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Board views on how much change is needed, risks and reporting
Board members see strong consensus across the enterprise on the future company vision, more than the rest of the C-suite (73% and 59%, respectively). But directors see less consensus on how much the business model needs to change, whether the company has the right talent to execute those changes and how long it will take for that vision to become reality, according to our June 2024 Pulse Survey.
Directors have an opportunity to help close these gaps and improve their oversight. They should push for better and richer reporting from management to gain a greater understanding of what’s happening across the company.
Bridging gaps between the board and C-suite
Only 42%
of directors are very confident in management’s ability to focus on the company’s future vision
Corporate directors acknowledge the need for their companies to adapt as consumer tastes change, technology evolves and revenue opportunities emerge. Nearly eight out of 10 (78%) board members say an average competitor won’t stay in business over the next decade if it doesn’t change its current business model.
When it comes to their own company’s vision, the majority of directors (73%) say there’s strong consensus in the C-suite on the future company vision. However, boards and CEOs are both less convinced that full-scale change is needed to support the future vision. Fifty-three percent of directors (and 52% of CEOs) say their company’s business model needs to fundamentally change to support the future vision, compared to 64% of all executives.
Directors and boards seem to be a bit at odds when it comes to how they view each other. While 58% of directors are very confident in management’s ability to recognize the need to innovate, only 44% are very confident that management can implement an effective business model, and 42% say the same about management’s ability to make time to focus on the company’s future vision.
CEOs, on the other hand, feel similarly about their boards: Only about half of CEOs say directors are very aligned with their vision for the company (56%) and that they’re highly effective business partners in driving the company’s strategy (54%). This disconnect is troubling. To successfully implement change at any level, CEOs need alignment across the full C-suite, including the board. And a strong relationship between the CEO and the board is critical for the company’s strategy to succeed.
What you can do
Foster stronger relationships with the C-suite and management by engaging with them outside of regular board meetings. Given the limited number of board meetings each year and their increasingly packed agendas, getting to know executives better can help build a consensus on the extent of change required for long-term competitiveness.
Assess the communications you have with the CEO. Have regular, healthy and constructive discussions and debates with the CEO on the company’s vision and strategy. Challenge management and ask questions to better understand the company's strategic direction and, as a result, the extent of transformation required to support the future vision.
Get more on this topic
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- What else is important to the C-suite right now?
Economic uncertainty and tech disruption top list of risks for boards
89%
of directors say an uncertain macroeconomic environment is a risk to the company
Directors see a risky business landscape ahead. Nearly nine out of 10 (89%) directors say that an uncertain macroeconomic environment is a moderate or serious risk. This is significantly higher than the 75% of all executives that say the same. Board members might see the macroeconomic environment as more of a risk than other C-suite members due to their broader perspective and responsibility. And C-suite members might be more focused on operational and tactical issues, which could lead them to prioritize other types of risks.
Other top risks for board members include technological disruption (80% of directors say it’s a moderate or serious risk) and cyber attacks (78%). These risks are particularly high on the board's agenda due to their responsibility for overseeing the company's overall strategy and risk management, which includes understanding and mitigating such threats.
Executives overall say climate change is a bigger risk to their business than in the past (61% call it a moderate or serious risk, up from 50% in August 2023). But directors once again have a differing view. Just 56% say climate change is a risk, a significant drop from 75% last year. This could be due to a variety of factors, such as a shift in focus toward more immediate risks like economic uncertainty or a belief that the company has adequately addressed its climate-related risks.
Our survey also shows that directors are concerned about management’s ability to identify and mitigate these risks. While 49% of directors say they are very confident in management making strategic decisions and setting clear goals, just 31% say the same about management’s ability to identify and mitigate risks across the enterprise.
What you can do
Advocate for enhanced reporting on risks. Risk committee members should make sure the full board understands the company’s risks. Request additional reporting to provide adequate information on management’s approach to risk management. If confidence is low, bring in both internal and external experts to provide additional insights on key topics related to risk management.
Don’t neglect key topics. Directors may be weary of discussing sustainability and climate change. With new global disclosure regulations, these issues will only grow in importance.
Better reporting can help strengthen board effectiveness
Only 27%
of directors are very satisfied with the reporting management provides on emerging tech
Corporate strategies can quickly pivot as a result of competitive pressures, acquisitions and new technologies. Even a highly experienced board can’t always anticipate what’s around the corner. In that kind of boardroom environment, it's crucial that directors receive in-depth and decision-useful reporting from management.
While directors seem somewhat content with the reporting they are getting, it’s clear there’s room for improvement. Only 27% of directors say they’re very satisfied with the reporting they receive on the adoption of emerging technologies, and about the same are very satisfied with reporting on supply chain resilience and ESG reporting (29% and 31%, respectively). About half (51%) say they are very satisfied with reporting on fostering an inclusive corporate culture, the highest area of satisfaction.
What you can do
Think holistically. Request more thorough reporting that includes not only strategic initiatives and financial implications, but also tangible examples of successes and failures across the enterprise. For example, ask for case studies of recent projects or initiatives, detailing what worked, what didn't and the lessons learned. This can provide a more holistic and realistic view of the company's operations and performance.
Acknowledge that you and other board members may have knowledge gaps. Ask questions to learn more about evolving, complex topics such as emerging tech. Look for opportunities to attend specialized training sessions, workshops or seminars to gain a better understanding of key topics impacting the company and the industry.
Get access to the complete survey response data and future insights
View the main Pulse Survey
Finding opportunity in reinvention
About the survey
Our latest PwC Pulse Survey, fielded May 15 to May 22, 2024, surveyed 673 executives and board members from Fortune 1000 and private companies about the current business environment, the risks executives are facing and their company’s strategic plans and priorities. Of the respondent pool, 55 were board members.
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