IN THIS EPISODE:
- The 'Collegiality Conundrum': How board collegiality both assists and stifles board effectiveness
- The Diversity Dilemma: Directors believe diversity is important, but they may be fatigued from discussing it
- Perplexing Priorities: What boards believe about shareholder primacy and ESG
HIGHLIGHTS:[caption id="attachment_9480" align="alignright" width="180"] View Report[/caption] On this episode, Leah Malone joins the show to discuss PwC's 2019 Annual Corporate Directors Survey. The study surveys over 700 US board directors, making it one of the largest public directors' surveys in the country. Three-fourths of the directors surveyed are from companies with at least $1 billion in revenue. Leah Malone is the Director at PwC's Governance Insight Center, and author of the study.
1. The 'Collegiality Conundrum'In the United States, boards often pride themselves on their collegiality. Typically, members don't openly criticize each other or fight for status, and they work together as a cohesive unit. However, this very collegiality could be stifling board effectiveness, said Malone. In this episode, she discusses three relevant takeaways from the PwC survey:
- Directors have a record level of dissatisfaction with their peers.
- Directors feel they can't always be open in their boardroom discussions.
- Directors believe their assessments aren't resulting in real changes in the boardroom.
2. The Diversity DilemmaIn short, boards are increasingly aware of the significance of board diversity, yet, they seem to be suffering from issue fatigue. Consider these numbers:
- 94% of directors say that diverse boards bring a unique perspective
- 87% believe diversity enhances board performance
- Over 75% believe diverse boards enhance performance of the company
"So, boards are saying, 'We agree diversity is important. We've heard you, we're working on it, let's move on.'" - Leah Malone, Director, PwC's Governance Insight CenterIt's also worth noting that sentiment is not consistent across gender lines. While 75% of male respondents believe boards are focusing too much on diversity, only 25% of female respondents said the same.
3. Perplexing Priorities: Stakeholders & ESGRecently, a letter from the Business Roundtable, signed by over 200 chief executives, said that companies should advance not only the interests of shareholders, but they should take a broader stakeholder-centric approach, considering shareholders, employees, customers, and others. When directors were asked if they agree with that statement in PwC's survey, the results were mixed: Just over half agreed they should prioritize the broader group of stakeholders, rather than just shareholders. Interestingly, though, over 80% of directors hold that social purpose and profitability can both happen simultaneously. Directors were split on whether these issues should be incorporated into company strategy. Specifically, only about half said that ESG issues are important to their company or board, and only half said ESG issues are important to their shareholders.
'So, we see a tension between where directors are on the issue and where investors are.' - Leah Malone, Director at PwC's Governance Insight Center
- PwC's Annual Corporate Directors Survey
- Business Roundtable letter from 200 chief executives, redefining shareholder primacy
- PwC's Governance Insight Center
The Rising Tide of ESG – Navigating the Road Ahead
The Board's Role in Leading and Enabling GRC
Board and Executive Collaboration: Components of a Secure Platform for the Evolving Workplace