Boardroom outlook 2023
Boardroom outlook 2023
Catharina Mannerfelt, partner at Alumni, has extensive experience supporting boards and owners in board composition, board effectiveness and board development. Here she reflects on the outlook of successful boardroom work for the coming year.
The job of a board chairman or director is becoming increasingly demanding and time-consuming. Board responsibilities are growing: not only do compliance and governance issues take up far more time these days, with boards under unprecedented scrutiny, but performance expectations have risen too, which means boards have to be more closely involved than ever before in developing and monitoring strategy. These shifts have considerable implications for the structure and composition of the board, as well as for the skills, roles, and responsibilities of individual board members and for the way they interact with each other and the management team. Complexities which need to be highlighted to avoid the regress to a time with less professionalized boardroom work.
Implications for board succession
When looking to identify new potential for the boardroom, traditionally nominating committees have cast their eyes towards candidates at the CXO level. However, the increasing amount of time needed to fulfil the board responsibilities makes it increasingly difficult for a CEO to take on a board role. We have for many years advised clients to think more broadly when considering board appointments – and viewing people at the next level down from the executive team in outside organisations as potential candidates. Such individuals may have more flexible diaries than the typical CXO, they gain valuable development experience, and they bring all-important diversity of skills and experience. As part of this we always support initiatives that aim to help build a larger talent pool of board ready candidates.
“The increasing demands on board directors call for owners, nominations committees and chairs to ensure that their recruitment process is as professional, thorough, and rigorous as it would be for a new CEO. ”
Even though board succession planning often scores the lowest in the board reviews we have conducted over the past twenty years, we see a steady improvement and a more long-term approach. Successful owners will look at succession and a board director pipeline four years ahead in time, something we did not see ten years ago.
Board dynamics
Boardrooms are often comprised of big personalities, fierce intellects and high stakes which can make for intense boardroom dynamics. The composition of boards is seen as increasingly critical to their effectiveness, but recruiting and retaining a balanced board of directors, with the right mix of industry and financial expertise, objectivity, diversity of perspectives and business backgrounds, continues to be a key challenge for boards. A range of complementary, yet relevant, skills help the board in its dual role of ‘check and balance’ and contributor to strategy, because it can challenge and support the executives in an informed way. It's important for the board to strike the right balance between collaboration and challenge.
Board director recruitment is something which is becoming increasingly critical to get right. Our offering for instance within this field has developed very quickly in recent years, with clients being much more specific in their demands, requiring shorter time to placement and needing more complex candidate profiles. Owners and nomination committees are more inclined to look beyond their own network and partner with an external firm for help in identifying future directors.
Our view is that you should not get stuck looking for digital experts to join your board when wanting to ready your business for digital opportunities and disruption. Instead look for expert generalists that understand a big variety of topics and themes, and who know how to apply that kind of knowledge and consolidate this with corporate strategy. Having directors with current operative experience is always valuable to add another perspective. Currently one competency that is in high demand is sustainability and here we advocate that a board director should not necessarily have to be the expert in the field but have experience of leadership from an organisation where sustainability is business critical.
“At Alumni we endorse the trend of a greater use of board committees that can delve into issues of particular relevance for the company, with ‘expert’ directors acting as advisors to the executive team.”
Securing successful boardroom work
A seat on the board is not a passive perk, but an active responsibility. Directors who do their homework and come prepared to engage the CEO in robust discussion add value at every meeting. CEOs want access to the diversity of opinion directors can bring and need to embrace the open conflict and debate it inevitably ignites. Directors are there to create the spark.
Enlightened boards don’t leave anything to chance and regularly monitor their effectiveness, at both an individual and collective level. As well as allowing the chair to identify potential skills gaps a board review can also improve interaction and communication among directors. However, the true value of the review depends on whether the board acts upon its findings. At Alumni we always offer and advise on actions to take as part of the outcome of a review. Currently we are working on a new service to provide a more flexible solution to support boards in reviewing their work on a regular.
In high demand
Whilst demands on boardroom work have increased the past years, at Alumni we see that the compensation levels are not following the same trend, thus making the case for a career in the corporate boardroom less convincing. In this context we see that professional chairs and board directors become increasingly valuable. Our ambition is to continue building on the boardroom insights we have built over the past thirty years, supporting existing directors and new in maintaining a high level of professionalism in this very key role in building strong successful businesses. It would be a shame to see the progress made so far erode and a board directorship becoming only a career option for those individuals who are financially independent.
Alumni
Our global board practice helps some of the world’s most forward-thinking companies attract, assess, and develop their board. The practice has more than 20 years’ experience in delivering global board services to organisations both large and small across a wide range of sectors. Our clients are found amongst the largest institutional owners as well as PE/VC firms and private ownership spheres.
Using a tailored approach, Alumni will work with you to identify the strengths and weaknesses in your board composition using both quantitative and qualitative research. We provide high quality feedback on current board effectiveness and its ability to meet both current and future strategic goals. Get in touch for a confidential discussion.
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