Strategy, growth and performance
The 3 biggest challenges Belgian boards of directors are currently facing
Deloitte’s first Boardroom survey highlights the biggest challenges boards need to tackle. In Belgium, greater focus on organization structure and governance is expected.
Diegem, 06 July 2016 Deloitte presented the results of the first edition of the EMEA 360 Boardroom survey: ‘Agenda priorities across the region’, which highlights the views of 271 non-executive directors across 20 countries in the EMEA region. This research provides a unique perspective on the issues boards of directors are currently facing, with regard to various aspects of corporate governance. Strategy, growth and performance are the top 3 issues impacting boards in the 12 past months. In Belgium, mergers and acquisitions have been a key issue in the past 12 months but are not expected to be of such importance in the future. The respondents expect greater focus on organisation structure and governance.
Innovation gains in importance.
In Belgium where there is a well-established start-up and entrepreneurial culture, innovation features highly on boardroom agendas with a focus on process, business model and product innovation. As a respondent from Belgium stated: “I strongly believe that innovation is key for the future success of European companies. I is our biggest challenge. Is Europe already in innovation mode? Europe has to fuel innovation.” A large majority of Belgian respondents further indicated that innovation and idea generation is generally encouraged within the company and that a good balance is struck between the innovation strategy and the level of risk the board is willing to take. Finally, the study shows that product innovation was the area receiving the most attention. Also digital innovation scored highly but it has come increased exposure to cyber risks.
Cyber security: a far more important issue
Cyber security has become a far more important issue for non-executive directors, ranking it high upon their agenda for the next 12 to 24 months. The emergence of cyber security as a significant issue may be due partly to its visibility in the media and the threat to reputational risk of companies that become victim of a successful cyber-attack. However and despite its importance, only 25 per cent of Belgian respondents stated that their organisation currently had an action plan in place to deal with cyber security. In the eyes of Belgian respondents, an executive management committee has responsibility for the cyber risk action plan.
Slightly more optimistic outlook for growth and competitiveness
Non-executive Belgian directors appear to be adopting a slightly more optimistic outlook for growth and competitiveness in the short to medium term compared to the recent past. Previous concerns about cost reduction and capital management, in response to adverse economic conditions, have diminished.
Need for effective and flexible strategy
Disruptive changes in business and commerce are continuing at a rapid pace. Companies need to pursue strategies that can adapt to transformations in their markets while remaining focused on their long-term objectives for creating shareholder value. As Rik Neckerbroeck, Partner Audit stated: “An effective and flexible strategy is never more important than when an organisation is pushing for growth and to remain ahead of their competitors. This continues to be a top priority for the respondents. Active consideration of risk is a crucial element in the development of an effective and flexible strategy, with almost 85 per cent of Belgian respondents indicating they were satisfied that risk management is well integrated into strategic decision-making at board level.” To most respondents, boards have overall responsibility for strategy and risk within the governance framework, and provide the leadership for this crucial aspect of their company’s affairs.
Strong and effective leadership at board level a major concern
Industry knowledge, strategic direction of the company and international development aspirations are the main factors taken into account when determining the future skill requirements of the Board. In terms of diversity, 75 per cent of Belgian respondents indicated that internationalisation is the main criterion followed by gender and professional qualification.
Board evaluations on the rise…
…as 42 per cent of Belgian respondents have indicated that they have always performed this type of evaluations, generally conducted internally and mainly focus on strategy and leadership. Rather surprisingly, the results of the board evaluation is not always used to affect future change, as indicated by 63 per cent of the Belgian respondents.