Businesses are being driven by a need to change: to become quicker, more efficient and more innovative. In order for this to happen, the structure at the top has to change. Both at the Board-level and at the Operating Board–level, where the Executives sit. Norman Broadbent has a 30-year UK heritage as one of the leading executive search and leadership consultancy providers and operates at the very senior end of leadership and talent identification at Board-level. Its consultants discuss how the structure of the Boardroom is changing...


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What is driving this change?

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How does this affect what Boards look like?

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Should the composition of Operating Boards change?

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How can we bridge the gap between experience and innovation?

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Is the next generation going to be broad enough to step up?

New companies that are young, nimble and imaginative, that break the rules and do things differently are disrupting the market. The customer is now driving the agenda and businesses of every size across all sectors truly have to become more customer-oriented and change rapidly in response to those new demands. In addition, there is a generational shift in perspective: people want to be managed differently, particularly the new Millennials or ‘Generation Y’. They have a desire to be more creative, to have meaningful, interesting roles and importantly, have a say in how the business is run. Millennials have grown up in a more inclusive, participatory environment where the focus is on teamwork rather than the ‘individual.’ Consequently, there is a desire for organisations to be flatter and less hierarchical. This does not necessarily mean that complex, legacy organisations are completely changing and becoming start-ups, but this is leading to a shake-up of traditional company structures. This change extends to those future leaders who can no longer be siloed, functional specialists. New company leaders need a much more holistic view of the business, have an appetite and ability to drive change quickly, react to what customers want instantly, and importantly, be able to embrace the digital revolution.

Over time, more Plcs are moving towards having just two Executives on their Board: the CEO and the CFO. This creates limitations, particularly when considering that many CEOs were CFOs previously; both Executives sitting at the table are Finance specialists. Including the Audit Committee Chair - this makes three with a Finance background. There is also the requirement for relevant sector experience within the Non-executive group. Although this has generally been the case, there has been a recent backlash against people who don’t have immediate, relevant experience. Recent corporate failures at high profile businesses have led to stakeholders questioning why highly-regarded NEDs have missed key issues. Was it their lack of sector experience that prevented them from deep-diving within the organisation? Although not a requirement, the consensus is that a strong representation of sector knowledge at the Board table is needed. Therefore, given the need for sector and finance expertise, the pressure then falls on the small number of remaining NEDs to have as much diverse experience as possible.

Traditionally, an ideal number around the Board table is often considered to be between eight and ten people and when the number increases beyond this, the dynamic changes and debates can become harder to manage. As businesses begin to adopt change; become flatter, less hierarchical and respond to both external and internal pressures, it could be argued that a bigger Board is needed to manage changing business requirements, particularly the need to innovate and digitalise.

This is something we are seeing more frequently and although there is no consistent composition across businesses, every company is looking to drive growth through transformation. The key difference between now and ten years ago is that change is now occurring at a phenomenal pace. In order to keep agile and operate at speed, Operating Boards are becoming smaller, but the people on them are becoming broader with the ability to take a holistic company view. A key example of this would be the consolidation of the Marketing, Operations and Digital function producing the single role of Customer Director.

There is a generational divide between the tech-savvy Millennials and the more experienced Board members. Therefore, how can Boards incorporate the entrepreneurial, digital skill-sets with those with longevity and experience to truly drive growth and innovation whilst still mitigating risk? The underlying theme is the need for businesses to change and recently we see leaders embrace this transformation and begin to re-imagine their businesses as truly customer focused and part of the digital era. The days of rising to the top within a single function are diminishing. This is demonstrated by the consolidation of roles within the Operating Board and consequently the need for forward-thinking business leaders who can speak the other ‘languages’ of marketing, supply chain or IT. This collaboration and crossover between functions is critical to business success. A key example is the changing role of IT within the organisation, once seen as a cost centre, is now a fundamental business enabler. The Chief Information Officer (CIO) of old with a deep technical expertise is now less relevant on the new Operating Board. Instead, CEOs are requesting commercial CIOs that also have strong business and financial acumen. Indeed, anyone sitting on the Operating Board needs to be a much broader, strategic thinker, able to grasp the competitor landscape and the changing needs of the customer.

The answer is yes, if companies plan early enough. Some organisations are already recognising the need to plan for the future and have introduced schemes to breakdown silos, change ways of working and encourage a spirit of entrepreneurialism and collaboration. Generation Y have relevant skills for the future: they are tech-savvy, innovative and ambitious with the ability to work at a high-speed ‘4G’ pace of life. Current leaders need to think about how they are fulfilling employees; exposing them to other areas of the organisation early on in their careers, nurturing talent and encouraging entrepreneurial behaviour. In parallel, this will encourage breadth of experience, fresh perspectives and a culture of collaboration within the leadership team which will also pave the way for a new wave of progressive Executive and Non-Executive Directors.

About Norman Broadbent

The Norman Broadbent Group has a 40 year track record of working with clients ranging from established corporations to high-growth innovators who seek their expertise in board and executive level search, senior interim management, executive recruitment solutions, talent advisory and leadership consulting.

Norman Broadbent