In one of the most comprehensive global surveys of corporate board directors to date, directors were found to be in striking alignment on economic outlook, political and regulatory concerns, and the business challenges facing their companies - but genders differ sharply when it comes to board diversity.
Released today, the 2012 Board of Directors Survey - conducted by WomenCorporateDirectors (WCD), Heidrick & Struggles, Professor Boris Groysberg of the Harvard Business School, and researcher Deborah Bell - captures in extensive detail the governance practices, strategic priorities, and views on their own boards' strengths and weaknesses of more than 1,000 directors from around the world.
Key Findings: Politics, Strategy, and Regulation
Top 2012 political issues: state of the economy and federal budget deficit. When asked to name the political issues most relevant to their role as a corporate board director, both men and women cited "unemployment/the economy" and "the federal budget deficit" as the top two concerns. Below these top two, men and women differed slightly, with "healthcare costs" coming in as the #3 concern for women and "energy costs" as #3 for men.
Take-away: Gender differences practically disappeared when we looked at how men and women directors think about issues like the economy; these bottom-line business issues tend to allow for the greatest consensus in the boardroom.
Regulatory pressures and talent issues pose challenges to corporate strategy. The threat of increasing regulations on top of those already levied since the start of the global financial crisis is seen as the biggest obstacle to achieving strategic objectives, according to the survey's U.S. respondents. Both men and women directors cited the "regulatory environment" as the top challenge for their companies, followed closely by the need to "attract and retain top talent." Directors outside the U.S. named regulatory environment and talent concerns equally.
Take-away: Despite the good intentions behind regulatory reform, board directors do not see increased regulation as the answer to the economic crisis; men and women directors are similarly concerned about the ability of Dodd-Frank to create better corporate governance - only about a quarter of both men and women respondents agreed that these regulations would result in better corporate governance."
Professor Groysberg underscored the importance of talent management to companies' long-term strategic goals: "Given that for many companies human assets are a major source of competitive advantage and given the very large differences in performance between the top people and everybody else, it is becoming increasingly critical for boards to be involved in talent management to assure that their companies' most important assets and competitive advantage are not being mismanaged."
Key Findings: Diversity and Governance
Diversity on boards: a pull from above or a push from below? When asked to rank the most effective ways to build diverse corporate boards, women directors cited "board leadership serving as champions of board diversity" as the #1 factor. Men in the survey ranked this equally with "developing a pipeline through director advocacy, mentorship, and training."
Take-away: Women tend to put the responsibility squarely on board leadership, while men see it as both a pipeline and a leadership issue; women view the board chairs, lead directors, and nominating committee chairs as the real change agents in building a diverse boardroom.
Disagreement on reason why women are underrepresented on boards. Forty-five percent (45%) of men vs. 18% of women surveyed believed that the "lack of women in executive ranks" is the primary reason that the percentage of women on boards isn't increasing. As the top reason why there were not more women on boards, women respondents cited that "traditional networks tend to be male-oriented."
Take-away: There is a clear perception gap when it comes to evaluating how the still predominantly male business networks impact the number of women on boards; women see a real need to develop the kinds of networks that have historically been the path to directorships. These more diverse networks will create greater success for the company.
"On many boards, creating an inclusive culture for the organization has not been a point of focus," said Professor Groysberg. "The increased importance of diversity to organizational success, however, is compelling boards to make it part of their strategic focus. Unfortunately, many boards lack awareness of best practices in this area and are uncertain about how to integrate diversity and inclusiveness initiatives into their organization's long-term strategy."
One “alarming” area of agreement in the survey is in how men and women rate their personal strength - or lack thereof - in CEO succession planning. Only 1% of women and zero percent of men rated succession planning as their strongest area of board expertise and only 40% of respondents globally said that their boards had an effective succession planning process for directors.
Source: WomenCorporateDirectors (WCD)