Why Boards Are Getting More Involved Running Their Companies

In Britain, almost three quarters of CEOs and their directors say board members are getting more involved in the day-to-day running of companies.

This is reflected globally as well, with board members worldwide becoming more operationally involved, leading to increased tensions, according to headhunter Heidrick & Struggles.

And over a fifth of British company directors say that boards do not fully trust their executive teams to get things done. 

Heidrick & Struggles’ 2024 Board Monitor Report analysed responses from more than 3,000 CEOs and company executives in the UK and around the world, to examine whether board members might be “crossing the traditional line between oversight and management”. 

Crossing the “traditional line” between non-executive directors and the executive team comes amid rising pressure on boards from investors, regulators, government, media and campaigners, as well as the spread of issues such as artificial intelligence and cybersecurity, global politics and environmental, social and governance responsibilities. 

As to why boards are becoming more hands-on, reasons stated by respondents in Britain varied from a desire to know more about operations (43%) to the chief executive requiring assistance owing to demands on their “bandwidth” (21%).

The wide-ranging nature of the issues drawing boards’ attention combined with the pressure they are under from multiple stakeholders, means that “the challenges and expectations on boards are ultimately greater than ever”, according to Kit Bingham, partner and head of UK board practice at Heidrick & Struggles.

“Board directors now need breadth of experience, as well as a depth of expertise in particular topics, combined with agility and a willingness to learn.”

Naturally, almost half of the board’s time (44%) is spent on traditional board oversight and strategic responsibilities, followed by portions of time examining global risks (10%), shareholder and employee-driven topics (10%), the opportunities and risks of new technology (9%) and crisis management (6%).

Constant balancing act 

Alice Breeden, Heidrick & Struggles regional practice managing partner, CEO & board of directors practice, Europe and Africa, said: “The relationship between the board and management, and particularly the chair and the CEO, is critical to driving a high performing organisation. 

“As the pressures, expectations and responsibilities of board members continue to expand, it is easy to see how this pressure is then put back on executives to provide as much detail and access as the board feels is necessary to govern the business. 

“With this constant balancing act adding stress to both sides, the need for stronger pulse on the business without overreaching will continue to be a challenge.”

Mark Cutifani, the former chief executive of Anglo American and the present chairman of Vale Base Metals, who contributed to the report, said the board’s role was “changing quite significantly, far more significantly than we probably appreciate. I think the board needs to play a more active role in a whole range of things, because you won’t have the experience and capacity in the chief executive to deal with these complexities. You’ll need some of it from the board”.

Deeper engagement

In addition, an overwhelming majority of UK board members (96%) believe they should engage with employees from “deeper within their company”. 

More often than not, UK respondents believe the board should engage with groups of employees (61%) – however, only 6% think a direct employee representative on the board is a “promising idea”.

The survey also asked respondents to specify which stakeholders have grown their influence in the post-Covid environment. Forty-nine per cent say influence has grown among the broader workforce and regulators, while 47% cite the CEO and leadership team and 43% consumers.

Just 22% of board members, on the other hand, report that the influence of mainstream investors has increased, dropping to 13% for “activist investors”.

This shows, Heidrick & Struggles says, that changes in the way boards approach their work “do not come first from the shareholders they serve”, but instead from the “operational, commercial, and regulatory contributors to the business”.

But this lack of growth in stockholder influence is “no cause for concern” among respondents – 76% of UK board members report a high level of satisfaction with the way things are.

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