Half of company directors think their board is of no value to the business

Almost half (46 percent) of company directors in the US and UK think their boards do not add enough value to their organisation, according to the Board Value Index from Board Intelligence. The Board Value Index is based on responses from more than 200 executive and non-executive directors from companies with over $50 million in turnover across the UK and US. Almost a third (31 percent) of directors surveyed said that their board adds no value at all, with half of that group believing their board is actively holding their organisation back.

The findings also suggest that boards are being set up to fail, with over a third of directors (34 percent) stating that their board’s primary focus is on reviewing past activity. Only 21 percent say their board split time equally between forward- and backward-looking topics, while 10 percent report that over 80 percent of board time is spent looking backwards.

The Index suggests there is a notable difference in director sentiment between the UK and US. While the proportion who believe their board adds no value at all is consistent across both markets (32 percent in the UK versus 29 percent in the US), more than half (51 percent) of UK directors hold negative views on their board’s contribution, compared to 41 percent of US directors. 28 percent of US directors consider their board an essential value creation tool, versus just 18 percent in the UK.

A similar divergence exists when looking at the weighting how time is spent in the boardroom. In the UK, 39 percent of directors report that their boards spend more time looking backwards than forwards, versus 29 percent in the US.

While 80 percent of UK and US directors rate their board meetings and processes as broadly “efficient”, fewer than four in ten (38 percent) describe them as “very efficient”. When asked about barriers to making faster, better decisions in the boardroom, directors were most likely to cite the rigidity and inconsistency of decision-making processes and frameworks as the biggest roadblock (selected by 28 percent of directors). This was followed by the clarity of roles and responsibilities (27 percent), time management in meetings (27 percent), and the quality of information provided to the board (26 percent).

Regional differences were again evident. Almost a third (31 percent) of US board directors felt held back by processes and frameworks, and 30 percent cited stakeholder considerations as the biggest hurdle, compared to just 19 percent in the UK.

The Board Value Index also assessed directors’ confidence in the ability of their board and executive team to take clear, timely, and well-informed decisions without relying on external consultants in a range of areas. Tellingly, no single area of board decision-making was selected by more than a third of directors, suggesting low levels of confidence in board decision-making overall.

The most commonly cited areas where directors felt confident in their boards to make clear, timely, and well-informed decisions without external consultants were corporate finance (including M&A) and legal and compliance (both selected by 33 percent of respondents). Digitisation and technology strategy (32 percent) followed closely. Comparatively, directors were least confident in boards’ ability to manage reputation and brand issues (26 percent), HR, and the allocation of spending (both 29 percent)

In contrast, when asked about executive decision makers (executive committee members and corporate senior leadership), corporate finance and legal and compliance were identified as key weaknesses, with just a quarter (25 percent) of directors surveyed confident in their executive team’s decision making in those areas. Setting the priority areas for growth and business strategy was identified as a strength, with 38 percent confident in their executives’ abilities in that area.