Only 17 pc of boards play active role in shaping company strategy: ISB survey

New Delhi, Jan 5 (PTI) Only 17 per cent of boards play an active role in shaping company strategy, said a survey by the Indian School of Business (ISB).

According to the survey, 83 per cent of the boards remain passive, playing no active role in the company's management.

It also said that 36 per cent of directors surveyed admitted that their boards provide limited or no input beyond reviewing management's plans.

The findings of ISB's Corporate Governance Report 2025 – The Board's Looking Glass - reveal that while Indian boards demonstrate structural soundness and compliance maturity, the majority lack the strategic foresight and behavioural readiness needed for future leadership.

The report, authored by Sanjay Kallapur, Professor, ISB, Nirmalya Kumar, Visiting Professor, ISB, and Harish Raichandani, adjunct faculty, ISB, is based on a comprehensive survey of over 200 directors from BSE 500 companies.

It assesses governance maturity across three dimensions — guidance and oversight, board functioning, and leadership — and examines the effectiveness of key committees, including audit, risk management, and nomination and remuneration.

"Although 98 per cent of directors see the boards as being compliant, which is commendable progress compared to yesteryears, there is a widening gap between guidance and oversight on the one hand, and strategic influence on the other.

"Effective oversight requires directors to go beyond compliance, anticipate risks, and guide management with foresight and conviction," said Sanjay Kallapur, Professor of Accounting at ISB.

The study also highlighted that only 27 per cent of directors seek information from independent sources, creating an "echo chamber" that can stifle dissent.

"Indian boards are diligent in process and participation, but many fall short in translating these into meaningful strategic dialogue. Effective board functioning requires more than attendance and agenda compliance, it demands independent thinking, constructive challenge, and engagement beyond formal meetings," said Nirmalya Kumar, Visiting Professor of Strategy at ISB.

The report has also pointed to a crisis in candour within board-management relationships.

Satisfaction with candour stands at only 38 per cent, reflecting a reluctance to provide CEOs with unfavourable feedback.

Over one in five (22 per cent) boards remain disengaged from whistleblower and vigilance mechanisms, treating these as compliance exercises rather than tools of trust and transparency, it said.

Harish Raichandani, Adjunct Faculty and Researcher, ISB, said: "Independent Directors on the Indian corporate boards need to improve their ‘work ethic’, appetite to keep abreast, and find courage to speak up." He cited the study's findings that at least one in three directors do not adequately prepare for their meetings, that two in five directors’ alignment with the Company's mission appears weak, and that only one in six directors truly brings an independent external perspective to the deliberations in the boardroom.

The Indian School of Business (ISB) is India's highest-ranked business school and features in the top tier of several global rankings. PTI NKD CS DRR DRR