Only 29% of C-suite executives rate their board’s overall performance as excellent or good.
This was the shocking headline from a recent executive survey conducted by PwC and The Conference Board.
Diving into the data uncovered some of the reasons:
The board does not spend sufficient time doing its job (79% of executives)
The board does not have the right mix of skills and expertise (74% of executives)
The board does not ask probing questions (67% of executives)
The board’s expertise in cybersecurity/technology is poor or only fair (67% of executives)
The board’s experience in international matters is poor or only fair (65% of executives)
In the opinion of 75% of the executives, two or more of their company’s directors should be replaced, with a whopping 89% of executives saying at least one director should be replaced.
We know from daily client conversations that business challenges are multiplying at unprecedented rates. Digital transformation, cybersecurity, geopolitics, and COVID-19 have meant, in the words of one client, that C-suite executives now “live life in dog years.” Yet the annual turnover rate among independent directors of S&P 500 companies has barely changed (7% this year vs. 6% in 2013.) And almost half of S&P 500 companies appointed no new independent director in the past year.
Anecdotally, we hear directors talk about how difficult it is to get an underperforming director to leave. Yet isn’t it part of a board’s duty of care to replace directors who no longer have relevant credentials?
Do the survey responses align with your experience? We are interested in your point of view.
For the first time in many years, I'm going to be at this year's NACD conference in Washington, DC October 8-11. I look forward to seeing those of you who are also attending.
SpencerStuart: 2023 U.S. Spencer Stuart Board Index