Company boardrooms need upgrading to reflect today’s digital economy and diverse business community.
And an island businessman said the ‘lack of digital savvy in the boardroom is a glaring hole’.
A new report highlights significant opportunities for performance and growth improvements for those who meet the challenge.
And it warns that without revision boards will struggle to meet the diversity of thinking and skills required to effectively advise management teams.
The important new blueprint for the future entitled ‘Corporate Governance: The Tone from the Top’ has been produced by accounting company Grant Thornton.
Martin Kneale, a director at Grant Thornton in the Isle of Man, said the findings are relevant to island businesses as they must ensure they are keeping pace with firms in other countries to maintain a competitive edge.
The Grant Thornton report explores three major aspects of corporate governance – the role of culture, board composition and strategic planning - and how they are affecting businesses around the world.
It draws on interviews with business leaders and board members from more than 1,800 businesses across 36 economies and 82 in-depth discussions with board directors. It found 62 per cent of those surveyed believe it is important for board members to have current industry knowledge, and discovered 86 per cent think board members should challenge management with new ideas.
However, the report revealed the lack of technology experience among boards today is a significant concern for board directors. Grant Thorn -ton has its main island office in Athol Street, Douglas, and a satellite office in Ramsey.
Mr Kneale told Business News: ‘The role of boards is to set the tone from the top, but also to advise and guide management teams.
‘A lack of digital savvy in the boardroom is a glaring hole.
‘Digital has disrupted markets, and the way we do business, but it hasn’t yet changed boards. The digital sector is also among the most entrepreneurial; generating ideas and innovation.
‘Harnessing this at a strategic decision-making level is vital to firms that have an interest in exploiting technology to drive growth.
‘The truth is, board experience and wisdom on how to run businesses successfully remains as important as ever.
However, boards need a 21st century upgrade.
‘This means boards making best use of their “digerati”, chief digital officers and other experts; people immersed in the digital dimension must have appropriate influence.
‘If your business only has junior management with digital expertise then your business likely has untapped potential, and you need to reflect on your talent mix, recruitment and people development accordingly.
‘Companies with digital acumen on the board will be better placed to embrace and exploit new technology to drive productivity and performance.’
He added: ‘This report’s findings are based on the opinions of global business leaders and indicate the direction of travel for companies which want to remain competitive.
‘It is essential reading for Isle of Man firms which want to stay ahead of the game, especially as we have access to such a wealth of digital expertise to draw on within our own shores.’
The Grant Thornton research also exposes a gap between perception and reality when it comes to the gender composition of boardrooms.
While they remain overwhelmingly male – only a sixth of directors globally are women – more than two thirds (68 per cent) of business leaders believe they do an effective job of encouraging diversity.
Mr Kneale said: ‘A lack of diversity has an impact on performance; groups who are the same think the same.
‘This isn’t good for new ideas and challenging existing practices – something boards tell us they want to see - but this presents a huge commercial opportunity for businesses.
‘Diversity means more than just gender – diversity of culture, background, knowledge and thought are all important. However, doing more to ensure a better blend of men and women sit at the top table, by creating better opportunities for women to progress, would be a giant step in the right direction.
‘The time is right for an appraisal of the way boards operate, their culture, the knowledge they possess and who they consist of.
‘This is critical to ensure they continue to reflect the businesses they govern and the society they are part of. There are real opportunities available to those boards who can successfully adapt.’