The lack of digital skills at board level is hurting organisationsJust 5% of board members in non-tech organisations have digital competencies, according to the latest research from executive search firm, Amrop
A UK government report published in 2016 found that the digital skills gap is costing the UK economy £63 billion a year in lost GDP. Yet, although studies like this tend to focus on the lack of computer science teachers and the struggle to recruit graduates with the necessary skills, a new report from Amrop, a global executive search firm, reveals that digital capabilities are also in short supply at the very top of organisations.
The latest Digitization on Boards report shows that just 5% of board members in non-tech organisations have digital competencies, and that the figure has barely moved in the last two years. How is this gap hindering organisations, and what can companies do to address it?
The importance of digital skills on boards
A board needs to be equipped to ask the right questions, find the answers, and implement solutions in the right place at the right time. Increasingly, digital competencies are a central part of this, impacting almost all aspects of an organisation. From cyber security threats to customer data management to process optimisation, digitisation is a thread that runs through many of an organisation’s most pressing concerns.
Although we may expect to see companies enhancing their digital skills at board level to match the current landscape, instead there’s little progress. In fact, the digital competency gap is widening between the tech sector and other sectors. Amrop’s previous study, conducted in 2015, found that the level of digital competencies on tech sector boards was seven times higher than that of other sectors. The latest study shows that the gap between tech and non-tech companies has now increased to nearly nine times.
Interviews conducted alongside the research help us to understand why this is a concern. They reveal that this lack of skills is making it difficult for organisations to efficiently execute large-scale infrastructure programs and deal effectively with digital threats. The board member of a leading bank, for example, said that his organisation had suffered multiple infrastructure attacks.
Another board member admitted that his company focuses on more ‘traditional’ technological aspects such as disaster recovery and customer care, rather than investing in innovation and digital transformation. A lack of digital confidence at board level slows progress, and leaves companies vulnerable to fast-evolving threats.
Digital skills and diversity
There are also some interesting connections between the digital competencies of boards and board diversity. Recent research has highlighted the woeful underrepresentation of women in the tech world, with one study finding that the number of women in senior IT roles is just 9%. Companies that don’t have a diverse leadership team also tend to lack diversity of thought, innovation and, ultimately, revenue.
Amrop’s study finds a correlation between the tech competencies of boards and the level of female representation. In short, boards with more women also have stronger digital capabilities.
Encouragingly, women now hold 35% of all board positions with a digital profile, and in France, Italy, Sweden, Norway and the Netherlands the proportion is 50%. The UK is lagging behind, however; it was one of the few countries that failed to name any female digital board members in 2016.
A 2013 EU study on digitisation and diversity showed that bringing more women into digital jobs could create a €9 billion annual GDP boost to the EU. The Commission’s recommendations included increasing the visibility of women in the digital arena, with representation on executive boards one of the measures. The board needs to be able to act as a digital sparring partner to the executive management team and the teams that serve them, and to do this effectively it must be diverse in terms of gender, age and experience. The Amrop study shows that new digital directors tend to be younger and often represent the first women on the board, bringing valuable experience from different organisations.
Building skills on boards
Boards that are diverse and that have digital capabilities are likely to be more effective in the modern operating environment, and diversity and digital capability tend to go hand-in-hand. But the Amrop study shows that there’s still a long way to go, with boards across the world still lacking key digital competencies.
There are several things that boards can do. They can learn lessons from listed tech companies, who have high digital representation at 43%, and can provide a wealth of insights into digitisation. They can assign a dedicated Strategy Day to connect the Board and Executive Management on the digital/technical theme.
They can also ensure that they’re open to new board members with different backgrounds who can bring a diverse range of skills and experience. Since many new digital directors may have atypical perspectives, companies must make sure that they have strong onboarding processes in place, to capture and maximise the impact of their new board members.
Companies that don’t take measures now may find that a lack of digital skills at the top of the organisation hampers their progress. It’s not just at the graduate level that tech skills need to be a top priority.
You can download the full report on the Amrop website
Sourced by Mikael Norr, leader, Amrop Global Digital Practice