Three-quarters of internal audit directors say the alignment of board talent with the company’s long-term strategy is a critical challenge for their board, and three in five cite a need for greater diversity of backgrounds and viewpoints on the board, according to a global survey by KPMG’s Audit Committee Institute. Survey respondents also cite significant barriers to refining the board’s makeup, from finding directors with the right mix of skills and overcoming “status quo” thinking to lack of formal succession plans. “Having the right talent in the boardroom
DOHA, 29 June 2016 – Three-quarters of internal audit directors say the alignment of board talent with the company’s long-term strategy is a critical challenge for their board, and three in five cite a need for greater diversity of backgrounds and viewpoints on the board, according to a global survey by KPMG’s Audit Committee Institute.
Survey respondents also cite significant barriers to refining the board’s makeup, from finding directors with the right mix of skills and overcoming “status quo” thinking to lack of formal succession plans.“Having the right talent in the boardroom is critical to a company’s long-term success,” said Issa Habash, Risk Consulting Partner at KPMG in Qatar.
“But achieving the right diversity of boardroom skills, backgrounds, and experiences to position the company for the future requires an active approach—from robust evaluations to formal succession planning. In Qatar, we are seeing very similar themes to the global trends identified in the report and it is important for businesses to take action to ensure their boards bring maximum benefits to the company now and in the future.
”To better understand how directors are thinking about the mix of skills, backgrounds, experiences, and perspectives in the boardroom—and tools and approaches to achieve the right mix—KPMG surveyed more than 2,300 directors and senior executives across 46 countries.
NewsDirectors see significant room to refresh or refine the board’s makeup: only 36 percent said they are “satisfied,” and 49 percent “somewhat satisfied” that their board has the right combination of skills, background, and experiences to probe management’s strategic assumptions.
The survey also identifies key challenges or barriers to building high performing boards, as well as steps boards are taking to overcome these hurdles and position themselves as strategic assets for their companies.
While the views and practices related to board composition vary by country (as detailed in the survey report), key global trends include:
• Board composition—and alignment with strategy—is a key priority. Survey respondents identified several reasons for the intense focus on board composition, including the need for directors with an understanding of the competitive environment, greater diversity of viewpoints and backgrounds, and understanding the pace of technology change and the potential disruptors of the company’s business model.
• Significant barriers exist to building a high-performing board. The barrier most frequently cited by survey respondents was “finding directors with both general business experience and specific expertise needed by the company” (69 percent). Identifying the board’s future talent needs ranked second (55 percent), followed by resistance to change due to “status quo” thinking (43 percent).
• Despite wide recognition of the importance of succession planning in achieving optimal board composition, many boards lack a formal succession plan. While the vast majority of survey respondents said that a formal board succession plan is a key mechanism to achieving the right board composition, only 31 percent reported having either a “formal succession plan in place that aligned with the company’s future needs” (14 percent), or “robust discussions and succession planning in process” (17 percent).
Habash continued “It is absolutely essential that businesses in Qatar consider and plan for board succession. Whilst there are good examples of this happening in the country, there is still much that needs to be done to ensure that future boards include the right people to oversee and contribute to the long-term success of the company.