topical than ever. The ambition behind the
Global Board Survey 2012 was to uncover facts, trends and opinions on the boards.
BOARDS ARE FOCUSED ON STRATEGY
The boards are increasingly aware that their
principal task is strategy and dedicate more time to
perform their board duties and particularly to the
strategy work shows an international study
conducted by Stanton Chase International and
Brammer & Co. The study has identified trends and
opinions in board work anno 2012.
DURING THE FINANCIAL CRISIS, THE BOARDS HAVE MOVED CLOSER TO DAILY MANAGEMENT
The survey results show that as a consequence of the financial crisis, there has been a power shift and 45% of
respondents stated that the board has moved closer to the daily management. In the past 12 months, the
types of tasks that the board is dealing with changed and more emphasis is put and more time spent on the
forward-looking activities. Thus, respectively 58%, 48% and 40% stated that in the past 12 months, they have
spent more time on strategy, finance and sales & marketing.
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3. During the past 12 months, have you experienced a change in the type of tasks
that you as a board member are involved in?
The boards are aware of their responsibilities and 90% forward that strategy is the single most important board
task, followed by finance, budgeting & forecasting and sales & marketing. In contrast, however, only 40% of
respondents answered yes to Megatrends included as a parameter in defining the company strategy. It could
therefore indicate that a large part of the strategy work focuses on either in-house or competitive factors,
including access to funding - see further below.
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4. Please mark the three most important board tasks in your opinion
The boards seem to be aware that the power shift is temporary and caused by the need for extraordinary
efforts and 53% reported that when a brighter future reveals itself, they will withdraw again.
THE BOARDS ARE OPTIMISTIC REGARDING THE FUTURE
According to the respondents, a bright future is
ahead. 65% believe that businesses will perform
better in the next 24 months than in the preceding
24 months and only 20% say they will do worse.
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5. What are your expectations for the company’s financial outlook for the coming
24 months compared to the past 24 months
At the same time 61% assess that their companies will outperform their competitors. Hence, the boards appear
to be convinced that with increased time spent and more focus on the future-oriented strategic work, they are
in a good position to tackle future challenges that competition and financial turmoil entail.
What are your expectations for the company's financial outlook for the coming
24 months compared to that of your closest competitor(s)?
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6. THE BOARDS’ FUTURE-ORIENTED FOCUS
The boards expect a number of internal and external influencing factors in their future work. On the internal
lines, the focus remains on strategic work, financial management, and sales.
Over the next 12 months what are the 3 most important internal challenges
your company faces?
Evidently, the external influences in part compose a reflection of internal challenges. Thus, 77% highlight that
the competitive situation (including the relationship with customers and therefore sales efforts) will have the
greatest impact, while 71% still expect to be affected by the financial crisis. 49% expect political and / or
regulatory aspects to affect business operations.
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7. Over the next 12 months what are the 3 most important external challenges
your company faces?
COMPREHENSIVE NEED FOR UPGRADING COMPETENCIES ON BOARDS
The strong focus on diversity in the media has also left its imprint in the boardroom, where 34% indicate that
the growing focus on diversity has had an effect on board composition. However, 59% claim that it had no
effect - which is puzzling, since as many as 63% indicate that diversity should be a priority when the board is
composed, and at the same time, the European Commission is expected to table a new directive in this area
during spring 2012.
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8. Has increasing focus on diversity in boards had an effect on how your board is
composed?
The agenda on diversity focuses on the mix of
competencies, 74%, and to a lesser extent on
gender and nationality, respectively 37% and 26%.
There is a strong perceived need to upgrade the
skills of incumbent boards and 57% state that
handling future challenges require upgrading of the
current board of directors e.g. in in the form of
education.
The most commonly stated qualitative parameters of the sought-after skills in the boardroom are 1) Strategic
understanding and attitude, 2) Holistic leadership skills, 3) Industry Experience, 4) Sales / Marketing, 5)
Economics / Finance, 6) International experience, and 7) Miscellaneous ...
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9. Will the future challenges require upgrading of competencies with the existing
board members, e.g. in terms of education?
THE BOARDS EXPECT REPLACEMENTS IN ORDER TO PROPERLY ADDRESS FUTURE CHALLENGES
72% of respondents expect that future challenges will have an effect on the composition of the board.
Will the future challenges have an effect on the composition of the board?
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10. Just 37% of the boards carry out regular
evaluations of the board despite the fact that only
32% believe that the board performance is very
good.
How would you rate the quality of the board's overall performance?
