The future brings a whole new set of worries for British boardrooms

City directors are concerned about technology and the new skills needed in a changing business environment

Change is afoot in the boardrooms of Britain’s biggest companies (Reuters)

These are uncertain, nervous times for directors of our biggest companies.

I know, there will be plenty of people on reading that who will say you must be joking, they earn tons of money, they get all the perks, they’re paid squillions to attend a few meetings, and swan around the rest of the time… etc, etc.

Yes, it’s true they earn well. But money is not the be-all and end-all. Directors have feelings, too.

Go on, mock a bit more. But think on: we live in an age where reputation is everything, where you can be high one minute and crashing the next, never to recover. Put one step wrong, slip up, be identified with failure, and even if it’s not your fault you could be ruined.

Certainly, I’ve been struck for a while, just how angst-ridden many directors seem. Not when they’re in collective situations, in meetings, at industry dinners, in the golf club bar, with their peers. But when you get them in a one-to-one, they will open up. Then, the veneer can slip, and you often realise, that for all their wealth, power and status, they’re fraught with worry.

Harder evidence for that anxiety comes with publication of the “Future of Boards 2018” report. Once, directors only had to bother about corporate performance, their own contribution, and whether investors, who could turf them out of their jobs, were happy.

Not any more. Today, how the board gets on with others (and by extension, how they’re perceived by the wider community), is a major concern. According to the report, only 14 per cent of executive and non-executive directors at the UK’s largest corporations (FTSE 100 and FTSE 250) say their boards engage with community stakeholders very well.

Companies are smart at communicating with their investors (64 per cent of directors say they do this “very well”). They’re also not bad at talking to regulators and employees. But customers, suppliers and the community come much lower.

Clearly, companies have a comfort zone of reaching out to their own kind, to shareholders, officials, and staff. Broaden it it, though, to embrace customers, suppliers, and the community as a whole, and they fall down. Gone are the days when all boards had to do, pretty much, was to keep their investors sweet and everybody else could go hang. Today, directors want their companies to reach out more, to shore themselves up with the wider audience – knowing they’re just as vulnerable to attack from customers, suppliers and the community.

That narrow, self-centredness, is no longer appropriate. Worse, it’s downright dangerous. So half, too, would like to see greater ethnic diversity on boards. Two-thirds are on boards with no non-white directors, and most of this group, 79 per cent, believe their company is not on target to recruit a non-white board member at the date set by the Parker Review into the ethnic diversity of British boards.

The survey, from executive search firm Ridgeway Partners, shows, though, that where gender balance is concerned, board members are happy their companies are moving in the right direction, with 74 per cent believing they’re on track to match the Hampton-Alexander Review goal of 33 per cent female board and leadership representation by 2020.

That sense, however, of directors struggling to grapple with all manner of things thrown at them in a rapidly changing social and business environment is compounded by another finding, that technology skills and knowledge of technology infrastructure are rated as more pressing than marketing, international experience and strategic thinking, and far ahead of human resources, versed in dealing with government, commercial/P&L know-how, prior board experience and risk, and financial management. This again, is turning the old, established order on its head, and elevating to the top more urgent values reflecting the shifts in society.

Previously, experience of serving on boards, P&L and financial management were the overriding pre-requisite skills for would-be directors. Not any more. Boards can do all that stuff; what keeps directors awake at night is the fear of being left behind, of being caught napping by technological advances.

So, asked which skills or knowledge they believe their board needs more of, and the two dominant answers relate to technology – 57 per cent for new/emerging technology eg artificial intelligence, and 34 per cent wanting more expertise in technology infrastructure. This is further evidenced by more than a third, 36 per cent, saying they would like to spend more time discussing the impact of technology at board meetings.

That desire to think outside the box is highlighted too, by the strong belief that calibre and behaviour of directors greatly outweigh relevant sector experience in influencing board effectiveness. Similarly, that traditional requirement, of “previous experience is essential”, no longer applies.

Possibly, directors are becoming more judgmental and performance-related. Exactly half were prepared to say they have witnessed underperformance by a non-executive director.

Similarly, directors would like to see their boards improve succession planning. A far-from-thumping majority, 57 per cent, say their board has a “very accurate” knowledge of internal successors to the CEO; while a lowly 10 per cent believe they have the same degree of knowledge when it comes to potential external candidates.

Louise Angel, head of board practice at Ridgeway Partners, said the results “shed fascinating light on the continued evolution of UK boards and the tensions that increasingly exist between the multiple priorities facing them”.

“Clearly boards have considerable work to do in improving community engagement, ethnic diversity, technology capabilities, succession planning and performance management processes,” she added.

For directors to be thinking about customers, suppliers and the community when previously all they cared about were investors, regulators and staff is radical enough. Add to that their desires for increased diversity, and to put technology ahead of boardroom experience and P&L savvy, and to wish to see improvements in performance testing of their fellow directors, and you have the makings of a wholesale shift.

Their critics may not agree, but behind those boardroom doors, change is afoot. They’re moving a long way from the old boys’ network and slaps on the back. It may take time, of course – too long for many of those opponents. But something is happening, nonetheless. And its radical nature should not be underestimated. Britain’s directors have seen the writing on the wall, and do not like it one bit.

Chris Blackhurst is a former editor of The Independent, and executive director of C|T|F Partners, the campaigns and strategic communications advisory firm