Worldwide Organization of Executive Search Firms in partnership with Board Network – The Danish Professional Directors Association has conducted a global survey among corporate board chairs and board members to gain their view on the most significant trends, changes and challenges.
Written by Jakob Stengel , LL.M., Founder & Chairman, Board Network
In this annual survey, we dig into what separates leaders from laggards among corporate boards. We look at:
- How the ethical landscape is changing.
- How international boards look at the near future.
- Which megatrends that set the scene for boards across the globe.
- Which tools and habits the best performing Chairs take advantage of.
Across countries, industries and company sizes, some common trends and key take-aways were clearly apparent:
1. Boards continue to spend more time on doing their job and carrying out their responsibilities, however our respondents express that they would like to spend even more time on a variety of tasks – despite the fact that a majority feels underpaid to at least some extent.
2. Disruptive / exponential technologies is still a megatrend that has the attention of almost all board members. Other emerging trends in the following spots are geopolitical instability, climate change, increasing nationalism, and trade barriers.
3. We see a real change in the ethical standards expected by boards from the outside world – a paradigm shift that is undoubtedly linked to several recent cases of misconduct in the financial sector, and in leading tech companies that have failed to protect the interest of the u
4. Respondents continue to express an optimistic and confident view on the financial performance in the future, with 57% expecting their company’s financial performance to improve in the coming 2 years compared to the past 2 years, and 51% expecting to outperform the competition in the same period.
5. The average board in our survey has 6,7 people on board, of which 1,7 are women – corresponding to 26,5%. The improvement in gender diversity is primarily driven by larger companies with more than USD 1B in annual turnover, of which only 9% have 0 women on their board – compared to 27% overall.
6. A staggering 83% of women support gender diversity quota-initiatives, while this is only true for 40% of the men. However, the overall support to gender-diversity supporting initiatives has seen a remarkable change from only 41% in 2018 (73% of women, 31% of men), to a total of 50% today.
7. 58% say that the overall composition seems right to them, while 29% would like to change how the board is composed from a competence point of view.
8. The competencies mostly lacking on the current boards, in the board members’ personal view, are IT / digitalization, innovation, and customer orientation.
9. Respondents’ satisfaction with their fellow board members and executive management teams is not too impressive: 65% think that one or more board members should be replaced at the first given opportunity. Somewhat comforting for the executive management group must be that only 51% would like to replace someone from executive management.
10. A small majority of board members are independent of the company and its largest shareholder(s), but this we expect to change in the future. Investors want more independents to ensure greater transparency and arms-length decision-making processes.
11. The strategic areas which the boards feel the least comfortable around are talent management / HR, Innovation / R&D, and brand position / customer understanding.
12. Everywhere, we see a very high degree of satisfaction with the working climate on the Board.
13. 51% undergo regular board evaluations, while the vast majority (70%) of boards still rely primarily on their own personal network to identify new board members.
14. 41% have taken an executive education Board program of more than 4 days’ duration, underlining the growing professionalization of boards.
So, how is the what separates from the chaff. We will give you the answers in the next blogpost that we have created.
Creating impact In And From The boardroom
The past 10 years have seen a paradigm shift globally in how corporate boards are working. From a traditional governance / risk / compliance-focused supervisory board that would leave everything related to how the business was run to daily management – to today’s professional, ambitious, engaging, value-creation focused, strategic board with a clear self-awareness of its leadership role and impact potential.
These megatrends obviously all pose only further challenges for companies hoping to stay ahead of their competitors. So how is the wheat separated from the chaff among corporate boards?
1. Proactive: The board needs to assume a truly strategic and proactive role rather than a reactive, Boards are the ones in charge and the ones the world is increasingly looking at to praise in good times – and looking at to hold accountable when the company is performing poorly or is ethically in dire straits.
2. Transparency: Everything done and decided upon by the board needs to be able to undergo questioning and to be cross-examined by any type of stakeholder; be it investors, public authorities, employees, the media or the surrounding society. Imposters and frauds simply do not have any chance of survival in the future. The level of transparency is just too high.
3. Constant change: Viable attitude for boards in the future is one of curiosity, mental agility and ever-adapting to change. The only constant is change. Narrowmindedness and past successes won’t cut it alone. Thus, all board members will from now on be weighed against a scale of not only competencies, but equally also character and chemistry (ie. with the rest of the board).
4. Enhance diversity: Boards need to enhance diversity. Vigilance, innovation, ad¬aptability, risk management, agility and transfor¬mations are all areas that are better supported by heterogeneity in competencies and mindsets rather than by homogeneity, hence also better supported by diversity in nationality, age, gender etc.
5. Appointed by the board: Boards must constantly bear in mind why they were originally appointed to the board. It was originally all about shareholders believing they could create an impact and add value. Knowing their company, the industry, the business model. Then, they can be creating that impact and adding that value – to the board, the company and the shareholders.
The good news is that when true Board Leadership is exercised, the potential impact created is not only confined in the boardroom, but extends much further – to the entire company, its shareholders and the surrounding society.
Blog post written by Jakob Stengel , LL.M., Founder & Chairman, Board Network – The Danish Professional Directors Association, Managing Partner, Case Rose / InterSearch, Global Head of Board Practice, InterSearch and Co-founder & Partner, Board Mentors.
For further insights and findings, please and here to access the full survey report.