In a survey of 551 public company C-suite executives, The Conference Board and PwC found that executives see a significant gap between directors’ strong understanding of the company, and their overall effectiveness as board members.
On the upside, roughly nine out of 10 C-suite executives say their board understands the company’s strategy, key business risks, competitive landscape, culture, shareholders, and talent pipeline. However, 40% of executives think their board falls short in overall effectiveness, citing concerns about preparedness and expertise, inadequate oversight of crisis management, overboarding, and more.
“Executives provide strikingly high marks to outside directors on their understanding of the company’s business and culture,” said Paul Washington, Executive Director of The Conference Board ESG Center. “But management wants boards to be more, rather than less engaged – and to bring more experience, preparation, and diversity to the table.”
“Executives still view their board as a strategic resource as they look to navigate today’s complex and uncertain business environment,” said Maria Moats, PwC, Partner, Governance Insights Center. “Directors are seasoned business leaders, and their strong grasp of the company has never been in doubt. The survey’s findings present a unique opportunity for directors and executives alike to strengthen their relationship to further advance long-term shareholder value and the interests of the company’s key stakeholders.”
View the full findings of Board Effectiveness: A Survey of the C-suite. Key survey results include:
Executives believe directors are in sync with company challenges and goals.
- 94% believe the board understands the company strategy, and 89% believe they understand key business risks.
- The overwhelming majority of the C-suite think the board has a good understanding of the shareholder base (87%), the competitive landscape (85%), company culture (85%), and talent development (85%).
Executives want board turnover.
- 82% of executives say that at least one director on their board should be replaced.
- 43% think two or more need to be replaced.
Management wants the board to be more engaged and prepared.
- Executives think their board should be more willing to challenge management in areas like crisis management (48%) and risk management (37%).
- Only 37% of executives say their board comes to meetings fully prepared.
The COVID-19 pandemic put a spotlight on issues with crisis management oversight.
- Only 30% of executives say their board is able to respond well in a crisis.
- 57% of executives say their board understands the company’s crisis response plan, a large gap comparatively to other issue areas.
Views of the board are not consistent across the C-suite.
- C-suite executives with more specialized areas of expertise graded directors more harshly. For example, 74% of IT executives view board performance as fair or poor, compared to just 25% of CEOs and CFOs.
Executives and directors share common ground on board diversity’s benefits.
- Strong consensus on board diversity’s benefits: When comparing this survey of C-Suite executives to PwC’s Annual Corporate Directors Survey, the results reveal widespread agreement on the benefits of board diversity:
- Enhances board performance: directors (83%); executives (86%).
- Enhances company performance: directors (72%); executives (77%).
About the Survey
The PwC and The Conference Board study, Board Effectiveness: A Survey of the C-suite, gauges the perception that C-suite executives at public companies from across the United States have related to the performance of their boards of directors. In 2020, 551 executives participated in our survey. The respondents represent a cross-section of senior executives from over a dozen industries, the majority of which have annual revenues of more than $1 billion.
About The Conference Board
The Conference Board is the member-driven think tank that delivers trusted insights for what’s ahead. Founded in 1916, we are a non-partisan, not-for-profit entity holding 501 (c) (3) tax-exempt status in the United States. www.conference-board.org
At PwC our purpose is to build trust in society and solve important problems. PwC is a network of firms in 155 countries with over 284,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com. PwC refers to the PwC network and/or one of more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.
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