Last year's groundbreaking 2021 Mindful Exclusion Report which included feedback from over 300 company secretaries, directors and executives, showed us the prevalence of mindless decision-making in governance before COVID-19 and demonstrated how the experience of crisis had caused many organisations to become more mindful.
In a new report out yesterday from The Chartered Governance UK & Ireland and the Centre for Synchronous Leadership (CSL), we explore how decision-making has changed in the past year, get more concrete in exploring the dividend of engaging in mindful practices and highlight specific trends and areas of concern that warrant attention for the year ahead.
To what extent is mindless exclusion distorting the governance of your organisation?
- What important issues are not making it onto your boardroom agenda, simply because they are less familiar? (Agenda)
- What important conversations are not happening around the boardroom table, because they are less comfortable? (Dynamics)
- What criteria are not being factored into the selection of new members, because they do not reflect the ‘impressive people’ already around the table? (Composition)
In the 2021 Mindful Exclusion Report, we used these questions to demonstrate that many boards and executive committees (ExCos) were operating in a bubble – i.e., their decision-making was distorted by what was familiar, comfortable and considered ‘impressive’ to those already around the boardroom table.
This year, we have attempted to get more concrete in articulating the mindful dividend by tracking financial performance, along with a few other indicators that are increasingly monitored at top tables. We have also used distinct names to identify boards and executive committees that engage in each of the three mindful practices – Scanners, Synergisers and Stewards – and included new survey questions to bring their profiles to life.
The research identified that:
- 72% of respondents indicated that employee attraction and retention was a significant challenge in 2021, with only 32% saying that their organisation’s response had been effective. Despite this, talent management, organisational culture and employee well-being are being prioritised less.
- Innovation and impact on society are less likely to be prioritised now than they were during Covid-19. 64% of respondents reported there is little or no understanding of people facing poverty in their boardroom.
- The proportion of respondents reporting that their organisation has employee networks has risen from 51% to 70%, as has the incidence of many other structures related to diversity, equity & inclusion. And yet the influence of employee networks has gone down.
- Both the average frequency and duration of board meetings has risen in the past year. 42% of boards now have over 10 meetings a year (up from 32% last year), and 82% have meetings lasting three or more hours (up from 52% last year).
- The average number of members on boards has risen from 9.5 to 10.9. The number of members joining boards in the past two years has gone up from 2.8 to 3.2; the number leaving has hardly moved – from 2.5 to 2.6.
- Homogenous boards and executive committees are the least interested in diversity – regardless of whether this is diversity of expertise or lived experience. Boardrooms that already have high levels of one form of diversity are the most likely to prioritise other forms of diversity for future selection.
Peter Swabey, Policy & Research Director at The Chartered Governance Institute UK & Ireland, said:
‘History teaches us many things. One of these is about the temptation, after a crisis, to retrench and return to old habits rather than embracing the opportunity for lasting change. We decided, therefore, to test the results of the 2021 Mindful Exclusion Report and see whether the core practices that had helped boards and executive committees to go beyond their bubble in 2021 had stuck in 2022 and unfortunately we have found the opposite’
‘Company secretaries are at the forefront of changes in board practice. Our role as the key advocate for sound, moral corporate behaviour has been at the centre of our training and guidance to new and practicing governance professionals and everything else that we do. The growing focus on ESG and, in particular, ESG reporting has raised the profile and significance of effective governance and board decision-making in these areas, making this aspect of board behaviour more important than ever. These findings demonstrate the heightened need for better induction training, board evaluation and boardroom diversity.’
Justine Lutterodt, author of the report and Managing Director at CSL, said:
‘All of us live in bubbles – of familiarity, comfort, and ‘impressive people’. As human beings, this is our default approach to making sense of the world. The problem is not that we have bubbles, but that most of the time we do not even see them. Of those who do, few of us are willing to take ownership for how they distort our decision-making, and fewer still take action to prevent this from happening.’
‘Our intention with this report is to equip boards and executive committees to engage in more meaningful self-reflection and dialogue about how to improve boardroom decision-making. We have partnered with the Chartered Governance Institute because we believe that company secretaries have a key role to play in this journey.’
Download The 2022 Mindful Exclusion Report here.
To help you find resources on ESG, we have put together a webpage with links to our content, including blogs, papers and relevant courses. Take a look at our ESG resource hub.
