The makeup of corporate boards is beginning to reflect the realities of tomorrow’s business landscape. Among large, public companies, new board appointments are showing preference toward candidates with specialized expertise and active executives who are not already on other boards.
“This trend puts a spotlight on the advantage of perspectives from executives in earlier stages of their careers and, often, [who] are closer to new issues such as climate change that boards must increasingly address,” says Lyndon Taylor, regional managing partner of Heidrick & Struggles board of directors practice in the Americas.
The sharpest increases in expertise among new board members from 2020 to 2021 were for sustainability (from 6% to 14%) and cybersecurity (8% to 17%), according to the Heidrick & Struggles’ board monitor. Coincidentally, in March, the SEC proposed two new rules which were long-anticipated, calling for companies to report their governance and board expertise around cybersecurity and sustainability and climate practices.
Cybersecurity issues entered the forefront for board leaders during the past few years, but the expansion of remote work has increased risk for every single company. Russia’s invasion of Ukraine, as well as the continued global threat of data pirate groups, have also added to this risk. Hackers have already caused billions in corporate losses and shutdowns, and are likely to cause billions more in the future.
Demand for directors with HR experience is also on the rise, jumping from 11% to 19.4% in the S&P 1500 over the last two years, according to financial analysis firm ISS.
“Increasingly we see boards are called upon to help organizations manage through more complex and challenging issues, and a wider-range of perspectives, including more directors who are women, diverse, and serving for the first time, helps deliver the strongest outcomes,” Taylor says.
As companies strive to improve their talent brand and employee value proposition, they may encounter challenges bringing in new perspectives if they don’t have the right company and leadership culture in place. The same goes for director level appointments.
A recent survey from Boardlist, a board talent marketplace, finds that board candidates are concerned about psychological safety at companies that are not diverse. Thirty-six percent of diverse candidates said they have rejected an offer because of lack of diversity on the board and 55% said they are unlikely to join a company whose leadership does not have female representation.
Megan Wang, COO at Boardlist, posits that the root cause of this hesitation is “the historical lack of psychological safety on non-diverse teams and…that homogenous teams are an echo chamber of ideas and perspectives.” Wang adds that there are likely cultural root causes to the lack of diversity in leadership that need to be investigated. These are the kinds of thorny, new issues that boards are now advising on.
Aman Kidwai
aman.kidwai@fortune.com
Headlines
Tech takes a tumble. It’s an unsteady moment for tech, as companies of all sizes announce layoffs, waning investor sentiment, and hiring freezes. Companies that previously seemed pandemic-proof, such as Cameo and Mural, have laid off employees in the past week. Others, like Meta and Uber, are scaling back on hiring amid rising inflation rates and an ongoing pandemic. Protocol
Crypto crashes. Bitcoin is trading at around $28,000, down from a high of $68,000 in November 2021, its lowest point since December 2020. Ether, the second-largest cryptocurrency, dropped 11% to around $1,900 as wary investors sell off their crypto assets. The crypto dropoff has numerous implications for employers, particularly those who pay wages with crypto or offer employees crypto in their retirement benefits. Some companies are losing out on their Bitcoin bet. MicroStrategy, the enterprise software maker, had nearly $6 billion in Bitcoin at the end of March—that value is now nearly halved. CNBC
China’s ripple effects. The effects of China’s economic slowdown are being felt worldwide. Declining car sales in China are affecting global auto producers while delivery and production issues have slowed supply chains across industries, affecting manufacturing hubs and commodity exporters. From sporting goods, to farming and hospitality, “everyone has exposure,” a bank economist said. WSJ
Musk pauses takeover bid. Elon Musk tweeted that his attempt to take over Twitter is “temporarily on hold.” The Tesla CEO said he wants more information about the state of fake accounts on the platform, but also is likely reeling from the decreases in value of his Tesla stock and cryptocurrency holdings. Amid rumors that he may try to adjust the price of the acquisition, Twitter as a company recently instituted a hiring freeze, and its stock is sinking in pre-market activity even further as a result of this news. Bloomberg
BOARD MOVEMENT
United Bankshares has added Diana Lewis Jackson, founder and CEO of a building and facilities contracting firm, and Lacy Rice, managing partner of Federal Capital Partners, to its board along with its new CEO Richard Adams. Shopify CTO Allan Leinwald is joining the board of Compass Inc., a real estate brokerage. Gaming and entertainment conglomerate Super Group Limited has appointed Natara Holloway, a former NFL executive, and Jonathan Jossel, CEO of Plaza Hotel & Casino, to its board. First American Financial Corporation is adding Marsha Spence, chairman of the board and former CEO of Mother Lode Holding Company, to its board. Felicia Williams, current SVP finance at Macy’s and a former Coca-Cola and Bristol Myers Squibb executive, was appointed to the board of Paycom Software.
Numbers That Matter
20%
Increased turnover is likely to be a permanent fixture going forward. The research firm Gartner estimates that turnover is going to increase by 20%, compared to pre-pandemic levels, and stay at that level indefinitely.
“As long as we're in this world of remote and hybrid work — and it's hard to see us getting out of it — that elevated level of turnover is going to stick with us," Brian Kropp, chief of research for Gartner's HR practice, told Axios.
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