Better Together: Three Ways to Boost Board–CEO Collaboration
Overview
The role of board directors has become increasingly complex and demanding due to the convergence of disruptions and uncertainties in the business environment. A recent McKinsey Global Survey on boards confirms that directors are focusing on enhancing collaboration with their management teams, particularly with the CEO, to manage this complexity.
Key Findings
- Survey Participants: The survey gathered responses from 913 participants, including 826 board members and 87 executives.
- Complexity: Two-thirds of surveyed directors report that the complexity of their boards' roles and responsibilities has increased in the past two years. Topics such as generative AI, cybersecurity, and the net-zero transition are now commonly discussed.
- Collaboration: Only one-third of respondents say their boards and CEOs collaborate very effectively.
Benefits of Strong Collaboration
- Enhanced Impact: Effective collaboration allows boards to focus on companies' most pressing issues, thereby creating more value.
- Improved Information Flow: Better collaboration keeps boards informed about the competitive landscape and stakeholder environment.
- Trust and Transparency: Successful CEOs benefit from the insights provided by their boards, leading to better delineation of management versus board responsibilities.
Strategies for Enhancing Collaboration
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Establish Efficient Board Processes
- Clear and streamlined processes help avoid redundant discussions and unproductive meetings.
- Directors should ensure that they have consistent and effective touchpoints to maintain open communication.
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Foster Regular and Open Communication
- Increase the frequency and openness of communication between the board and the CEO.
- Encourage a culture of transparency and constructive feedback.
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Cultivate a Strong Board Culture
- Develop a culture that values collaboration, alignment, and shared goals.
- Foster a sense of unity and mutual respect among board members.
Impact of Effective Collaboration
- Impact on Long-Term Value Creation: Boards that collaborate effectively are twice as likely to report having a high impact on long-term value creation.
- Overall Effectiveness: 85% of effective collaborators rate their boards as highly effective, compared to 47% of those with less effective collaboration.
- Critical Activities: Effective boards perform better across key activities like strategy, talent management, and risk management.
Conclusion
By implementing these strategies, boards can enhance their collaboration with CEOs, leading to improved performance and greater value creation for their organizations.