Boards Made Progress in 2020. What’s Next?
A report shows that boards have become more future focused in the past year. But challenges on tech strategy and diversity remain.
The past year has helped boards get better at being boards.
That’s one of the main findings in a new report from the National Association of Corporate Directors. According to its Trends and Priorities of the American Boardroom report, released last month, leaders are spending more time on internal education issues and recognizing the need for diversity in their organizations.
For instance, the average number of hours spent annually on “director education” increased more than third last year, from approximately 24 to 33 hours. “In an unusual environment, directors increasingly sought assurance that they are well informed on rapidly evolving issues affecting their organizations,” according to the report. And a substantial proportion—43 percent—said they’re not paying enough attention to broader “oversight of organizational diversity and inclusion.”
Those findings seem to be a direct result of the pandemic and deeper conversations about social justice issues in 2020; less time flying to meetings can mean more time dedicated to the organization’s work. That’s good news, as is the fact that boards seem to be more concerned with issues pertaining to the future of their organizations than they are with matters of board operations like agenda planning, meeting management, and board evaluations.
But more time in remote meetings can be a mixed blessing, and the report also points to a few trouble spots that associations ought to be mindful of.
Chief among them is digital transformation. Approximately 40 percent of the respondents said their boards don’t spend enough time on the issue, but fully half of them say the “increasing pace of digital transformation” will have the greatest effect on their companies in the next year. (Cybersecurity and safe employee work environments were also top concerns.)
Last month, my colleague Ernie Smith shared some recommendations about how boards can better orient tech on their agendas. One key is to keep technology conversations centered on the organization’s overall strategy, instead of drifting into the weeds by talking about specific tools. As Thad Lurie, CAE, vice president of business intelligence and performance for Maritz Global Events, told Smith: “When you talk about the actual technology, it’s like figuring out how to reprogram your grandma’s VCR again. There’s just not going to be a lot of utility there.”
The same kind of strategic thinking ought to apply to the diversity challenge that the NACD report surfaces. Getting better at DEI issues is increasingly seen as essential. As the report points out: “Corporate commitment and follow-through via effective diversity, equity, and inclusion programs that are embedded into the organization’s operations are now a clear expectation for key stakeholders including investors, customers, and (most important) employees themselves.”
So while it’s progress that such a substantial proportion of boards see the value of diversity across their organizations (that 43 percent figure cited above), the report suggests there’s also a bit of a “rules for thee and not me” dynamic: According to the report, there’s substantially less support for conversations around diversity within the board. Approximately 70 percent of respondents say they’ve dedicated enough time in meetings to the diversity of management voices presenting to the board, and to the diversity of voices in the boardroom. When the makeup of boards still skews strongly white and male in both nonprofits and corporations, 70 percent of respondents saying they’ve spent “enough time” on the diversity of voices within the board should at least raise an eyebrow.
Boards have had an extremely challenging year in terms of how they go about their business and how they think about strategy, at a time when expectations on a number of fronts have been upended. To a substantial degree, they’ve stepped up. But there’s still work to do.