Mastering Board Governance in the Digital Age

Mastering Board Governance in the Digital Age

In the drive for digitalisation, the emphasis tends to be on the operational aspects of the business. But shouldn’t there be benefits for the board, too? Are there steps that can be taken in order to facilitate the digital transformation at board level? And do the tools exist to help them? The answer to all these questions is: “Of course!” 

With the pandemic accelerating digital disruption around the world, to what extent has this carried over to the corporate minefield? This next normal has pushed organisations in almost every industry to seek to innovate and forced them to embrace new, digital solutions. But while there’s been enough said about the impact of this industry shift on employees, managers and admins, there’s another critical demographic that’s gone through a drastic metamorphosis overnight: board members. 

The question to ask, then, isn’t about how fresh graduates are navigating this paradigm shift, but to what degree this rapid digitalisation has extended to board operations.

A new class of problem exists within this space of digitalisation, where seasoned executives’ experiences with business management and monetising traditional assets don’t translate as well in these modern mediums. It can be quite intimidating to keep up with these new growth drivers and competitors, with their rapid-fire funding cycles in Wall Street and other technology hotbeds and the emergence of non-traditional risks. It leaves some board members rightly feeling outmatched and overwhelmed. 

Achieving digital literacy for all

According to a 2018 study by McKinsey, up to 30 to 40 per cent of all workers in developed countries may need to move into new occupations or at least upgrade their skill sets significantly. Companies, managers or employees who don’t join the early adopters or innovate their talents to fit with the emerging curve may fall short of achieving digital growth. In an earlier study done in 2016, they found that 16 per cent of board directors had come to terms with the fact that industry dynamics were shifting. The pandemic has all but confirmed which direction most industries would need to flock to: digitalisation.

This is also about having the right board members. We see younger generations entering the board rooms, and we also clearly see that digital tools add significant value both to the board members and the company they represent.

The pace and scale of digital disruption – with all its risks of unemployment and growing income inequality – are as much a social and political challenge as a business one. One can no longer simply turn a blind eye and pretend to not see something so transformative unfolding and changing the very fabric of working society. The best option for companies right now is to plant themselves at the vanguard of change and be among the first few to make a positive societal impact, where they can then reap the greatest benefit after successfully transforming the workforce in the required way. 

“This is also about having the right board members. We see younger generations entering the board rooms, and we also clearly see that digital tools add significant value both to the board members and the company they represent,” explains Møyfrid Øygard, CEO of the leading Board Portal provider in the Nordic region. “With a proper introduction of a digital tool, and training in how to use it, it should definitely be possible to convince the more resilient board members about how easy – and fun – it can be to use modern digital tools. This will be for their own usage, as well as collaboration with other board members or stakeholders.” 

It’s not difficult to see why a rising call to increase age diversity within boards has been more evident as of late. Currently, the average age of directors is still over 60, and it’s widely acknowledged that this has led to a digital knowledge gap rampant in the workforce. A radical change in the way we approach digitalisation must occur if organisations are to hold their own against the changing tides of the industry moving at breakneck speed. The introduction of disruptive thinking and the encouragement of an open dialogue on challenging the status quo wouldn’t hurt, either.

  • A gap-less, generation-less future of work 

Digitalisation knows no age boundaries. There are still only a few boards with enough combined digital expertise to have truly meaningful digital conversations with senior management. The solution to this particular dilemma is simple: it’s not about recruiting people who are younger or older, but simply making any of them digitally literate.   

Technology can be so far-reaching that the knowledge and experience needed goes beyond one or two tech-savvy people from both spectrums. It’s not enough to recruit one or two new directors and hope their combined knowledge endures throughout all these changes. Recognising that a digital knowledge gap exists between generations is only half the process of working towards destigmatising it, and hopefully finding a meaningful workaround that supports both parties. If you want to serve as an effective thought partner, boards must move beyond an arms-length working relationship with digital issues and put in the work towards understanding how to better leverage technology.  

Streamlining and digitalising board work 

In a study done by HBR, the proportion of virtual board meetings pre-pandemic stood at 5 per cent. The number has since skyrocketed to a staggering 95 per cent, with a promise of half of them pursuing a hybrid meeting model long after the pandemic has died down. Data from Tricor Group implies that going hybrid results in meetings that are 30 per cent shorter, but with a significant increase in efficiency. It goes without saying that, while in-person meetings are still important, they aren’t regarded as the only option nowadays.

