Company leaders continue to rethink what “growth” means in a business climate in which rapid macro change seems to be one of the few certainties. Beyond bottom-line financial outcomes, though, executives are increasingly focused on their employees, customers, and the communities they serve, as well as their company’s responsibilities to society as a whole.
The boardroom is an important influencer of this broader definition of growth, which is why many companies are seeking to reenvision and transform the makeup of their board of directors, as we detail in our new Boardroom Diversity Survey.
For our survey, we spoke with more than 700 directors about their focus and concerns as they help the companies they work with plan for the future. Broadly, their insights underscore a growing trend toward prioritizing diversity in the workplace, even while many directors acknowledge ongoing challenges in trying to recruit more diverse board members.
We’ll take a closer look below at some of the opportunities and obstacles businesses have encountered as they evaluate their boardrooms.
Key takeaways
Above all, the survey reinforced that company leaders are actively looking for board members who can bring new perspectives and experiences to the table. Directors from diverse backgrounds can offer skills that are highly valued in a volatile business landscape, such as the ability to think outside the box. By filling in gaps in current board skill sets, these members can help companies build trust with key stakeholders, which could lead to significant, broader returns.
The biggest driver of boardroom change, according to our survey, is need: 73 percent of U.S. companies cited the need to replace a retiring director as their top issue, and every respondent anticipated at least some turnover on their board in the next few years.
73%
Replacement of a retiring director 51% Strategic necessity / staying competitive
51%
Strategic necessity / staying competitive
28%
Pressure from investors to fill perceived gaps in diversity
As far as skills, C-suite experience was the most important criteria cited by participants, with technology and even cyber security experience also at a premium. Surprisingly, prior CEO or board experience—long viewed as crucial—did not rank in the top two qualifications in this year’s survey.
Driving transformation with diversity
The majority of company leaders surveyed saw increased diversity in the boardroom as an opportunity for positive change and innovation, but some survey respondents reported continuing barriers to that goal. For example, 23 percent said their board or CEO still recruited from a narrow social or business circle, another 20 percent cited the same issue with outside search firms and 19 percent felt the board had not prioritized the need for diversity.
While identifying and attracting diverse board members continues to be difficult, directors acknowledged that improving diversity in the boardroom would likely have a beneficial impact on their companies and help them meet stakeholder expectations. In fact, many respondents are anticipating and promoting larger changes within their boards:
- Fifty-six percent believed their board would be moderately or completely different if they had the chance to restructure it.
- Fifty-one percent said they would consider recruiting new directors out of strategic necessity or to stay competitive.
- 69 percent felt diversity of the board’s composition and thinking was either relevant or very relevant to the company’s consideration of its role in society.
Diversity’s relevance to a company’s consideration of its role in society:
Diversity’s relevance to a company’s consideration of its role in society:
Toward better boardroom discussions
Among the most significant findings of our board leadership survey are concerns among many directors surrounding boardroom culture and operations—an important flag for company leaders who have prioritized the need to be more inclusive.
Indeed, one-third of the respondents expressed that leadership is only somewhat effective at drawing out the views, ideas and concerns of all directors, while 10 percent said their board leadership is not effective at doing that, indicating there is room for improvement.
In particular, some directors placed a heightened emphasis on better recognizing blind spots and engaging with infrequently discussed topics, with 42 percent either moderately or extremely concerned that a lack of diverse views in the boardroom hinders insightful discussions.
Of course, transforming business by developing better discussions and practices in the boardroom is an ongoing process that will require long-term effort from decision-makers. While there was a clear sense from respondents that the boardroom is poised for a change, more work ahead remains.
For more of their perspective, get the complete KPMG Boardroom Diversity Survey now.
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