CEOs struggle with board engagement, study finds

A recently published international study has found that CEOs, while maintaining solid relationships with Board members, struggle to tap into their knowledge which ultimately enables them to work together towards a shared goal.

In the early results from its CEO Excellence Assessment Tool, global management consulting firm McKinsey & Company highlighted that CEOs are facing a number of key issues, feeling more confident handling some, while more vulnerable in other situations.

The study received replies from more than 100 CEOs across 17 major industries. The majority of participants represented companies headquartered in Asia, however, McKinsey & Company stated that “subsequent waves” are expected in other global regions.

For the study, the firm classed 18 behaviours that denote CEO excellence across dimensions, with this being split in the following categories: set the direction, engage the Board, align the organisation, mobilise through leaders, connect with stakeholders, and manage personal effectiveness.

McKinsey & Company’s survey found that CEOs are most confident in their ability to stay true to their convictions and values, practice gratitude, and remain humble when reflecting on the growth of the company and their own.

On the other hand, CEOs expressed the least confidence in their ability to tap into the knowledge of their Board of Directors, with this achieving a score of 3.2 out of five.

“On average, respondents say they are able to have good relationships with their Board but are less confident in their ability to put good behaviours into practice when tapping into the Board’s capabilities and focusing Board meetings on the future,” McKinsey & Company’s research revealed.

Board Members seem to also agree with this, with studies highlighting that Board effectiveness is an “important determinant of value creation,” as it leads to higher market valuation and better performance.

Alignment and clarity between a CEO and Board Members enables them to work together towards a shared goal, thus better understanding the vision for the company. Without alignment between leadership and the Board of Directors, it is difficult for all parties to be on the same page, leading to conflicts about the company’s priorities and where its future lies.

This is not to say that there will not be friction between the two parties, however, part of having an effective communication model requires the right mechanisms being in place for CEOs and Directors to work through these difficulties.

The research highlighted that CEOs that aim to be successful “don’t tolerate an indifferent relationship” with their Board of Directors. Instead of simply helping the Board fulfil its fiduciary duties, CEOs must assess that their role is to help Directors help the business and ensure it remains sustainable in the long run.