Jun 15 2015

Short-termism on boards: Insights from Canadian directors and executives

Canadian directors agree they have a responsibility to do more to tackle short‐termism—and their boards should do more to address the issue.

Canadian directors believe they have a responsibility to address short‐termism. Many believe there are specific actions they should be taking on their respective boards. Such are the results of a recent survey of the members of the Institute of Corporate Directors (ICD).

In June 2015, Dominic Barton and Mark Wiseman, Global Managing Director of McKinsey and President and CEO of Canada Pension Plan Investment Board (CPPIB) respectively, delivered a well‐received keynote address based on the findings of their HBR article Where Boards Fall Short. The address shared recommendations that boards should take to combat short‐termism. Following the speech, a survey was distributed to gather the group’s perspectives. This was a follow‐up to a 2013 speech that relayed global evidence of the value‐destroying characteristics of market short‐ termism. An earlier survey conducted by McKinsey and CPPIB as part of the Focusing Capital on the Long Term (FCLT.org) initiative had found 63% of executives and directors felt short‐term pressure had increased over the past five years. Respondents also found that boards were the greatest source of short‐term pressure.

Keywords: Governance & Culture