“We continue to appreciate that many insights and recommendations we offer are seen by some as difficult, if not frightening, to consider addressing,” says Rollins. “But we feel it is business-critical, responsible and ethical to commit to work on the issues raised. Developing an effective board is a process – which starts with the commitment to exploring what strategies, processes, insights, conversations and commitments can help to create a more effective board.
“We are encouraged that an overwhelming majority of respondents believe external evaluations can improve board effectiveness. The needle is moving in the right direction in regard to evaluation activity, but we challenge those commissioning and undertaking audits to ensure they couple their efforts with definitive, time-bound development recommendations.”
When to resign from a board
The effectiveness of the working relationship between key members of the board and the executive team is a persistent issue for businesses. An ineffective working relationship can lead to conflict within the board and result in low-level lobbying, discussion and decision-making taking place outside the boardroom, which has the potential to harm board integrity.
Almost one in 10 respondents admitted to often or always making decisions outside the boardroom. 77% of respondents said they would resign if they were unhappy with the standards of governance, despite any legal obligation to correct issues.
According to recruiters Harvey Nash, it may be a tempting moral stance to resign when faced with failures in governance but the board has a legal and moral duty of care to act in the best interests of the organisation, which includes all stakeholders, shareholders, staff and customers. Staying and seeing through changes may be the correct thing to do and on other occasions a clean break is required.
“There are boards that I've left after three years, where I felt my values were offended,” says Debbie Hewitt. “Either I've felt isolated or frustrated that I haven't been able to influence anything.
“I resigned from one board over a transaction, where we had a vote. I thought we should sell the business. Two of us felt we should sell the business and everybody else felt we shouldn't, it was the wrong price. I stepped down with a really heavy heart, because I loved the business. I thought I was influencing it, and I felt, from then on in, I was going to be right or wrong. There was never going to be any middle ground. Either the board was going to go on to great things and everybody would be saying, ‘And you wanted to sell this, didn't you?’ Or if the board got into difficulty, I'd be feeling that everybody would be thinking, ‘I told you so.’
“In those situations it's important that you can still feel you can execute that independence, and when seismic things like that were happening, I needed to step down.”
Failures in governance are now widely broadcast with catastrophic repercussions for profits and reputations. For the past four years of the Harvey Nash survey, governance and risk has taken first place on the agenda but this year it is in third place behind cyber security and digital innovation.
Cyber security has jumped to first place on the agenda from fifth place last year, with 72% of boards discussing it more now than three years ago.