Boards of directors are facing increased scrutiny and a wider variety of complex challenges, according to a Wednesday report from Boardspan, a board governance software and advisory company.
Particularly challenging issues, such as succession planning, board diversity and crisis management, have become high-profile, high-stakes issues for corporations.
“This past year saw a host of challenges for boards, with activist engagement, unplanned CEO changes and tumultuous capital markets,” Abby Adlerman, CEO of Boardspan, said in a statement.
“Boards need to stay on their toes, more than ever,” she said. “Having objective information like benchmarking lends much needed clarity.”
According to the report, boards appear to be increasingly leaning into their roles as strategic contributors to management by serving as thought partners, validators and constructive challengers. They’re also creating more value for stakeholders in these efforts.
Boards also gave some of their highest marks to standing committees — such as audit; compensation; and nominating and governance — for successfully stepping up to address new challenges such as risk mitigation, say-on-pay and ongoing diversity, equity and inclusion efforts.
The benchmarks also showed that boards are making real gains in diversity in 2023, but they still point to it as a major growth area.
“Boards are becoming very intentional about who sits around the table,” Kaitlin Quistgaard, Boardspan’s senior vice president of client solutions, said in the statement.
“Given rapidly shifting market dynamics and evolving regulatory frameworks, boards are seeking a broader range of skills and life experiences to fulfill oversight responsibilities and think expansively about opportunities and threats on the horizon,” she said.
Despite progress, Fortune 500 boards still aren’t fully representative of the U.S. population, according to a recent report. Although there have been steps in that direction, the slow pace means that U.S. boards might not represent the nation’s population until 2060.
However, board diversity and the presence of a chief diversity officer can improve profitability, according to a recent study. HR professionals can play a key role in this by supporting the organization to adopt a board diversity initiative, invest in diversity programming and participate in disclosure statements.
Disclosure transparency relies on HR to be ready to tell the company’s story to leaders, the board and stakeholders, experts told HR Dive. This requires a focus on people data along gender, race and ethnicity breakdowns. HR can also own the story and create better visibility through bar graphs, pie chairs and other data visualizations. Social media posts about training programs and incentives can help, too, they said.