March 18, 2024
6 Trends for Board Directors Shaping 2024
By
Spencer Stuart's North American Board Practice
Spencer Stuart’s North American Board Practice recently convened a series of breakfast discussions with board directors about the challenges facing boards today, the changes we’re seeing in the boardroom, and how boards can prepare for the 2024 proxy season.
The conversations at our events — in Chicago, New York, Austin and Washington, D.C. — highlighted a number of top-of-mind issues for directors. Below we look at a few of those trends, and key questions for boards as they consider the issues.
1. Board composition is a balancing act
Board turnover remains consistently low — 53% of boards added at least one new director in 2023. The emphasis on board succession is on finding the right talent to effectively oversee the company and best position it for the future. While specialist skill sets may be valuable, boards are dealing with multiple priorities and are primarily focused on adding individuals with broad and diverse skills and experiences relevant to the company's challenges and opportunities.
Questions for consideration:
- Is board refreshment and succession planning a primary agenda item?
- Are you investing in assessing director performance? How are you addressing underperforming directors?
- Do you have a strong understanding of the skills and attributes on your board today, and what you need for the future?
2. Diversity remains a board priority
Two-thirds of directors joining S&P 500 boards last year were diverse1, 76% higher than 10 years ago. Boards today generally have better processes and procedures in place to expand their reach and pipeline of talent. More are considering many facets of diversity — including race, ethnicity, gender, skills and experiences — on their boards to enhance performance and effectiveness. At the end of the day, stakeholders want to know boards engaged in a thoughtful and thorough process for how they are structured.
Questions for consideration:
- Is diversity built into your board refreshment strategy?
- Does your board have a culture that embraces diverse perspectives?
1Diverse is defined by Nasdaq as directors who self-identify as female and/or underrepresented minorities (Black or African American, Hispanic or Latinx, Asian, Native American or Alaska Native, Native Hawaiian or Pacific Islander, or two or more races or ethnicities), and/or LGBTQ+.
3. Technology is a board imperative
As technology evolves rapidly — from the rise of AI to the constant threats to cybersecurity — so does the board’s priorities for overseeing the latest trends and their impact on companies. We are seeing heightened interest in directors with particular technology skills — including cyber, digital and AI experiences — but boards continue to prioritize directors who can combine that expertise with a broad understanding of the business and what drives it.
Questions for consideration:
- How are you assessing technology-related risks within the company’s business strategy?
- Have cybersecurity and AI been discussed at the board level?
- Are you interacting enough with your company’s top technology executives?
- Are adding technology, AI and cybersecurity expertise part of your board refreshment plans?
- Are your external advisors helping you stay informed?
4. Boards increasingly contend with workforce and people-related issues
Talent issues are becoming a more common board-level issue. Boards increasingly are doing additional in-depth assessments to understand talent gaps and strengths.
Questions for consideration:
- Does talent receive consideration in your board’s oversight?
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How much is talent part of your business strategy?
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How much do you collaborate with the CHRO on C-suite succession planning and development?
5. Boards should prepare for the CEO’s “sophomore slump”
Spencer Stuart’s CEO Life Cycle research has found that a second-year downturn is a very real thing for CEOs. For boards, this makes working toward a strong second-year performance a key element of an effective CEO transition plan.
Questions for consideration:
- What onboarding tools have you provided the CEO to ensure a smooth transition?
- How can the board and CEO work together better to turn a “sophomore slump” into an opportunity for growth?
- Is your board’s succession plan for the CEO and other C-suite roles a living document?
6. Effective onboarding programs are a board responsibility
Given the escalating demands on boards today, successfully integrating new directors into the boardroom is critical. The onboarding process is the critical linchpin in helping a new director quickly integrate and contribute meaningfully to the work of the board. Boards have a responsibility to ensure that onboarding programs are “right-sized” so all directors, not just those joining a board for the first time, can quickly jump on the boardroom learning curve.
Questions for consideration:
- How effective are our onboarding programs?
- How can we enhance our onboarding programs?
• • •
The past few years have highlighted the ever-changing challenges facing boards, and how they must contend with often jolting changes. Challenges are only expected to increase in 2024, amid global unrest, geopolitical and economic uncertainty and continued technology innovations and disruption. How boards are composed continues to be critical as they oversee companies and help them move forward.