The recently released PwC report “What’s Important for Boards in 2024” sought to delineate the topics that are shaping board agendas as we move into the second quarter of the year. According to its findings, directors will be challenged to, among other things, prepare for the unexpected, engage with stakeholders and embrace technology that they have heretofore not been exposed to.
But, of course, boards will be hard-pressed to address the many challenges facing them if they are not run effectively, which is why boards are prioritizing adaptation to evolving strategic challenges and modernization of long-standing governance practices. Part of modernizing the current board is engaging in a board assessment process, PwC’s 2023 Annual Corporate Directors Survey found that even boards that are engaging in the process are not exactly using it to great effect, with 39% of the survey’s over 600 respondents saying that their boards have not made any changes based on the findings of their most recent board assessment. To get the best results from a board assessment going forward, boards will need to commit to candid discussions on board refreshment and director performance in the assessment’s wake.
The report shows that boards are confident in their ability to be ready for unexpected events, with 96% of directors saying that they believe their board can guide the company through a crisis. While confidence is valuable, another result shows that the bravado may not be based on actual planning, with 48% of respondents stating that their boards have not created a formal crisis management escalation plan. Boards should be proactive in creating such a plan, while also actively engaging management on the company’s move-forward strategy in the case of a crisis.
While most of us have heard of the saying “Familiarity breeds contempt,” it is likely that most of us have not heard of “Lack of familiarity breeds lack of confidence,” since it does not exist in an official fashion. But that was exactly the message that was being sent in PwC’s Board Effectiveness: A Survey of the C-Suite, when just 29% of the 600 responding executives rated the board’s performance as “excellent or good” and just 21% believed that directors spent enough time fulfilling their duties. Going forward, boards will need to step up the time they spend engaging with management so there are no misunderstandings about the board’s role and performance.
Speaking of the board’s duties, part of that mandate going forward will be familiarizing itself with emerging technology, with major attention being paid to AI. Sixty-eight percent of the nearly 5,000 global CEOs who responded to PwC’s 27th Annual Global CEO Survey said that generative AI will significantly alter the way their companies create, deliver and capture value over the next three years. To provide oversight on this emerging area, boards and directors will have to step up their knowledge on AI’s advantages, disadvantages and ethical use, leveraging both internal and external experts to widen the knowledge base.
One of the stakeholders of a company that is most interested in developments around AI is the talent base since a staggering amount of jobs could be affected or even made unnecessary by developments in the space. That’s why the technology was a major talking point in “Time to Rethink Talent in the Boardroom,” a recent report by Deloitte Insights. Of the nearly 500 director respondents to the survey, 46% said that technological developments, including AI, will have an impact on their organization’s workforce.
Despite the potential impacts of AI on the workforce, planning for the technology is still in the “getting under way” stages, with just 2% of responding directors saying their companies have introduced a long-term strategy for AI and 58% saying their organizations are just starting down the road of figuring out how AI will impact the workforce.
Aside from the effects of AI, there are many other issues that are vexing boards when it comes to talent. Forty-two percent of directors say that aligning workforce-related investments with strategic priorities is one of their board’s top priorities, while 40% say that they are focusing on building a resilient talent pipeline. Interestingly, in a time of nonstop technological developments, just 30% of directors list retraining and upskilling of talent as top priority for their boards.
While talent is a topic that is going to challenge boards going forward, the old question remains: How do you fit discussions on talent into an already crowded board agenda? According to the survey, it is a query that boards don’t exactly have mastered. Yes, 50% of the nearly 500 respondents to Deloitte’s Global Boardroom Program talent survey say workforce-related matters are discussed “quarterly or more often,” but 27% of respondents state that their boards talk about talent issues once per year or less, which seems to translate to not at all.
Clearly, a company’s talent pool is one of its most valuable assets. When seeking to attract and retain the best people, private company boards will have to make discussions of what will make them happy a priority, crowded agenda or not.