Against a backdrop of increasing fragmentation and complexity, companies are seeking to develop and execute coherent strategies, and corporate governance needs to keep pace, with directors addressing more topics and fielding input from more stakeholders. Through it all, business leaders are looking for their boards to move beyond traditional roles and expertise and offer greater guidance, leadership and knowledge in emerging areas such as digital, GenAI and environmental/sustainability.
To explore how executives perceive board performance today, PwC and The Conference Board conducted our fourth annual survey of more than 600 public company C-suite executives in the fall of 2023.
Board effectiveness
While C-suite executives acknowledge their board’s proficiency in core oversight areas, they signal a need for upskilling in other areas of board oversight. The survey results suggest an underlying issue: a perceived gap in the board’s ability to pivot and adapt amid the whirlwind of rapidly evolving strategic challenges and business risks. What’s more, only a modest 30% of executives rate their board’s overall performance as excellent or good.
Board composition
Our surveys reveal dissonance between board and management perspectives on board refreshment. Executives are growing dissatisfied, with a record-high 92% advocating for director replacement. The quest for board refreshment may be driven by executives’ desire for directors with backgrounds in nontraditional areas of board oversight, a need amplified by new topics rapidly emerging to change the business environment and risk landscape. Having directors who possess open minds, a strong desire for continuous learning and the ability to consistently broaden their knowledge is essential.
Board role and responsibilities
A fragmented picture emerges of the board’s role and its responsibilities. While a solid 84% of executives believe their boards are not crossing the line into management territory, there’s a catch. Forty percent (40%) say their boards don’t understand the role of the board versus the role of management. Less than half (49%) see their boards challenging management in a constructive way. And only 34% think their boards are asking tough questions.
Board expertise
Only 28% of executives feel their boards are armed with the right combination of skills and expertise. A closer look at executives’ priorities reveals differences with directors on the importance of critical competencies in the boardroom. Executives place a premium on industry, regulatory and sustainability expertise. Directors, by contrast, prioritize finance, risk management and operations acumen — all core but rather traditional board oversight areas.
Management trust
While executives have been very vocal about their concerns in our survey, from board refreshment to time commitment and skill gaps, a strong beacon of positivity emerged regarding executives’ level of trust in their boards. Despite their criticisms, executives are showing a renewed faith in their boards’ ability to steer the ship in times of crisis, make value-driven decisions and plan for the future. In fact, 76% of executives said they trust their boards to engage with shareholders and 68% said they trust their boards to make decisions consistent with the company’s purpose and values.
From a scattered governance picture to a coherent mosaic of leadership
At a time of upheaval and fragmentation in the business landscape, this year’s survey paints a complex picture of the current state of board effectiveness from the perspective of C-suite executives. While there is recognition of the board’s proficiency in traditional oversight areas and confidence in the board’s resolve, there is a clear call for additional education in emerging areas. The path to a more harmonious relationship between management and the board may involve give and take from both sides. Directors need to be willing to ask tough questions and challenge management when appropriate; in turn, management needs to be receptive to criticisms and develop deeper connections with their directors.
About the survey
PwC and The Conference Board’s annual study, Board effectiveness: A survey of the C-suite, gauges the perception that C-suite executives at public companies across the United States have related to the performance of their boards of directors. In 2023, over 600 executives participated in our survey. The respondents represent a cross-section of senior executives from over a dozen industries, the majority of whom help to lead companies with revenues of more than $1 billion.
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