Board Monitor Europe 2024: Six shifts boards are making to thrive now
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As the role of the board is expanding, with more being expected of directors in the context of increasingly uncertain times, we are exploring the implications in the way boards operate and evolve. How is the role of business in society changing? What are the implications for directors? What does the future hold?
Around the globe, boards are tackling geopolitical uncertainty and conflict, emerging technologies, cybersecurity concerns, and a long list of social and environmental concerns. In Europe1, directors also face an ever-increasing regulatory burden and a closer continuous threat from geopolitical conflicts that have risen on the agenda of European governments.
But this expanded role is also creating opportunity for boards. New approaches are emerging for boards and individual directors who see promise in this shifting landscape. In what follows, we draw on the results of two recent surveys of CEOs and directors around the world, and our experience, to describe how directors and CEOs are answering six questions that are reshaping the boardroom.
Six questions reshaping the boardroom
- Who is influencing the board agenda today—and are board members happy with that?
- Where does the board spend its time—and are those the right places?
- How are boards addressing the widening risk environment?
- Are boards more operationally involved?
- How should boards engage with the workforce?
- How are boards thinking about diversity today?
Who is influencing the board agenda today—and are board members happy with that?
To better understand the relative influence of stakeholders today, we asked directors and CEOs to stipulate which stakeholders have accelerated their influence most in the post-Covid environment. Overall, they report that the CEO and leadership team, the broader workforce, regulators, and consumers and customers have increased their influence more than others.
Regulators top the list of stakeholders whose influence has increased since the beginning of the Covid-19 pandemic in Europe, with 52% of directors reporting increased influence in the same timeframe, compared to a 45% global average. Though boards are paying attention to the role of activists, we saw a relatively small number of European respondents reporting report increased influence from mainstream investors (22%) or from activist investors (12%), consistent with the global average.
Where does the board spend its time—and are those the right places?
Europe follows the broad global agreement among both CEOs and directors that the board meeting agenda remains primarily focused on traditional board oversight responsibilities (financial performance and risk, stockholder concerns, and strategy reviews, for example) and traditional board leadership responsibilities (CEO succession planning and leadership performance and compensation, for example). Together, these categories take up nearly 60% of boards’ time. External global risks, the opportunities and risks associated with technology (AI and cyber) and other stakeholder issues capture about 10% each in the balance of the meeting schedule.
Respondents in Europe far more often than their global peers report spending more time on geopolitical, sustainability, and environmental risks. Consistent with global findings though, the area that saw the greatest increase in time spent in the boardroom is emerging technology and AI.
How are boards addressing the widening risk environment?
When we asked what steps boards have taken since Covid began to better manage uncertainty and risk, we found that respondents remain anchored primarily in risk management practices that are internal in nature; that is, derived from interactions among the board itself and between the board and management. This is more pronounced for European boards, where respondents indicated to a lesser extent that they had exposure to external experts or had added risk experts to the board.
Are boards more operationally involved?
Both in Europe and globally, a majority of respondents report that board members are more operationally involved. Only a quarter report that they have not crossed that line. When it comes to reasons for operational involvement, European respondents cite to a larger extent than their global peers the desire to learn more about operations than reporting allows. Notably, just over a quarter of our European respondents say they don’t trust the executive teams to get the work done.
How are boards engaging with the workforce?
Workers are increasingly exercising their influence on the board agenda. When we asked how boards should engage with the workforce, respondents in Europe showed a preference for participating in townhalls, receiving third party employee engagement surveys, and meeting small groups of employees without executives present.
Diversity among the newest directors
Each year, we analyze the new appointments to the boards of companies listed across Europe, including overall turnover, new directors’ former and current executive roles, and age, among other aspects of their backgrounds. For the full year of 2023, we saw a small uptick in the number of seats filled though a small downturn in the share of seats going to first-time directors. Overall, diversity trends remained steady. Click here for global data.
EU regulation requires that boards have at least 40% (and not exceeding 49%) of the underrepresented gender among non-executive directors or at least 33% (and not exceeding 49%) among all board members for listed companies by the end of June 2026.2
Progress toward that goal has been steady over recent years, with the share of seats going to women ranging from 43% to 49%. In 2023, 47% of seats went to women in Europe overall, and in six countries more than half of seats went to women.
When we look at age diversity, while the average age of newly seated directors has crept up since 2020, from 55 to 57, the range of ages goes from 28 to 79.
Recommendations
- Increase stakeholder engagement
- Cultivate a learning culture on the board
- Expand sources of expertise
- Increase investment in succession planning
- Govern across boundaries
- Leverage others
Acknowledgments
Heidrick & Struggles wishes to thank the following executives for sharing their insights. Their view are personal and do not necessarily represent those of the companies they are affiliated with: Mark Cutifani, chairman, Vale Base Metals; board member, Total Energies; former CEO, Anglo American Total, Anglo American; Colin Hunt, CEO, Allied Irish Bank; and Sonia Tatar, executive director, INSEAD Corporate Governance Centre.
Heidrick & Struggles also wishes to thank the following colleagues for their contributions to this article: Alice Breeden, Sam Burman, Carole Deffez, Sylvain Dhenin, Jenni Hibbert, Will Moynahan, Tobias Petri, Nicolas von Rosty, and Claire Skinner.
References
1 This year’s Board Monitor Europe tracks and analyzes trends in non-executive director appointments to the boards of the largest publicly listed companies in Belgium (BEL 20), Denmark (OMX Copenhagen 25), Finland (OMX Helsinki 25), France (CAC 40), Germany (DAX and MDAX), Ireland (ISEQ), Italy (FTSE MIB), the Netherlands (AEX), Norway (OBX), Poland (WIG20), Portugal (PSI 20), Spain (IBEX 35), Sweden (OMX Stockholm 30), and Switzerland (SMI Expanded).
2 "Directive (EU) 2022/2381 of the European Parliament and of the Council of 23 November 2022 on improving the gender balance among directors of listed companies and related measures,” EU-Lex, November 23, 2023.