By Zach Kauraisa
Corporate boards play a critical role in driving strategy, ensuring strong systems of internal financial control, and managing risks across a company.
However, many boards operate with outdated governance structures that fail to address evolving business challenges. One of the biggest culprits? A misalignment between board skills and the company’s operational needs.
This issue is particularly pronounced in organisations that undergo rapid change, face financial distress, or enter new industries where existing board expertise may no longer be relevant.
Without regular board education, restructuring cycles, and shareholder engagement, boards risk becoming passive oversight bodies rather than active strategic drivers.
This article explores the hidden costs of an ill-fitting board, examining how outdated board structures create governance risks, why alignment between board expertise and organisational needs is critical, and how companies can implement strategies to build resilient, high-performing boards that evolve alongside their business challenges.
Case Study: Cbus Super – The Risks of a Static Board Structure
In 2024, Cbus Super (“Cbus”), an Australian pension fund with over $100 billion in assets, was the subject of a Deloitte investigation commissioned by the Australian Prudential Regulation Authority; based on concerns about whether board members met fit and proper requirements, and whether certain expenditures aligned with fiduciary duties.
Cbus is governed by equal employer and employee representation. The board is comprised of 12 non-executive directors, who are nominated by various employer and employee unions and 2 independent directors. Unions mostly employ labour law and industrial relations specialists; and therefore, the majority of board members nominated by the unions possessed such skills – which is unrelated to management of billions in pension capital.
While this governance model was effective in its early days, ensuring all stakeholders are represented, the complexity of financial fund management outgrew the expertise of its board members, leading to regulatory concerns.
The Deloitte investigation concluded that Cbus board members lacked deep financial expertise, despite managing billions in funds, and that independent financial professionals would need to be involved for effective governance in the future.
The investigation also criticised the fact that there was no robust process to reject unqualified board nominees that were presented by the employee and employer associations or unions.
The above case study highlights how static board compositions create governance risks when business complexity outpaces board expertise, and how even large institutions can suffer from ill-fitting boards when heavy reliance is placed on legacy appointment processes.
Board Composition, Recruitment and Monitoring
A first step to ensuring appropriate board composition is the use of a board skills matrix during board recruitment and assessment.
A board skills matrix is a structured framework that maps the capabilities of existing board members against the strategic needs of the business to ensure that the board consistently possesses the skills to meet such needs. Below is an example:
An effective board is not static—it is dynamic, informed, and continuously refreshed to align with the business’s needs.
Companies should use a board skills matrix as a recruitment tool from the outset and continuously monitor it. Boards can remain adaptable through annual training. Additionally, shareholder-led board restructuring should be triggered when persistent financial underperformance, regulatory challenges, or strategic stagnation arise.
Ultimately, a well-composed board is an organisation’s best defence against crisis and its most powerful driver of success. By aligning board strategy with business needs, companies can safeguard governance integrity, enhance resilience, and secure long-term growth.
*Zach Kauraisa is Head of Advisory at Eos Capital
