New Zealand Law Society - Board directors feel constrained by compliance issues, says research

Board directors feel constrained by compliance issues, says research

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Compliance-related tasks often take over board meetings, dominating both time and talk, and ensuring that more time is spent on those issues than on strategic direction, research from the University of Auckland Business School says.

In an article entitled "Board Directors and the Swamp of Compliance", Emeritus Professor Kerr Inkson reports on interviews with 60 directors. This included 35 CEOs and 25 board chairs from the same companies, across a range of industries and firm ownership types, including commercial companies, public services and not-for-profits.

Brigid Carroll of the University of Auckland and Coral Ingley of AUT joined Professor Inkson in the original research.

While involvement in strategy and leadership represented an ideal for directors, concerns about compliance and control - the statutory requirements of the board - made the ideal almost impossible to attain.

The article says this indicated a conflict between the directors’ compliance and strategy mind-sets. To the researchers’ surprise this contradiction didn’t just apply to some types of board but to virtually all of them.

"Many boards members have huge energy, talent, and networks but their assets are wasted by confining them to important but mundane compliance tasks," says Professor Inkson.

Most participants could clearly identify the problem but did not know the solution.

"Directors need to reflect seriously on what they honour and lead their organisation by reframing the strategy/leadership mind-set as a complement to their compliance mind-set," he says. "This will enable boards to make the strategic and leadership contributions that create real stakeholder value."