Listen to Episode 43 on Apple PodcastsAt the end of a pivotal and unprecedented year, hosts Dottie Schindlinger and Meghan Day are joined by TK Kerstetter, host of Inside America's Boardrooms for 2020 highlights and predictions for 2021. Spoiler alert: last year's predictions for 2020 were a bit off in one big way. Guest: TK Kerstetter, host of Inside America's Boardrooms, Inside Europe's Boardrooms and Inside Australia's Boardrooms Hosts: Dottie Schindlinger, Executive Director of the Diligent Institute, and Meghan Day, Senior Director of Board Member Experience for Diligent Corporation
In this Episode:
- How did predictions for 2020 stack up? While nobody predicted a global pandemic like COVID-19, predictions from Day, Kerstetter, and Schindlinger regarding the importance of cyber risk, public policy and political uncertainty in the boardroom certainly turned out to be true.
- What were the top governance moments of 2020? Strides forward in diversity, learning how to work from home, and an increased focus on stakeholders are among the trends discussed.
- What topics will ascend on board agendas in 2021? Predictions include an increased focus on boardroom diversity, a COVID-19-influenced proxy season, and a reckoning of workplace locations and in-person work.
2020 in Review: A Perfect Storm for GovernanceThe year 2020 brought a slew of changes across all levels of society. From a pivotal shift to virtual work, to increased commitments to diversity, to navigating a challenging political environment, 2020 had no shortage of surprises for the business world. At the end of a pivotal and unprecedented year, hosts Dottie Schindlinger and Meghan Day are joined by TK Kerstetter, host of Inside America's Boardrooms, for 2020 highlights and predictions for 2021.
How accurate were our governance predictions from last year?It is safe to say that nobody predicted a global pandemic that would systematically disrupt every level of society in 2020. However, Schindlinger, Day and Kerstetter were correct in 2019's year-end podcast about the types of topics that would rise to the top of the boardroom agenda, despite the unprecedented and unexpected chain of events that landed them there. Kerstetter speaks on the prediction that ESG would stay in the spotlight: 'There's no question that with the social unrest and how the pandemic played out in 2020, we certainly saw ESG come to the forefront in the boardroom.' He goes on to touch on how policy and political uncertainty have grown even more important as well, with the pivotal 2020 U.S. Presidential Election dominating headlines for the last few months: 'We talked about public policy and political uncertainty, and that was right on.'
'The headline of 2020 is certainly COVID-19 and its implications on companies of all shapes and sizes, and on all of us individually.' -Meghan Day, Senior Director of Board Member Experience
What were the top governance moments of 2020?When asked for his most significant governance moment of 2020, Kerstetter focused on the combination of crises and accelerated boardroom trends, citing the pandemic, social unrest, digital transformation and the continued rise of "stakeholderism" as just a few of the many issues that demanded board attention simultaneously this year.
'When you put these factors together and have to figure out how to deal with them all at once...it really was the perfect storm in terms of challenging a board.' -TK Kerstetter, Host of Inside America's BoardroomsSchindlinger discussed the open letter written by 170 GCs to big law firms about the issue of systemic racism: 'They committed their organizations to a set of practices around increasing the diversity of their teams, being intentional about it, and holding themselves accountable.' She went on to describe its significance in response to the murder of George Floyd, stating that, 'You now have actors at every level owning some level of personal accountability and taking responsibility to shift the narrative and create change.' For Day, her chosen governance moment of the year really was a moment: March 13th, or the day most of the companies on the eastern seaboard of the United States sent their employees to work from home for what ended up being an indefinite amount of time. Despite the fact that nobody knew what to expect, Day focused on the positives that came out of this drastic change to the workforce: 'It was amazing to see how fast organizations of every shape and size leaned into transforming the way their companies work. This is going to have major implications on the future of business.'
'Who knows if we'll ever go back to the office again in the same way we did, and that has implications for boards and how they function as well.' -Meghan Day, Senior Director of Board Member Experience
What topics will ascend on board agendas in 2021?With so many issues gaining visibility and importance in 2020, Kerstetter, Day and Schindlinger made their predictions for which topics would remain top of mind for board members in 2021. Day predicts a continued focus on boardroom diversity next year, particularly in light of some of the landmark legislation and mandates to come out of 2020: 'I think we're going to have mandatory disclosure on race and ethnicity of boards in 2021. We're seeing headway there, particularly in light of NASDAQ's recent announcement.' She went on to describe some of the ways this trend could continue: 'I wouldn't be surprised if we saw NYSE do this as well.' Kerstetter, meanwhile, focused on how the continued rise of stakeholder-centric philosophies and structures would affect corporate law: 'Could there be lawsuits, if, for example, you had a plant in a single-factory town and it gets closed down despite that fact that it will negatively affect the community and those employees? Are we going to see as many lawsuits out of a situation like this as we do when M&A occurs?' Schindlinger echoes this sentiment, citing the fact that the 2020 proxy season mostly happened before COVID-19 struck globally, meaning that last years' proposals were not impacted by the pandemic and its related effects. She also touched on a number of other areas that are sure to be intensely focused upon in 2021, like virtual work: 'The old assumptions are up in the air. Work from home does not seem like it's causing a hit to productivity and if anything, companies saw productivity gains. I think we're going to see a big shift in where offices are located and where employees are located.' She went on to list supply-chain issues as a big 2021 board agenda issue as well, indicating that, 'C-suites and boards are going to be challenged specifically on what counts as a supply-chain '''win.''
'We may see some big name companies, especially those who can't have a remote workforce, mandating that their employees receive COVID-19 vaccinations.' -Dottie Schindlinger, Executive Director of Diligent InstituteAlso in this episode: Kerstetter, Day and Schindlinger discuss the pros and cons of virtual director onboarding as explored in Diligent Institute's forthcoming Ask a Director series, as well as other governance must-reads, including Leo Strine's Toward Fair Gainsharing and a Quality Workplace for Employees. To quote Day, 'Like it or hate it, everybody should read it.'
Listen to Episode 43 on Apple Podcasts
- Leo Strine, Toward Fair Gainsharing and a Quality Workplace for Employees
- Jill E. Fisch and Steven Davidoff Solomon, "Should Corporations Have a Purpose?"
- An Open Letter to the Global Legal Community on Systemic Racism
- 2020 Proxy Season: A Look Back, and A Look Forward
- Inside America's Boardrooms Series on Battling Systemic Racism
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