Competition for talent tops the list of concerns, followed by rising inflation, uncertain pace of economic recovery, increasing pace of digital transformation and evolving cybersecurity threats
WASHINGTON, June 21, 2022 /PRNewswire/ — The National Association of Corporate Directors (NACD), the authority on board practices representing more than 23,000 board members, has released the findings of the NCD 2022 Survey of Public Company Board Practices and Oversight report today.
Despite many pressing economic and political challenges, competition for talent remains at the top of many directors’ list of key trends for the next 12 months.
Heightened competition for talent tops the list of concerns for public company directors respondents for the second year in a row, even amid growing concerns about the economy. The next two most important issues, “rising inflation” and the “uncertain pace of economic recovery”, highlight these growing economic concerns.
“Each year, our Board Practices and Oversight Survey reveals the trends that motivate directors of public companies,” said the NACD President and CEO. Peter R. Gleason. “The changes companies have gone through this year have had a broad impact on board members. Workplace disruption has created pressure on management, resulting in more time and oversight required from from the boards of directors.
2022 key trends
Survey of Public Company Board Practices and Oversight
Boards of directors are organizing and formalizing their monitoring of human capital.
Human capital is increasingly on the board agenda, and many boards have begun to formalize their governance structure, processes and practices to oversee this critical asset.
- A majority of boards now discuss a company-wide talent development strategy (68%) and a majority of respondents indicate that their board discusses talent strategy more regularly. human capital, as a recurring item on the agenda (57%).
- These discussions may be a precursor to more focused practices adopted by major boards, such as delegating oversight of human capital to relevant committees (43%) or communicating reporting expectations to management ( 45%).
- Human capital oversight is most likely to find its way into compensation committees (57%), which are increasingly morphing into a human capital committee tasked with overseeing a much wider range of talent concerns.
As Cybersecurity Risks Rise, Directors Support Adding a Cybersecurity-Savvy Director.
- Eighty-three percent of respondents say their board’s understanding of cyber risk has improved significantly compared to two years ago. Yet amid the growing speed and sophistication of cyber threats, as well as increased scrutiny from regulators, administrators increasingly see a benefit in adding a savvy cybersecurity director.
- Forty-two percent of respondents say hiring a cybersecurity-savvy director would benefit their board, compared to 36 percent of public company respondents last year.
ESG oversight is forming and standardizing across most boards, but challenges remain.
- This includes efforts to improve board reporting (70%) and delegating ESG oversight tasks to specific committees (64%). Yet developing clear ESG priorities presents a major hurdle for boards and management teams.
- Forty-four percent of directors say the lack of consistent disclosure standards presents the biggest challenge for oversight of ESG issues.
- Feeling the pain of their management teams, boards find themselves grappling with defining what Ethe Sand the g meant for their business. Respondents indicate that defining scope (23%) and materiality (9%) are among the most challenging aspects of ESG monitoring.
A majority of directors report an improvement in their board’s understanding of DE&I issues.
- Nearly 3 in 4 boards (74%) now receive key DE&I metrics from management and 69% hold discussions about the organization’s DE&I priorities.
- These practices improve many boards’ understanding of DE&I within their organization, but there is still more to be done.
- Fifty-eight percent of respondents say their board’s understanding of DE&I issues has improved significantly compared to two years ago, when the social justice movement sparked by the murder of George Floyd intensified the growing expectations of society and investors.
- Similarly, 59% of respondents agree that their board understands how DE&I relates to other board issues such as strategy, human capital and technology.
- Only 29% of respondents went beyond traditional human capital issues to discuss DE&I issues related to vendor selection, supply chains, and business purpose.
Discussions about climate change have increased on most public company boards.
- Fifty-four percent of public company respondents indicate that the frequency of climate change discussions has increased on the board’s agenda over the past two years.
- For 37% of those who say discussions have increased, the main factor driving these discussions was the perceived relevance of climate change to the company’s long-term growth prospects.
- Twenty-five percent said its disclosure requirements were the main driver.
- As directors’ awareness of climate change issues increases and it is featured in more board discussions, it is likely to become a key consideration in strategy. , risk management, executive compensation, accounting and performance reporting.
The quality of board discussions is considered the most important driver of board performance.
- More than half of public company directors believe that the quality of board discussions (57%) is the most observable indicator of board performance.
- The quality of management’s contribution was the most widely selected key factor in outstanding board performance, identified by 59% of respondents.
Read it full report published by NACD.
About the survey
Leveraging its proprietary member database as a sampling frame, NACD sent out email invitations to directors and other board members asking them to participate in the 2022 Corporate Practices and Oversight Survey. the administration’s advice. The survey took place in the field from March 28 to April 21, 2022, and the questionnaire was administered electronically. Respondents have been instructed to respond on behalf of one of the boards to which they belong.
Percentages are based on the total number of specific responses to each question. For example, if a question received responses from only 100 respondents out of a total of 372, and 75 respondents answered “yes” while 25 respondents answered “no”, the result is reported as 75% affirmative. In some cases, survey responses totaling less than 5% are not represented in the charts for clarity.
About the NCD
For more than 40 years, NACD has been at the forefront of corporate governance, setting standards of excellence that have elevated board performance. NACD provides today’s directors with ideas and education that advance their mission, while preparing a new generation of board leaders to meet the greatest challenges of tomorrow. NACD is a community of more than 23,000 directors driven by a common goal: to be trusted catalysts of economic opportunity and positive change in businesses and in the communities they serve. To learn more about NACD, visit nacdonline.org.
SOURCE National Association of Corporate Directors