During tough times—and they haven’t been this tough for generations—directors are supposed to ask difficult questions about their companies. Yet they rarely ask hard questions about themselves, such as, “Are we the right people, asking the right questions, providing the right sort of leadership, challenging management in the most productive ways?” What’s more, except in the banking world, boards haven’t had to take the blame for practices they should have corrected early on.
Today, boards are probably underreacting to the stresses—and opportunities—of economic turmoil. Directors themselves seem to agree: a McKinsey survey conducted in conjunction with an article published earlier this year1 showed that only half of the 186 directors responding thought their boards had met the demands of the crisis. Just 30 percent reported that a wider range of information was now presented at board meetings or that conversations were more frank than usual (exhibit). Even among directors who believed that their boards had responded effectively, overall, to the crisis, only 19 percent felt that those boards had really addressed the problems of talent management—meaning not only the composition of the board but also its role in hiring and remunerating senior executives.