An article by Helen Pitcher
What do Maslow and high performing boards have in common? A recent McKinsey insight report highlights that higher and lower impact board’s depend upon the breadth of issues that directors focus on and tackle.
April 2013 McKinsey Global Survey of 722 directors on board practices
It appears that a board’s progress through a hierarchy of practices is analogous to Maslow's hierarchy of needs. By this we mean that directors who report lower impact typically focus on the basics of ensuring compliance reviewing financial performance, assessing portfolio diversification.
An interpretation of Maslow's hierarchy of needs, represented as a pyramid with the more basic needs at the bottom - Wikipedia
These activities are, of course, also undertaken by directors who report higher impact, but their more effective approach means that these directors also focus on strategy; what drives value; allocation of resources, such as capex for example. Then, at the highest level, boards look inward to aspire to more 'meta' practices e.g. deliberating about their own practices and dynamics so as, for example, to remove biases from decisions.
All of this necessarily demands more time from the directors.
McKinsey talked to 770 directors from public and private companies for their survey. Those who reported higher impact stated that they put in double the time i.e. some 40 days, four of which were spent on the basics (the same as the lower impact boards) but an extra eight days on strategy; and three extra on performance management, M&A, organisational health and risk management. And they manage this input without crossing the line and usurping the CEO and executive authority.
