This post was originally shared on LinkedIn and is republished here with permission.
Board member views on strategy and risk oversight have shifted to a longer-term orientation with emphasis on evaluating macro-trends as part of their strategic review, according to PwC’s 2015 Annual Corporate Directors Survey. But the survey points to growing pressure among Board members to balance longer-term strategic planning and investment with the need to meet short-term investor expectations.
Among other prominent findings, the survey indicates that directors are becoming more involved in crisis management oversight and are taking measures to deter fraud. The results also suggest directors are more focused on talent management oversight.
Highlighting the move among directors to a longer-term focus, 58 percent now say their time horizon for review of the company’s strategy is greater than five years, compared to just 48 percent in 2011. In fact, only 39 percent of directors now say they use a one- to three-year time horizon in evaluating strategy, compared to 52 percent who said so four years ago.
In evaluating company strategy, the survey showed that most directors are focused on macro-trends. Overall, 76 percent say they look at long-term, economic, geopolitical and environmental macro-trends, and 71 percent of directors consider emerging technological macro trends when evaluating strategy. Additionally, nearly six in 10 directors studied competitor initiatives that could cause disruption.
According to the survey, directors express a high degree of confidence around talent oversight. Ninety-three percent at least “somewhat” agree that their company’s hiring, retention and incentive programs support a robust talent pipeline. Nearly 80 percent at least “somewhat” believe that company documents include talent oversight and succession planning, and almost as many think the Board or its committees takes ownership of talent management oversight.
With regard to crisis management oversight, the survey points to deep involvement among Board members. Seventy-seven percent report discussing management’s plan to respond to a major crisis and 62 percent have evaluated management’s testing of the company’s crisis response plan. However, only about half of directors say their company has identified or contracted with a particular law firm to advise or conduct an investigation in anticipation of a possible crisis; less than half have identified a public relations firm to assist with necessary communications.
Finally, the survey showed that directors continue to take actions to reduce fraud risk. The most common of these was holding Board discussions about “tone at the top.” Sixty-eight percent of directors say their Boards had such discussions—a 22 percentage point increase over three years ago. There has also been a significant increase in the percentage of directors who say they have had interactions with members of management below the executive level; 57 percent did so this year, compared to only 31 percent in 2012.
PwC’s recently published its Annual Corporate Directors Survey, which explores this topic in greater detail. The report can be read in full here.