Corporate Governance: Nothing New

McKinsey's Quarterly Survey of Corporate Governance shows interesting comparisons with the same poll taken in 2008, before the collapse of Lehman Brothers. The results should be disappointing for shareholders concerned about board effectiveness.

44% of the respondents say that their boards simply review and approve the strategies proposed by management. 58% of the board members responding said that their knowledge of the company's current strategy was lacking. Roughly the same percent said that their knowledge of the value creation process, company risks and industry dynamics were also lacking.

Have the boards been spending more time on issues? Afraid not. The amount of time spent on strategic issues was about 23% of board time in 20111 versus 24% in 2008. The amount of time spent on talent issues was also roughly unchanged in 2011 versus 2008, at 10% vs. 11% of board time spent on the company.

In order to make things better, board members felt that more time should be devoted to board work, and that a better mix of skills and knowledge should be brought into the board rooms. They also called for "better people dynamics that enable tough, constructive boardroom discussions." Instead of focusing on long winded, uninformative C,D&A and prattling on about sustainability, investors need their boards to work on the fundamental activities which comprise the fiduciary duties of boards.