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Zoom Room Unlikely To Replace The Boardroom For New Zealand Directors

A worldwide survey of directors has revealed that only a quarter (27%) of New Zealand respondents, compared to 46% of their global counterparts, expect to conduct a significant portion (40% or more) of their board meetings virtually following the COVID-19 pandemic.

However, almost half (49%) of both New Zealand and global respondents agree that virtual board meetings are as effective as in-person meetings.

“What’s particularly interesting is that New Zealand directors were more likely to find the lack of non-verbal communication in virtual meetings a challenge [76% of NZ respondents compared to 68% globally],” Chief Executive of the Institute of Directors New Zealand Kirsten Patterson said.

“Of course, it’s important to bear in mind just how different the business environment is in New Zealand right now compared with overseas, where many are still operating under varying levels of lockdown. It’s a sobering statistic that 54% of New Zealand respondents said their board had already met in person [following the crisis], compared to 14% globally,” she said.

“This is the second time the Global Network of Director Institutes [GNDI], has carried out such a far-reaching global survey. And this one, led by the USA in collaboration with Marsh & McLennan, provides unique and valuable insights into how boards around the world have grappled with the challenges of governing through a global pandemic,” Ms Patterson said.

Resilient boards

“Encouragingly, most directors felt their boards had been resilient in the face of an operating environment upended by COVID-19. Ninety-two per cent of NZ directors surveyed said their board was able to govern effectively through the crisis, in line with the 89% of directors globally who said the same,” she said.

New Zealand directors were more likely to increase the amount of time they devoted to their governance duties, with 33% saying their time commitment as a director doubled or more during the crisis, compared to 22% of global directors. Twice the proportion (16%) of NZ-based respondents as their global counterparts (8%) said they gave up or planned to give up a board role as a result.

Environmental and social considerations

New Zealand directors appeared to fall behind when it came to prioritising environmental and social considerations, with 49% of those surveyed expecting their boards to put greater emphasis on these issues post-crisis (vs 57% globally). Meanwhile, only 20% of New Zealand respondents (vs 36% globally) said their boards would increase how often they included environmental and social issues on their agendas.

“That said, more than half of New Zealand’s respondents (vs 24% globally) were from not-for-profit or government/state-owned enterprise organisations, where you would expect to see environmental and social issues already quite high on the agenda. Meanwhile, only 6% of New Zealand directors surveyed represented publicly-listed companies, compared to 33% globally,” Ms Patterson noted.

Risk management shoots up the global agenda

She wasn’t surprised to see a growing emphasis on risk identification and scenario planning among both local and global directors, given less than one sixth of all respondents (13% NZ and 14% globally) said their board-level risk dashboards featured pandemic as a key risk a year ago.

“Around sixty per cent of directors surveyed (both NZ and worldwide) said incorporating a broader set of risks into scenario planning would be one of the most significant long-term impacts of the crisis. This seems a wise move, given the many uncertainties organisations and their boards continue to face,” Ms Patterson said.

Steve Walsh, Chief Client Officer, Marsh (NZ) was reassured by how robust and agile boards in New Zealand and around the world were in responding to the pandemic in 2020. However, he sounded a note of caution, too.

“The greatest governance challenges might be yet to come. As the world returns to growth, many boards will have to navigate multiple competing forces and shifting priorities to ensure the long-term sustainability of their organisations,” he said.

About the survey

Between August and November 2020, nearly 2,000 directors across the globe participated in the Global Network of Director Institutes 2020-2021 Survey, representing 17 director institutes spanning North and South America, Africa-Middle East, Asia-Pacific, Russia, Europe and the United Kingdom. Around 120 New Zealand directors took part, comprising 6% of the total responses.

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