A survey of  215 directors in 12 countries finds that many directors are concerned that increased regulatory and compliance obligations in the wake of the global economic downturn have distracted them from focusing on performance and growth.

According to Deloitte Touche Tohmatsu Limited’s (DTTL) "Director 360: Changing Roles, New Challenges", the economic downturn and market volatility appear to have forced directors to clarify their roles with respect to the role of management, and heightened directors’ focus on risk and liability.

"The good news is that boards expect to focus more on growth, performance, management succession, and mergers and acquisitions moving forward,” observes Dan Konigsburg, Leader, Deloitte Global Center for Corporate Governance, DTTL.

The survey highlights that while almost three quarters (73 percent) of directors surveyed either agreed or strongly agreed that all board members made a valuable contribution to the boards they sit on, more than a quarter (27 percent) were either indecisive or flat-out negative about the contributions of their colleagues.

Increased Liability

More than half of the directors (59 percent) responding to the study agreed that the level of liability imposed on directors was appropriate.

Some directors suggested that a heightened director liability standard may, over time, make it harder to recruit talented directors in some countries. As one director said, “Increasing regulation and liability will force directors to reduce the number of boards they are on. This impacts the cross-fertilization of ideas and best practice.”

On management succession planning, less than half (46 percent) of directors surveyed said that their organisations had an effective CEO and senior management succession plan, while approximately one-third (31 percent) indicated that they did not have an effective plan in place.

There were wide regional variations in responses to this question, with the majority of directors in Austria and Mexico indicating they did not have an effective plan in place, and directors in Australia, India, and Ireland voicing strong confidence about the effectiveness of their management succession plans.
Some directors indicated that while the succession planning process was efficient in identifying people, there was still work to be done in preparing people to take on new roles.