A recent survey of board members of American companies listed on the stock exchange, carried out by Corporate Board Member in partnership with Grant Thornton, revealed some interesting developments in perceptions of the main issues needing to be discussed.
In 2013, respondents said that the most pressing issues for the boards of public companies were long-term strategic planning, acquisitions and mergers, CEO succession, global strategy and digital strategy. In 2019, disruptive technologies and innovation top the list, followed by growth strategy, digital security, CEO succession, and opportunities for acquisitions and mergers.
The latest survey also reveals the view that the main issues that boards should seek external advice about are digital security, disruptive innovations and succession planning. These topics assume great importance given the fact that the CEOs of most listed companies lack experience in the first two areas, hence the need for boards to recruit younger members who do have experience in digital security and digital innovation, artificial intelligence, and connectivity.
As for CEO succession planning, the issue of diversity is considered very important, as is the role of the chairperson in encouraging effective input from board members, creating an inventory of board members’ specific competencies, and deciding which skills should be sought externally.
When it comes to recruiting new board members, the survey found that the factors considered most important are industry experience, expertise in finance, gender diversity, digital/cyber expertise, and experience as a CEO. Although it might be possible to find a candidate possessing all those qualities, the preference for previous experience as a CEO still presents an obstacle for women because most CEO positions in American companies, as in the rest of the world, are occupied by men.
Listed companies have been under considerable pressure from investors, regulators and other stakeholders to improve diversity on their boards. A recent study by the McKinsey consulting firm points out that diversity and inclusion provide competitive advantages, particularly when it comes to a company’s expansion into new markets.
A particularly effective form of pressure has been the recommendations from institutional investors and so-called proxy advisers, which guide the voting of institutional shareholders at companies’ general meetings. Both ISS (Institutional Shareholder Services) and Glass Lewis have recommended voting against the election of chairs and nominating committee members in companies without female representation on their boards, while institutional investors have expressed the expectation that boards should have at least two female members.
In Brazil, the business landscape is still dominated by companies with state or family control, but the issue of gender diversity is gaining prominence as more women are recruited to boards – particularly women who have expertise in the areas of finance and compliance along with previous experience at executive level.
Ieda Gomes is a member of the board of Women in Leadership in Latin America (WILL) in London. The above is a translation of an article published on the WILL website on 21 March 2019.