Check Out the Latest Board of Directors Trends

The business landscape is constantly evolving, so it makes sense that your company’s board of directors needs to evolve to keep up.

Each company’s board has slightly different priorities, but they all face certain trends and challenges. Here’s what you need to know about this year’s trends for boards of directors and corporate governance.

Technological Expertise Is More Important Than Ever

In many companies, the tech experts aren’t the ones populating the boardroom. However, technology is growing and changing at a blistering speed — and it presents every company with both threats and opportunities. Cybersecurity threats still loom large, and the dawn of AI is helping companies optimize countless time-consuming processes. 

In order to successfully navigate the expanding world of technology, more boards are looking for members with a technological skill set. However, most are looking to hire those who combine technological expertise with a solid understanding of business. If your board isn’t quite sure how to start addressing the technological challenges ahead, try asking these questions:

  • Are board members interacting with tech executives?
  • Is technology being discussed at the board level?
  • Have technology discussions included AI and cybersecurity?
  • If the board is lacking in tech expertise, are there plans to bring in new members?
  • How does the current risk management strategy handle technological risks (like data security)?

Of course, the tech revolution is more relevant in some sectors than in others. But every sector uses some kind of technology, so it’s still critically important for your board to discuss this ongoing need.

Boards Need to Prepare for the CEO’s Slumps

You might think that most CEOs deliver a better performance in their second year than they do in their first. But in most cases, the opposite is true: CEOs often undergo a “sophomore slump” in their second year with a company. If your company has a newer CEO, your board should be proactive in helping them rise above common second-year challenges.

Refreshing the onboarding tools you give incoming CEOs can be a way to deal with this issue over the long term. Ensuring first-year CEOs have access to corporate mentorship or executive coaching is another good strategy. Even if your CEO’s performance does decline in the second year, the right support can still be instrumental in helping them get back on track.

More Boards Are Making Diversity a Priority

Boards of directors are often tasked with solving complex problems. When you have people with different backgrounds and perspectives working together, the group as a whole tends to more easily come up with inventive solutions. 

Shareholders also generally approve of more diverse boards. When it’s clear that a company has put significant thought and effort into the composition of its board, that usually means the company is organized and deliberate in other arenas, too.

Many people think of race when they hear “diversity,” but true diversity has many facets. When boards pursue diversity, they’re usually looking for several types:

  • Ethnicity
  • Gender
  • Skills
  • Experiences
  • Race
  • Age

This doesn’t mean that boards are choosing new members solely because they’re different. However, most boards have expanded their talent pipelines and adjusted the way they search for new members to make sure they include a broader cross-section of people in their considerations.

Specialist Skill Sets Aren’t Necessarily the Most Important Thing

Boards of directors typically don’t have a very high turnover rate. This means that when the board does get the opportunity to choose a new member, members should make the choice wisely — and with the future of the board and the company in mind.

To ensure they keep a balance of skills and attributes at all times, more boards are creating succession plans before they’re actually needed. Your board will be stronger if members make it a point to identify gaps in skills and knowledge and then work to fill those gaps. 

For instance, your board might determine that it would benefit from greater financial knowledge. Even if there are currently no open seats, the board might agree that the next director should be a former CFO or otherwise have a strong financial acumen. 

This might make it seem like boards are focusing on recruiting specialists. However, the opposite is often true. Having board members with very specialized skill sets may periodically come in handy, but boards of directors handle a wide array of different issues and challenges. The most valuable members tend to be those who have a wide array of past experiences and areas of expertise.

As you might imagine, striking the balance between depth of knowledge and breadth of experience can be extraordinarily difficult. That’s why the aforementioned succession planning is so important.

Boards Are Taking Charge of Onboarding

Choosing the right directors is important. But so is doing all you can to help those new members succeed in the role and offer valuable input on board decisions. One of the best ways to do that is to ensure the board has effective onboarding tools and programs. 

Onboarding needs to be both thorough and efficient. To maximize efficiency (and to keep experienced directors from becoming bored or frustrated with onboarding materials), some boards of directors are creating specific onboarding programs for first-time directors and those who have served previously on other boards.

Nearly every board of directors has an existing onboarding program. But it’s a good idea to regularly evaluate and optimize training materials. One of the most effective ways to optimize is to solicit feedback from recently onboarded directors. Taking their thoughts into consideration can help the board tweak materials so they’re even more effective for the next new director.

Keep Your Finger on the Pulse

A strong board of directors can make a weak company thrive. On the other hand, a weak and disengaged board can do serious damage to a healthy company. As the corporate world gears up for turbulence in the foreseeable future, it’s critically important to evaluate your board’s composition and performance to ensure your company is in good hands.