Governing with Impact - What Strong Boards Must Know About What’s Keeping Their CEO's Awake at Night
In boardrooms across Australia and New Zealand, a critical reflection is underway. The challenges of 2024 haven’t just tested CEO strategies - they've tested their resilience. To govern with true impact in 2025 and beyond, boards must first understand a fundamental question: Do we genuinely know what's keeping our CEO awake at night?
This theme echoed throughout recent discussions at The CEO Institute. CEOs openly expressed concerns about boards drifting into ceremonial roles or becoming increasingly disconnected and dysfunctional. Alarmingly, family-dominated boards, outdated governance models, and chair appointments based on familiarity rather than strategic alignment were highlighted as major concerns. Moreover, boards must acknowledge that their decisions and dynamics profoundly impact CEO morale and effectiveness.
When boards lose their independence or sharpness, they don't just compromise effectiveness - they erode CEO confidence, increasing the risk of strategic misalignment and organisational stagnation. CEOs stressed the necessity of independent, strategic, and responsive board governance as pivotal to their capacity to lead effectively through turbulent times.
Shifting Board Sentiment: A Wake-Up Call from Australia and New Zealand
Data from the AICD’s Director Sentiment Index (2H 2024) underscores this shift. Australian board confidence has plummeted to its lowest since the pandemic's onset, dropping sharply to -33.6. With nearly half of all directors (46%) at that time predicting a recession within 12 months, heightened concerns about economic pressures, the then rising interest rates, and weakening consumer sentiment are placing unprecedented demands on governance.
New Zealand directors share similar anxieties. According to the Institute of Directors NZ Director Sentiment Survey 2024, confidence among Kiwi directors had also waned, driven by concerns over regulatory complexity, geopolitical uncertainties, sustainability pressures, and the ongoing impact of rapid technological change. Notably, 74% of New Zealand directors, at the time of being surveyed, identified cyber threats as their top risk, while 58% expressed significant concerns around talent retention and workforce capabilities. Governance in both nations clearly demands renewed attention.
KPMG's 2025 Board Agenda further reinforces this urgency, highlighting that boards face unprecedented disruption - economic volatility, geopolitical tensions, cybersecurity threats, and transformative shifts driven by AI advancements. Boards must recalibrate strategies to balance efficiency, growth, and resilience, continuously reassessing risk profiles, refining crisis response mechanisms, and rigorously employing scenario planning to anticipate future challenges.
Fast Strategy Demands Agile Boards
Today's CEOs operate in an environment defined by immediacy - addressing all those exact threats; cybersecurity, economic volatility, integrating AI, and responding swiftly to market shifts
When board decisions lag, they hinder rather than help CEOs. Effective governance today requires directors, particularly non-executive directors (NEDs) and chairs, to match the CEO's intellectual agility, strategic clarity, and commercial pragmatism. Boards must offer challenge, perspective, speed, and a keen awareness of CEO realities. Developing robust decision-making frameworks and clearly defined governance protocols can significantly enhance boards' responsiveness and effectiveness.
Understanding the CEO's Reality: A Governance Imperative
Too many boards focus narrowly on financial outputs and compliance metrics without genuinely understanding the context in which these results are produced. If boards aren't routinely asking:
- What pressures are influencing our CEO’s decisions right now?
- Where is our CEO showing signs of strain, and how are we addressing this?
- Does our governance structure match the pace of our industry?
- Are we introducing fresh, relevant strategic perspectives, or relying on past expertise?
…then they risk falling short in governance effectiveness. Strong boards must actively engage with these questions, ensuring they provide meaningful support rather than superficial oversight.
Boards Set Conditions; CEOs Execute Strategy
While it's the CEO's role to implement strategy, it’s the board’s responsibility to ensure this strategy is appropriate and that the conditions for successful execution exist. This requires:
- Inquiry without undermining confidence.
- Support without hindering accountability.
- Governance without micromanagement.
According to the AICD, only 23% of directors feel the federal government understands business needs - yet similar disconnects manifest within corporate governance structures themselves. Exceptional boards regularly reflect internally, “Are we part of the problem or part of the solution?”. Continuous internal reflection, coupled with external benchmarking, enables boards to remain adaptive and impactful.
Strategically Selecting Board Composition
Gone are the days when directors are appointed based solely on personal connections or historical loyalty. Both KPMG and the Institute of Directors NZ identify board composition, diversity, and renewal as essential priorities. Boards must proactively build teams with diverse skills, backgrounds, and experiences relevant to future strategic needs.
Diverse, independent boards drive robust debate, transparency, and strategic clarity. High-calibre chairs foster trust, ensuring CEOs receive strategic insight, not mere oversight. When governance aligns closely with strategic intent, CEOs are empowered rather than constrained. Boards must regularly assess their composition, adjusting as necessary to match evolving strategic needs and enhance decision-making quality.
The CEO Institute’s Perspective: A Call to Action
At The CEO Institute, we believe governance must evolve beyond mere compliance or traditional oversight. The new era requires boards that are proactive, strategically responsive, and deeply attuned to their CEO's operational realities. Our message to boards is clear: move beyond superficial engagement and actively understand the nuanced pressures facing your CEOs. Prioritise strategic alignment, encourage genuine inquiry, and embrace governance agility as non-negotiables for sustainable success.
Final Thought
Today’s CEOs carry more than businesses - they shoulder stakeholder expectations, organisational culture, and critical strategic decisions. The strongest boards acknowledge this burden and respond with insightful governance, genuine empathy, and decisive agility.
When boards get this right, they don’t merely oversee growth - they actively enable it, ensuring sustained organisational success and resilience.
