Navigating Shifting Board Composition Trends
How boards are reshaping their processes to thrive in today's evolving governance landscape
Board Monitor Insights
Six Questions Reshaping the Boardroom
Based on surveys of CEOs and directors from around the world, these are the key questions and trends reshaping today's boardroom dynamics.
Who is influencing the board agenda?
CEOs, leadership teams, the broader workforce, and regulators have increased influence more than other stakeholders in the post-COVID environment. Notably, investor influence is not growing at the same rate.
Key Finding
Only 22% of respondents report increased influence from mainstream shareholders, compared to 53% for CEOs and leadership teams.
Where does the board spend its time?
Boards are spending more time on emerging technologies (including AI), cybersecurity, financial performance/risk, and organizational culture than before the pandemic.
Key Finding
71% of global respondents report spending more time on emerging technologies/AI, making it the top area of increased focus.
How are boards addressing risk?
Boards are adopting more comprehensive approaches to risk management, including creating dedicated risk committees and enhancing the importance of the chief risk officer role.
Key Finding
64% of boards are spending more time talking with management about risk management, while 28% are adding board members with expertise in particular risks.
Are boards more operationally involved?
74% of respondents globally report that board members are more operationally involved than before, with differences between how CEOs and directors explain this involvement.
Key Finding
Directors most often say they're more involved because they have specialized knowledge the executive team doesn't have (50%), while CEOs cite directors wanting to learn more about operations (50%).
How are boards engaging with the workforce?
86% of respondents believe directors should engage with employees deeper in the company, with notable differences between CEO and director perspectives.
Key Finding
93% of directors believe they should engage with employees beyond senior management, compared to 82% of CEOs.
How are boards thinking about diversity?
While the percentage of Fortune 500 board seats going to women and ethnically diverse candidates has increased significantly over the past 15 years, appointments have leveled off in recent years.
Key Finding
Women held 43% of new board appointments in 2023, while ethnically diverse candidates held 32% of appointments, down from a 2020 peak of 42%.
Board Diversity Trends
Gender Diversity on Fortune 500 Boards
The percentage of seats going to women on public Fortune 500 company boards has more than doubled since 2009, but appointments have leveled off in the past five years.
Ethnic Diversity on Fortune 500 Boards
The percentage of ethnically diverse directors appointed to Fortune 500 boards spiked in 2020 and has since decreased but remains above the 15-year average.
Black Director Appointments
Peaked at 28% in 2020
Declined to 14% in 2023
Approaching representational parity with US population (14%)
Hispanic/Latino Director Appointments
Consistently between 4-7% over 15 years
6% in 2023
Not keeping pace with growth in US Hispanic population (19%)
Asian/Asian American Director Appointments
Grown from 3% in 2012 to 10% in 2023
17% of consumer sector appointments in 2023
Roughly representative of US Asian population (6%)
First-Time Director Appointments
33% of 2023 appointments went to first-time directors
First-timers are more diverse in gender, ethnicity, and expertise
More likely to bring digital or sustainability expertise
Six Recommendations for Board Evolution
Increase Stakeholder Engagement
Enhance engagement with a broader range of stakeholders, particularly the workforce. US directors are increasing their commitment to ensure non-management employees are heard in the boardroom.
Cultivate a Learning Culture
Develop a board culture that emphasizes continuous learning. Business judgment and adaptability are increasingly important as the scope of expertise required expands beyond traditional boundaries.
Expand Sources of Expertise
Utilize advisory committees, external advisors, and on-demand talent platforms to augment the board with specialized expertise, particularly in emerging areas like AI and cybersecurity.
Increase Investment in Succession Planning
Adopt an ongoing approach to CEO and board succession planning. Research shows many directors are concerned that succession planning is not receiving adequate attention.
Govern Across Boundaries
Seek directors with experience working across societal and company boundaries. The new face of diversity extends beyond traditional definitions, requiring directors with empathy and proven ability to collaborate.
Leverage Others
Rely more on the corporate secretary, service providers, outside experts, and peer companies to manage the expanding scope of board responsibilities and develop collaborative insights.
Navigating Board Evolution
As boards adapt to expanding responsibilities and stakeholder expectations, effective governance requires new approaches to expertise, engagement, and diversity.