  • The acceleration of digital competency 

Any successful integration into digitalisation wouldn’t be possible without first attaining digital competency. The lack of digital savvy and training around the impact of emerging digital tools, technologies, and business models can be a major hindrance to its assimilation. The pandemic has also increased the need for these skills at the board level.

The acceleration of digital competency

In the company’s latest e-book, 3 steps to accelerating digital literacy in the boardroomØygard refers to “using a purpose built board portal so they can be more efficient, have better control and work in a secure environment if they manage to avoid sending emails to each other.”

Now more than ever, companies need board directors who are digitally competent and understand the new technologies that are impacting business decisions. And that means both recruiting the right directors, and investing in continuous education for existing directors.

“I also think it is very relevant to open up for feedback from all levels in the organisation that a Board represents, since there are normally many clever minds and good ideas among the employees,” she adds. 

Establishing a digital governance team 

Adapting to the digital age requires more than just the participation of employees, but for organisations to arm themselves with new capabilities. This may require going out of their comfort zone, or trying new things they’re not so familiar with. If properly done, digital meetings can be productive, efficient, and convenient. If improperly managed, board meetings can lead to feelings of frustration and alienation, as employees are unable to focus on a dry meeting within a virtual space.

A fully functional crew either remotely managed or relying on digital governance is a collaborative effort from everyone; organisations, teams, and non-profits will need to establish a digital governance team if they are going to operate in the digital space. This taskforce must be composed of individuals who understand technology, its benefits, and its risks.   

  • Fine-tune onboarding of digital directors 

In theory, the idea of board members coexisting within a digital space is exciting. It doesn’t matter if you’re being run by the private or public sector, being able to convene regardless of where you’re located in the world as a board member automatically removes the burden of being present in person. It emboldens organisations to tap into talent anywhere in the world, snipping that invisible thread of propriety that has hitherto prevented organisations from branching out due to geographical limitations. Businesses, teams, and profits can leverage new technologies to streamline their organisation’s processes and improve on their communication.

In an attempt to diversify or enrich ranks with tech talent, boards may lean towards younger digital directors who have grown up with different organisational customs and may not hold the same board experience prior to their appointment. The simple solution to remember is not just to diversify the talent pool.  It needs to be made so that the executive talent search process is not limited to background and skills, but takes into serious consideration a candidate’s temperament and ability to commit time. The latter is critical when board members are increasingly devoting two to three days a month of work, plus extra hours, to conference calls, retreats, and other check-ins. 

This onboarding process is crucial when it comes to bridging the digital-traditional gap. The induction of these digital directors must be handled with care, as they will be the ones to propel the organisation forward and through the many more digital disruptions that may occur. 

“You need to have the right board members who are prepared not only to contribute with their competence and ability to challenge and make smart decisions on behalf of the company they represent, but just as much have the ability to adapt to new technology,” Øygard emphasises. “They all need to be well prepared for the board meetings and the process that runs with it. Nowadays with an increasing amount of digital, as well as hybrid, meetings, it is also crucial to have the tools that provide the necessary level of security, as well as offer better control of the documentation and efficiency to the board processes.” 

Øygard

  • More than just a safe digital space 

What is the digital age, really? Is it about simply mitigating cyber-risks and drawing up contingency plans in the likely event they become a reality? Is this what being safe in the cloud really means? For most companies like Admincontrol, it goes beyond the protective firewalls and antivirus suites. It’s about nurturing an open culture of dialogue where every board member feels safe to voice their concerns about going fully digital, or stepping into a medium they might not all be that familiar with. The concept of security goes both ways, and it doesn’t just need to exist within the ether. 

Møyfrid believes that encouraging “transparency, good and open-minded communication, as well as ambitions, and make sure that necessary and extensive documentation is in place are of great importance” when it comes to maintaining a digital board. She also stresses that shifting into this new frontier of work “demands strong communication and collaboration skills among the leaders and the board of a company, as well as trust; these are all skills that are of great importance if you want to empower decision-making.”  

As a final note, she observes: “The ability and will to improve, renew and change when necessary is also crucial, and you should be prepared to be up to speed with your surroundings if you want to avoid falling behind – also in the decision-making and how this affects your business.” 

You can learn more about Admincontrol and their solution modern board work here. 

Admincontrol’s mission is to provide the ultimate solution for decision-makers. The company offers a smart and secure collaboration platform for boards, management and other stakeholders, where they can access, share, discuss and process information efficiently. Admincontrol has over 115,000 active users worldwide.

LEAVE A REPLY

Please enter your comment!
Please enter your name here