“Our own experience is that the time required to do a good job is usually more than directors initially expect,” McKinsey said, citing a recent survey of more than 1,000 company directors that showed the most effective spend is an average of 41 days in their role.
Deepening directors’ commitment is one of four pieces of advice it offers to CEOs, in addition to broadening the board’s scope of duties, clarifying directors’ responsibilities and creating a culture of trust between directors and executives.
“Getting more deeply involved in strategy and other matters will require many board members to increase their digital literacy,” it argued.
CEOs are having to grapple with the rise of artificial intelligence, advanced data analytics and the so-called sharing economy, which are changing the way businesses from auto manufactures to funds managers develop products and sell them to their customers.
Some of America’s biggest companies have moved toward addressing these challenges head on by placing tech-industry executives on their boards.
Retailer Walmart and oil giant Exxon, for example, have appointed Instagram co-founder Kevin Systrom and former Microsoft CEO Sam Palmisano as directors, respectively.
But other companies have been slow to respond to the threat, with previous research by McKinsey indicating that only 17% of companies’ boards sponsoring digital initiatives, while 16% of directors fully understood how the industry dynamics of their companies were changing.
CEOs should also make sure boards are asking crucial questions about technology, McKinsey said, such as what value is the business getting out of its most important IT projects and how strong is its supply of next-generation IT talent.
And when it comes to choosing the right talent for the board, CEOs should be prepared to cast a wide net.
“Ideally, the board brings together individuals with the right combination of skills and background,” McKinsey said.
“One recommendation is for boards to appoint directors and assign them tasks the same way private-equity firms assign their partners to deals: according to their experience and what they’re best at.”