For many years, Heidrick & Struggles has been tracking the trends that have shaped the global governance arena including important long-term changes in board independence, diversity, financial oversight, risk management, and in the shareholder base the directors serve. 

More recently, we have been helping our clients understand the expanding environment in which they are operating. How is the role of business in society changing? What are the implications for directors? What does the future hold?

Clarity has been hard to find as directors struggle to draw reasonable boundaries and consider their responsibilities in the midst of a rolling global pandemic, geopolitical uncertainty and conflict, emerging technologies, cybersecurity concerns, and a long list of social and environmental concerns. While there are important industry and regional differences—indeed, differences from one company to another, most accept that the role of the board is expanding. More is at stake. More is uncertain. And more is expected now of directors. 

While this expanding role creates added pressures, it is also creating opportunity. 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 

1. Who is influencing the board agenda today—and are board members happy with that?
2. Where does the board spend its time—and are those the right places?
3. How are boards addressing the widening risk environment?
4. Are boards more operationally involved?
5. How should boards engage with the workforce?
6. 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. Respondents across Latin America—in Brazil, Colombia, and Mexico—particularly highlighted increased influence from consumers, the CEO and leadership team, and regulators. Given social shifts in Latin America, governments with stronger social and regulatory agendas, and customers rapidly shifting their preferences to more agile and socially conscious companies, these groups are becoming paramount to address going forward. In Latin America and Mexico, regulators are increasing their influence in sectors other than financial services, and expectations are that that trend is likely to increase, particularly in the energy, infrastructure, and industrial sectors. To make the most of increased opportunities for both local and foreign investment in Mexico, maintaining good relationships with regulators, developing a profound understanding of regulatory changes, and lobbying efforts will be paramount.

Where does the board spend its time—and are those the right places?

Globally, more respondents report spending more time on emerging technologies and AI as well as cybersecurity compared to pre-Covid than any other category. Consistent with our findings on who is influencing the board, attention to mainstream and activist shareholder concerns shows the lowest increase. The Latin American survey data also highlights AI but shows some other notable differences in areas of increased focus, including stakeholder and mainstream shareholder concerns and diversity. These reflect, in part, Latin American companies’ notable focus on preparing their organizations to improve their cultures and their CEO succession processes.

How are boards addressing the widening risk environment?

To better understand how boards are adjusting to this new reality, we asked what steps they have taken since Covid began to better manage uncertainty and risk. 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. However, we also see a growing willingness to draw in the contributions of “external” experts. Respondents in Latin America are somewhat less focused on talking with management and somewhat more focused on advisory boards and gaining an external perspective as they navigate through their challenges.

Are boards more operationally involved?

When we asked directors and CEOs whether their boards were more operationally involved, and thus crossing the line between oversight and management, survey respondents in Latin America far more often than others say involvement is frequent. And looking at both frequent and occasional involvement, leaders in Latin America report being involved more often than leaders in any other region.

In Latin America, respondents also more frequently cite specialized knowledge, as well as CEO bandwidth. This aligns with the diverse and complex challenges companies in the region are facing, which require boards to expand areas of specialization that current management teams are still developing (such as cultural transformation, succession, cybersecurity, AI, political and regulatory shifts, and diversification strategies).

How are boards engaging with the workforce?

Workers are increasingly influencing the board agenda globally. A number of trends are driving this, including demographic changes, income inequality concerns, talent shortages, inflation, nearshore, new labor regulation in Mexico, and the proliferation of social media organizing platforms. As we entered 2024, other recent research has found, workforce attraction and retention was the third-highest concern of directors, behind geopolitical risk and economic uncertainty—but it ranked in the bottom half of issues the board feels the company is equipped to address. To better understand the impact of this on how the board does its work, we asked respondents how they think they should engage with employees other than the most senior executives. Latin American survey respondents scored slightly higher that global average, at 88%, with CEOs and directors tied. And it’s likely even higher at family-owned companies in the region, since families shape the culture and employees appreciate having the family close to the company. For family-owned company leaders, “being seen” by the employees is a source of motivation and creates a sense of belonging. On a global basis, respondents most often preferred to engage with the workforce through the use of surveys, town halls, and direct engagement with small groups of employees without management present. Latin American leaders were generally less interested in surveys as a way of understanding employee concerns than peers in other countries.

How are boards thinking about diversity today?

BMV IPC boards are adding directors with more varied sources of expertise than in many prior years. Last year the share of seats going to people with the most traditional areas of expertise—people who have been CEOs or CFOs—fell again, and the share of first-time board members, while much lower than last year’s two-thirds, is still notably higher than in earlier years. These trends underscore boards’ interest in fresh perspectives and in building their knowledge in other areas, including on topics the management team is also still learning.

The share of seats going to women has remained roughly steady in recent years. Though the share is lower than in the United States, for example, it is a sign of overall continued commitment to building boards that are more gender diverse.

Recommendations

Change is a constant, and this has been particularly pointed for directors in recent years as society looks to business for more than it ever has. But the fog is clearing for boards that are learning to adapt. Many are finding that societal impact and shareholder value can go hand in hand, and, if managed well, the director role can be less overwhelming and more rewarding. We recommend that boards:

1. Increase investment in succession planning 
2. Increase stakeholder engagement 
3. Cultivate a learning culture on the board 
4. Expand sources of expertise 
5. Improve company culture

Acknowledgments

Heidrick & Struggles wishes to thank the following executives for sharing their insights: Jose Antonio Quesada, president, CNCPIE, and Yvonne Ochoa Rosellini, professional independent board member. Their views are personal and do not necessarily represent those of the companies they are affiliated with.

Heidrick & Struggles also wishes to thank the following colleagues for their contributions to this article: Lewis Adams, Lydia Peraza, and Carlos Vázquez.