By Melissa J. Anderson

According to McKinsey Quarterly’s latest survey on governance, most Boards believe they could be doing better: “Just one-quarter characterize their boards’ overall performance as excellent or very good…”

Board directors acknowledged that in light of the demands today’s companies are facing, such as the economic crisis, an increasingly global footprint, and resource scarcity, they simply aren’t meeting the challenge as effectively as they would like.

While not much has changed since the survey was last performed three years ago, directors are reporting an increased interest in 2 areas in which they haven’t traditionally spent much time: talent management and diversity. But is interest enough? The survey found that the most common complaint directors had about their own performance was a lack of industry experience, as well as a lack of time.

Talent Management

According to the 2008 survey, directors said they hoped to spend more time on talent management and strategy. But, according to the research (performed in April of this year) directors are spending about the same amount of time on these areas as they were before.

Nevertheless, directors say they still want to spend more time thinking about talent management than every before, with a similar number of directors looking to focus on talent management as on strategy. The report says:

“…directors say their boards are now spending roughly the same amount of time on strategy (23 percent of board time, versus 24 percent in 2008) and talent (10 percent, versus 11 percent) that they were three years ago. With the lack of progress, it’s not surprising that two out of every three directors still say they want to focus more on these two areas…”

Additionally, the report revealed, many directors felt their boards were passive when it comes to strategy, which may contribute to feelings that boards weren’t performing optimally.

Desire for Longer Term Information

A common complaint from senior management is that directors and shareholders take a too-short term view of company profitability and success. Interestingly, the directors surveyed in the McKinsey study said the opposite.

According to the results, half of the respondents said their information was too short-term to be useful. Additionally, the survey says:

“Directors who describe their boards’ overall performance as excellent or very good are happier about the time frame of the information they receive—though a third of those respondents still say it is too short-term.”

It’s All About Time and Diversity

Directors say the lack of time they are spending on company matters is harmful – spending more time with the company is the number one solution directors came up with for improving their board’s performance. The report explains, “Directors say that on the whole, they’re putting in 28 days’ worth of work and should ideally spend 38 days to discharge their responsibilities effectively; chairs put in 36 days and should ideally spend 47 days…”

But is this possible? Board directors are already at a loss for time and they know it. McKinsey suggests that rather than simply increasing hours spent, that boards better manage their time, allotting more hours to high impact topics like long term trends.

The second most cited area for improvement, according to directors, was experiential diversity. Almost half of the survey respondents said that “a more appropriate mix of skills/backgrounds among board members” would improve board performance, and this rings true to what directors said about lacking a depth of industry knowledge.

A new diversity of board directors would also help improve the time-crunch so many directors cited – but they may not like the reason why. One reason directors say they are time-poor may be that so many serve on multiple boards. A rush of diversity may help alleviate some of this stress by eliminating the need for directors to hold so many board directorships. Mandatory term limits could help usher in some fresh blood as well.

While these solutions could mean some directors would lose their roles, given directors’ view that they would like to focus on the long term interests of their company, wouldn’t they be amenable to these kinds of changes?