Boards still don't do much on strategy – McKinsey

It's not quite a case of "Crisis, what crisis?" But three years after the shock of the collapse of Lehman Brothers and the ensuing steep recession in major economies around the world, boards of directors seem to be doing the same old thing. According to a survey on governance from McKinsey Quarterly, directors at companies around the world say their boards have not increased the time spent on company strategy. The previous survey by the consultancy's house journal, conducted in February 2008, seven months before the collapse of Lehman, boards spend 24 per cent of their time on strategic issues. In 2011 it was 23 per cent. On "talent" issues in 2008, it was 11 per cent; now it's 10 per cent. "Moreover, 44 percent of respondents say their boards simply review and approve management's proposed strategies," the report states. "Just one-quarter characterize their boards' overall performance as excellent or very good; even so, the share of boards that formally evaluate their directors has dropped over the past three years." Underperforming boards see a greater need to do better: 78 per cent want to spend more time on strategy, compared with 65 per cent of directors who rate their boards' performance as excellent or very good.

These highlights of the study – what McKinsey itself chose to highlight – mask another finding: that 70 per cent expect their boards to do more strategy work in the future. Most also expect to spend more time on risk management and talent issues. Even more operational areas like performance management and execution, more directors expected to spend more time than those who expected to spend less. In fact, there was only one category of work where more directors expected to spend less time – that was on governance and compliance!

Source document: The highlights from the McKinsey board survey, "Governance since the economic crisis," is a nine-page pdf file.