Strengthening your board for success in a volatile world

The role and importance of the board for successful companies have never been more crucial. This applies to both the strategic development of the company and to top management, which now more than ever requires qualified sparring and input in response to the increasing volatility in the world around us. Just consider the many challenges management has faced over the past 5 years alone – COVID-19, inflation, interest rate hikes, geopolitical tensions, energy crisis, climate issues, ESG agenda and much more. Successful companies react and execute in time.

The roles of boards and top management are therefore changing. The demands for individual members' skills and diversity are clear. Hence, the right composition of both the boardroom and top management is of paramount importance for success or failure. The optimal board composition is not one-size-fits-all but must naturally be tailored to each company, its unique context, market, and environment. Nevertheless, some characteristics seem to recur in companies that have successfully navigated through the turbulent waters of recent years – and they all challenge the conventional reliance on familiar, unchanging leadership approaches.

Optimal board composition, characteristics and challenges

Global perspective and international experience

In an increasingly globalized world, having a global perspective is crucial for the board. Our global network of executive search professionals ensures we can identify diverse board candidates with the international experience your company needs to thrive. Members with international experience bring not only a broader view of global market conditions but also a network and an understanding of cultural differences that are essential for the company's success worldwide. Therefore, both international experience and other cultural and ethnic backgrounds are strengths in the boardroom of the future.

Industry expertise and contextual understanding

An optimal board composition includes members with deep insights into the company's specific industry and market. Having individuals who understand the unique challenges and opportunities facing the company is crucial for making optimal decisions and developing strategies tailored to the industry's dynamics. The uncertainty in the world around us in recent years calls for decisiveness, action and executional speed.

Strategic thinking and innovation

The optimal board is not only adept at handling daily operational challenges but also capable of thinking strategically and innovatively. Having members who can look beyond the current business environment and identify new opportunities and threats is crucial for ensuring long-term success. As long as there is a willingness for execution and speed.

Management experience versus technical expertise or both

Board members should not only possess strong management skills. With the rapid development in technology, digitization and especially the need for innovation to ensure the company's future relevance and competitiveness, the composition of the board calls for technical niche insight, expertise and experience in particular. This should open doors for the 'nerds' in the most positive and respected sense of the word.

Uncertainty is the new constant and the boardroom's greatest challenge

1. Decision-making under pressure: Boards are often required to make critical decisions at a rapid pace to respond to sudden changes. This pressure can lead to decisions being made without complete information, increasing the risk of errors.
2. Lack of long-term vision: Uncertainty can result in a cautious approach, where boards refrain from making long-term investments or strategic decisions for fear of unknown consequences.
3. Organizational challenges: Attracting and retaining talented leaders and key employees can be challenging when uncertainty permeates the work environment, and the organization must adapt to frequent changes.
4. Difficulty predicting market developments and trends: Boards face challenges in predicting market developments, competition, and consumer behavior, making it difficult to develop effective and proactive strategies.

The uncertainty challenges the traditional approach to strategic planning, which relies on long-term stability and predictability around us and therefore requires constant attention and adaptability from board members now and in the future. But what could effective navigation tools be for the effective board?

Navigation tools for the effective board

To address the volatility and uncertainty surrounding the operating conditions of businesses today, some essential elements emerge that both top management and boards should consider in their crucial interaction. One crucial word is agility, which should be incorporated. For example:

Summary

Boards are playing an increasingly relevant role in fostering the development and growth of successful companies. As the world faces growing uncertainty, crises and change, the need for agility becomes paramount. This agility must be reflected in both the composition of the board and the competencies of its members. The meticulous selection, challenging and "hiring" of board members are as vital as executive recruitment, highlighting their strategic importance. At Kestria, we don't just fill board seats, we build high-performing boards that drive long-term value creation.