Only 10% of board members fully understand the sector in which they operate and another 20% fully understand their company’s strategy, according to data from consulting firm McKinsey. These are “incredible” data, points out Professor Pablo Foncillas. “90% and 80% respectively don’t even know what they’re doing,” he contradicts.
Another study points out that when they vote most of the time they have an alternative on which to decide and they usually do so in favor of the CEO.
What does this teach us? That the board has three main tasks: put the best CEO possible; check that the CEO does not have other interests than the company should have; and bring independence of criteria in the big decisions, in the strategy.
But in practice, CEOs want to be successful, “and sometimes it comes with a huge ego.” In the end, they create such a suitable context for their plans to be voted on that they seldom meet with due resistance on the council. “To this is added that the majority of directors, intelligent people, well prepared and with successful careers most of the time, recognize that they do not fully understand either the company on whose board they serve or the sector in which it operates. Thus, it is complex to oppose”, continues the researcher.
Perhaps to avoid these situations, when the CEO presents things in such a way that everything is perfect, the question that could change the rules of the game would be: what can go wrong when everything seems to be going well? “You have to ask the CEO of a company uncomfortable, difficult and complex questions,” says Foncillas.
What danger is there if they are not done? The teacher goes into detail in the video.
