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Boardroom of the Future: 5 Predictions for the Coming Decade

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By Coco Brown, Founder & CEO, Athena Alliance

Historically, companies move slowly to make necessary business innovations. For boards, the three core committees–Audit, Nominating and Governance, and Compensation–were introduced in the 1970s. It was not until the 1980s that a power shift from management to the shareholder was observed, accompanying the rise of the institutional investor. Moreover, the last major mandated change in board structure happened in the early-2000s with the near collapse of the financial system when the U.S. Securities and Exchange Commission (SEC) mandated boards to have a director with financial expertise at the table.

Since the SEC mandate, much has changed in the corporate world, and the speed of change is only accelerating—across business structures, technological threats and opportunities, and the global economic landscape. In response to this, business leaders have been laying the groundwork in the last decade to reimagine and reinvent the boardroom. These changes have largely been under the movements for diversity and a focus on environmental, social and governance (ESG) matters. However, thus far, these changes have been subtle tweaks and adjustments, not radical improvements.

That groundwork will shift toward fundamental restructuring and boardroom evolution. In 2032, the boardroom should be different than it is today. Based on my observations and work with boards, I foresee five fundamental changes in the coming decade:

1. Transparency and Data

If data is critical today, the future may present even more sophisticated ways of analyzing, reporting and sharing data. Company operations will become more transparent, with a company’s entire supply chain laid out right in front of customers for evaluation and enlightenment–demystifying how a business ties to human rights, health, the environment, climate change, and human safety. In an age when cybersecurity warfare is the starting point for global wars and geopolitical disruption, data and transparency will be vital for business vitality. Imagine the impact on embargoes, taxes, and trade—a dynamically shifting buyer and supplier ecosystem, for example.

The technological implications are enormous, but so is the flow of information. A board will have insight into a company’s operations, enabling companies to move faster and smarter. As good data leads to clarity, and clarity leads to better decision-making, the pressure for boards to operate from an informed moral and ethical center will not only be a reasonable expectation but an unavoidable one.

2. A Call for Worldly Business Leaders

The Covid-19 pandemic taught that employees’ geographic locations can be independent of the company’s and that remote, hybrid and in-office schedules can thrive. Companies are also becoming less localized in terms of their customers and products as supply chain, manufacturing, and distribution channels turn increasingly global. 

In the next decade, board composition will become less dependent on specific business models, titles, or other labels, shifting to the need for dynamic business leaders with a global perspective and experience across technology, financial health, reporting and regulations, and human capital. Boards will not have a simple “check-the-box” skills matrix. Rather, they will have a dynamic and complex matrix to encapsulate the collective and individual capabilities of the board across a wide range of variables, including skills and experience. Stakeholders will increasingly require more than simple self-attestations of what directors bring to the table with respect to ESG. 

Perhaps it will be required to have technological, human capital, and appropriate risk and sustainability expertise in the boardroom–as it happened with financial expertise in the early-2000s.

3. Measurable Societal Impact

In the future, handwaving and self-assessment around societal impact will no longer be possible. Since stakeholders will be armed with data, there will be no more speculation on a company’s harm or good to the environment and commitment to societal issues. Today, stakeholders already have access to data about a company’s commitment to its brand promise with respect to customer experience. Stakeholders can document and share whether a company is truly as “friendly” (or their products as high-quality) as they claim.

Looking ahead, stakeholders will have access to data transparency around the who, how, and what of a company’s talent and leadership, supply chain, partnerships, and global footprint. Not only will companies continue to improve decision-making via data, but stakeholders will also improve decision-making power through data transparency—and likely demand real, measurable impact to better the world.

This will level up what we think of today as ESG and put the onus on companies to prove their societal worth—no hiding behind greenwashing and no making claims without following through. Measurable impact will become table stakes, as ESG will likely be embedded in the functioning and structure of the board. 

4. Revised Committee Names and Structures 

Today’s board committees may be replaced by a new set of committees that have the existing responsibilities boards hold with an expanded way of thinking. Committees will encapsulate technological risks and advantages, human capital, organizational structure, and financial health. 

Committee name changes will symbolize society’s evolving thinking around the role of boards. For example, a “Financial Health Committee” instead of an “Audit Committee” would showcase a mindset shift across stakeholders. Similarly, a “People and Organizational Optimization Committee” versus a “Compensation Committee” would also represent a more holistic approach to what has been a narrow board purview. Furthermore, a “Technological Risks and Opportunities Committee” might, too, become part of the standard committee roster as boards may be expected to embrace a comprehensive approach to corporate governance.

While it might sound unwieldy, these changes will necessitate bigger boards – but it’s already something boards are willing to consider. The board’s role is expanding in responsibility and going deeper in accountability. More committees and larger boards overall (with a greater division of responsibility) will be inevitable. 

5. Shorter Rotations and Increased Operating Cadence

At the pace that business and the world move, quarterly board meetings may not be enough. Boards are already meeting monthly, and sometimes weekly, to shape response and strategy with respect to the pandemic, societal crises, and war. 

To succeed, board work will likely be part of a board member’s daily life. Board management technology will be instrumental in supporting a board’s efforts to keep a pulse on the company, exchange notes, and have always-available access to dynamic information. 

As a result, tenure may be less about years of service and more about business cycles, as boards will be expected to keep pace with the company. The pressure to refresh boards will occur at the fundamental shifts in business, such as the next series of investments, a major business pivot, a big phase of growth, IPO, acquisition, and related events. 

Of course, these are mere predictions and speculations. While I believe board changes are not happening fast enough, I remain optimistic that we are moving in the right direction.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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