Focusing on organizational resilience and accountability for performance are governance best practices that can enable directors and management teams to work more effectively.
The release of the Global Board Governance Survey, a collaboration between Protiviti, BoardProspects, and Broadridge Financial Solutions, Inc., unveils a notable misalignment between board directors and C-suite leaders regarding crucial issues related to business challenges and board performance oversight.
Surveying over 1,000 board members and C-suite executives worldwide across diverse industries, the study highlights a shared goal and purpose between boards and C-suite leadership. However, disparities arise concerning the strategies to achieve these objectives. Given the prevalent uncertainties such as the macroeconomic landscape, the ongoing global talent war, geopolitical instabilities, cyber threats, and the emergence of generative AI, it becomes imperative for directors and management teams to collaboratively address these gaps.
“While the board and C-suite each have their part to play in the effective management of an organization, they must be on the same page when it comes to navigating the most complex and daunting challenges their companies will face,” said Joe Tarantino, president, and CEO of Protiviti. “In addition to these challenges, the survey also points a way forward for boards and the C-suite to work more effectively by implementing corporate governance best practices, fostering organizational resilience, collectively addressing growth obstacles, and holding each other accountable for continued strong performance.”
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Areas of Divergence Between the Board and C-Suite:
Despite shared priorities such as strategic planning and execution, discrepancies surface concerning the board’s efficacy in fulfilling its obligations. While both groups acknowledge the valuable input of board members in corporate strategy and major policy decisions, nuances emerge in their perceptions of the board’s performance.
While 92% of board respondents commend themselves for prioritizing the company’s interests over personal interests, only 73% of C-suite respondents share this sentiment.
Merely 58% of board directors believe that underperforming board members are constructively addressed, a sentiment echoed by an even lower percentage (36%) of C-suite executives.
“Board members and C-suite executives are working toward the same goals, but in some cases, the data shows they are taking different routes,” said Mark Rogers, Founder and CEO of BoardProspects. “Leadership teams and their partners must work together, otherwise it will be difficult to coordinate and execute nimble and competitive responses to changing trends, policies, and other market threats.”
On board and C-suite working dynamics and participation, 89% of board members give themselves high ratings on coming prepared to each meeting, but only 70% of C-suite respondents said the same. Ninety-five percent of board members rated themselves highly on being constructively engaged during meetings and asking probing questions, while only 80% of C-suite executives scored their boards at this level.
When it comes to addressing specific business risks or other business needs, there is misalignment between the board and C-suite on which priorities are not receiving adequate time and attention from the board, including:
- Corporate culture
- 28% of C-suite respondents believe it is not receiving adequate attention
- 19% of board respondents believe it is not receiving adequate attention
- Environmental, social and governance (ESG)
- 20% of C-suite respondents
- 12% of board respondents
- Hiring and talent management
- 21% of C-suite respondents
- 12% of board respondents
Addressing Business Threats
While board members and C-suite executives largely agree on the top headwinds facing organizations, there is also a significant perceived confidence gap in the board’s ability to address them. Of the 15 organizational threats evaluated, in only three instances more than half of respondents believed their board was “extremely” or “very” prepared to address them. These include:
- 58%: Impact of compliance/regulatory requirements, including data privacy
- 58%: Access to capital/liquidity
- 55%: Corporate culture (resistance to change or inability to adapt)
Overall, respondents believe their boards are ill-equipped to manage the remaining 12 risks, with the four lowest confidence scores being:
- 29%: Political uncertainty
- 29%: Rapid change from disruptive innovation
- 27%: Geopolitical tensions and potential conflicts
- 27%: New and emerging technologies (AI, automation, IoT, metaverse)
How Boards Can Take Action
“Enhancing the dialogue between the C-suite and board members is critical as companies strive to keep pace with technology and the evolving marketplace and this study highlights both the strengths (strategic planning, execution rates, and risk management) and areas of greater opportunity (digital transformation, new technologies and cybersecurity),” said Michael Tae, Co-President of Broadridge’s Investor Communication Solutions. “Good corporate governance requires an engaged and active approach, to improve both board and C-suite performance and foster growth prospects.”
The results of the survey reveal several key strategies to improve board governance and performance. Actions that boards and their management teams can take include:
- Sharpening focus on crisis management, cybersecurity issues, and organizational resilience.
- Identifying methods of mutual accountability to improve director engagement, assess board performance, and manage underperforming directors.
- Working together to address obstacles to organizational growth.
Protiviti, Broadridge, and BoardProspects conducted the Global Board Governance Survey in the fourth quarter of 2023. The companies polled more than 1,000 (n=1,006) board members and C-suite executives. For several questions, the responses of directors who serve on multiple boards reflect the largest company for which the director serves on the board.
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