Only 13% of NEDs believe that the recent governance developments have pointed to the need for new skills and experience on Boards.
Nevertheless, over one third of NEDs feel their Boards do not currently have the right skills and experience.
When asked about the relative importance of various skills, competencies and attributes on the Board, the NEDs singled out strategic acumen as the most important by some distance, followed by financial, industry, risk management, executive leadership and operational expertise.
Only a small proportion considered skills such as cyber, IT/digital, ESG (Environmental, social and corporate governance) and marketing to be very important. A number of NEDs commented, however, on the need to source this expertise externally or otherwise gain a sufficient depth of understanding.
“One can’t have everything! We can hire in experts in cyber, environment and IT and/or ensure management is well resourced in these areas.”
“Very difficult to get all of these categories of expertise on the Board. I’m not sure we need to have them all at the expert level, but it does mean the Board has to educate itself so that they can challenge and understand answers. Accordingly there must be much more thought going into continual education of the Board.”
“Keeping track of new innovation and technology challenges is important, but the Board works hard on staying current on emerging trends and issues.”
Certain aspects of Board diversity are also seen as relatively less crucial. For example, only 14% believe cultural diversity is very important and only 9% in relation to age diversity.
When asked to select the top three ways to effectively promote Board refreshment:
The most popular method was through frank and confidential feedback, when provided to the Chair (65%) or a trusted 3rd party (54%).
Just over half (54%) of the NEDs selected the disclosure of a Board ‘skills matrix’ and
Half selected the use of limits on director terms (while very few NEDs agreed with one year appointments or a compulsory retirement age).
A number of NEDs commented on the need to regularly - and possibly more than ever - review the composition of the Board and build good succession plans.
“For the time being our Board composition is good, but this stage will soon pass and we’ll have to look at renewal and, in doing so, consider again the most needed skills and attributes.”
“Our Board recognises that we are in a period of change impacting us on many fronts - community expectations, cyber, AI, accelerating automation, etc - and therefore Board succession is a critical issue.”
Partner, PwC Australia
Tel: 612 8266 3034
Senior Executive Advisor, Risk Consulting, PwC Australia
Tel: +61 421 056 456
Partner, People and Organisation, PwC Australia
Tel: +61 (2) 8266 2420
Partner, Strategy& Australia
Tel: +61 (2) 8266 1299