84% of board evaluations are carried out as internal self-assessments, which entails the risk that the
assessments do not necessarily address the challenges that the board needs to act against. 29% of respondents
believe that their efforts are good and 32% that their efforts are very good. At the same time, there is an
acknowledged need for upgrading skills and replacing board members.
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11. How would you rate the overall understanding on the board of the company's strategy?
It is obvious, that the boards are focusing on the backward-looking control tasks. Thus, it is the corporate
financial and the market position that the board members themselves indicate compose the elements that
they have the best understanding of, whereas 39% of respondents believe that they have limited insight into
the company's talent management program.
CONSENSUS ON THE MEANS TO IMPROVE BOARD PERFORMANCE
Respondents believe that the most value creating driver for improving board performance is improved
understanding of the company's position and strategy (64%), which points to a need for more detailed material
from the daily management and increased time consumption for the board members.
In addition come a better competence mix (59%) and improved team dynamics in the boardroom (47%).
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12. In your opinion what 3 factors would best improve the overall performance on
your board?
BOARD WORK IN A FUTURE PERSPECTIVE
Across all sectors, ownership types, sizes and nationality, Global Board Survey 2012 states that the three single
most important factors for optimization of board performance, are the strategic focus, the good climate of
cooperation and the existence of the right mix of skills. There is a growing academic recognition of what best
contributes to value creation from the boardroom.
The board’s claim to fame
A board was originally entrusted responsibility for the operation of an enterprise. And thus performing the
duties of leadership. Specifying the direction and verifying the performance of daily activities. 39% of
respondents answered "do no know" to the question on whether the past year has seen new legislation
affecting their board work. It indicates some misgivings about how the boards will manage to fulfill their legal
responsibilities in the future.
The Board, the chairman in particular, must consistently prioritize the forward-looking strategic work to protect
the shareholders' interests. An excellent example of the effect of daring - and implementing - strategic
quantum leaps thinking, is Danish brewery Carlsberg's acquisition of Scottish & Newcastle a few years ago.
Carlsberg entered into an alliance with a strong competitor (Heineken) on a joint acquisition offer on
Carlsberg’s most important strategic partner (in the Russian joint venture, Baltika). That was quite a mouthful,
in principle too big for Carlsberg, but it succeeded because of the board's ability to think far into the future, its
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13. patience during the long process that preceded the deal, and its skills in the execution of the decision. And at
the same time, a maneuver that successfully moved Carlsberg into the global league. An example to follow!
Global Board Survey 2012 shows that boards spend
more time on the board work focusing on the
future-oriented activities including strategy in
particular, and this bodes well for their ability to
dare and to think strategic quantum leap thoughts.
The platform is on fire
But in relation to ensuring the right competence mix, including both professional, national and gender
diversity, sense of urgency is clearly lacking.
Apparently, there is an acknowledged need to
upgrade skills in the boardroom, but the question is
whether the recent years’ crisis management
exercise has taught boards to exercise due
diligence regarding the limits to their own abilities
and thus to make a timely succession planning. The
according to the survey already planned
replacements are hardly sufficient for the required
focus on the supply of new skills. And concurrently,
the global competitive platform is burning beneath
us.
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14. Going forward
The conclusions from the Global Board Survey 2012 and the recommendations are unambiguous: In the value-
creating ownership, the board is aware of its instrumental role. The board is composed to ensure that
experiences and skills reflect the challenges that the company faces. The board is dynamic, working with a
number of specific committees and work at least as much between the meetings as at the meetings. Finally,
board members are replaced with due diligence when tasks are completed and new tasks requiring new skills
need to be solved. Focus shifts from retrospective controls to forward-looking strategy and leadership...
METHODOLOGY
The survey has been completed by Stanton Chase
International and Brammer & Co in Q1 2012 among
300 respondents in more than 30 countries, as an
online survey. Respondents are board members
and chairmen from companies including listed
companies, private equity owned companies,
trusts, family owned and public institutions.
Respondents represent a broad industry range and covers technology, financial services, industrial,
government, education, logistics and transportation, consumer goods, lifescience, etc. The age spread is 18 to
75 years, of which the majority (77%) is between 41 and 60 years. The breakdown is 90% men and 10%
women.
We would like to take this opportunity to thank all respondents for participating in the study.
USE OF SURVEY RESULTS
For quotes, please refer to: Global Board Survey 2012 – Stanton Chase International and Brammer & Co.
For questions, please contact:
Jakob Stengel, Stanton Chase International, j.stengel@stantonchase.com / jsh@boardnetwork.dk / +45 21 28
28 82 or
Ditte Kirstein Brammer, Brammer & Co, ditte@brammerco.com / dkb@boardnetwork.dk / +45 40 12 33 12.
Copenhagen, June 2012
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