Why boards should evaluate individual director performance
Assessing individual directors' performance can do more than help the board identify skill gaps and improve group dynamics — it can accelerate necessary changes in overall board composition.
It is a pivotal moment for corporate boards, with emerging risks, disruptive tech and potential shifts in policies on trade, taxes and sustainability. In a polarized political climate, board agility and informed decision-making are crucial to navigating these changes effectively.
PwC’s Annual Corporate Directors Survey reveals that while boards are evolving, there is room for improvement to meet future challenges. Directors are increasingly involved in shareholder activism, using advanced metrics to assess corporate culture, while prioritizing traditional skillsets and recognizing the importance of specialized expertise. The current environment with rapidly changing dynamics provides an opportunity for directors to enhance their expertise and drive board refreshment, positioning their companies for success in an evolving landscape.
Ineffective board assessments may be to blame for record-high director discontent with peers
Historically, nearly half of directors have expressed a desire to replace at least one person on the board. This year’s results are consistent with that historical sentiment. And one-quarter of directors now say multiple colleagues should be replaced, a high-water mark.
Directors voice concerns about social and public policy issues, but many boardrooms aren’t discussing these topics
Despite significant concerns about political divisiveness, immigration policy, and economic inequality, over half of directors say their boards haven't discussed these issues in the past year. Even with increased pressure from stakeholders for clear corporate stances, directors are deferring these discussions due to time constraints and broad responsibilities.
As AI becomes intrinsic to business, boards seek deeper information despite confidence in management’s ability to execute the company’s AI strategy
As AI becomes central to business, nearly 70% of directors trust their management's execution skills, but only half feel informed about AI-related risks. Competitive pressures, increasing regulatory scrutiny and ethical concerns around AI usage also amplify the demand for educating the board.
Directors push back on narrow expertise, favoring traditional skillsets for new board additions
Directors are prioritizing traditional skills like financial, industry and operational expertise for new board additions, with less of a focus on AI, sustainability and geopolitics. Despite pressure for specialized expertise, boards are emphasizing long-term stewardship over trending topics.
Directors value diversity on their boards but question its impact on company performance
Directors overwhelmingly acknowledge that board diversity brings unique perspectives, improves culture and enhances board performance. However, there is skepticism about its impact on overall company performance, with only 40% of directors seeing a direct benefit.
Navigating ambiguity: ESG caught in the crosswinds
Some boardrooms have seen a declining focus on ESG issues over the past three years. Most acknowledge that ESG means different things to different people and that their boards do not consistently understand it, adding complexity and challenge to addressing these issues effectively.
Boards are taking more action amid ongoing shareholder activism
Boards are stepping up against shareholder activism, with 71% of directors saying that their boards have taken some kind of action in the past year, up from 65% in 2019. More directors are revising executive compensation, using stock-monitoring services and hiring third-party advisors.
Decoding corporate culture: directors are using more metrics and less intuition
Directors are shifting from intuition to data in evaluating corporate culture, with 76% now using employee turnover statistics and 75% relying on engagement survey results. This marks a move away from gut feelings to a data-driven approach to provide deeper insights and address potential issues more effectively.
About the survey
PwC’s Annual Corporate Directors Survey has gauged the views of public company directors from across the United States on a variety of corporate governance matters for more than a decade. In 2024, over 500 directors participated in our survey. The respondents represent a cross-section of companies from different industries, 69% of which have annual revenues of more than $1 billion. Sixty-five percent (65%) of the respondents were men and 32% were women. Board tenure varied, but 58% of respondents have served on their board for more than five years.
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