Nasdaq’s Global Governance Pulse Forecasts Priorities for Boards in 2024

4 Things Boards Should do to Engage in Strategic Discussions with Management.

A combination of higher stakeholder expectations, rapidly evolving business environments, and the introduction of new regulations and standards, are raising expectations for board service and elevating the boardroom agenda to include a broader array of topics. To help boards adapt to new requirements and prepare for the ever-changing landscape, Nasdaq’s Board Advisory team released its inaugural Global Governance Pulse report based on a survey of more than 730 board members, executives, and governance professionals across organizations and industries globally. 
 

From succession planning and board evaluation processes to expected 2024 priorities, here are four key considerations that board members should keep in mind to meet those demands:  

1. Maintain a well-balanced and effective board through the evaluation of composition and culture.

Composition and culture are essential elements to a well-balanced and effective board. Board succession planning practices are key to enhancing board composition. Nearly 78% of survey responses indicated their board has a succession plan. However, of those, 42% reported a formalized and documented plan reviewed by the board or delegated committee, which is the most proactive approach.
 

When asked how to improve board succession planning practices, more than 37% of survey responses regarded establishing a list of prioritized characteristics and competencies, such as skills, background, or experience, and board diversity goals as key steps. The right blend of board members who are able to candidly and constructively engage with one another are important to enabling board effectiveness. 
 

A board’s approach to its own succession planning often reflects its approach to corporate governance, as those with intentional practices often carry through such behavior to other board functions.  

2. Foster a performance-based culture through established board and CEO evaluation processes. 

Tone is set from the top with clear performance expectations and board and CEO evaluation processes. Over 90% of survey responses shared that their boards conduct a form of board evaluation process, most commonly facilitated through the use of a questionnaire to collect board member feedback (23%). A well-designed evaluation process and strategic plan to address identified priorities demonstrate the board’s commitment to effective corporate governance.  
 

Beyond facilitating board evaluation, the scope and cadence of evaluations must be considered when designing and implementing a process. Over 32% of responses report conducting an annual evaluation of the full board, while 8% indicate they only evaluate the full board on a periodic basis. In addition, 21% of survey responses indicated the board conducts individual board member evaluations with 15% of those doing so on an annual basis and 6% periodically. 7% indicated their board’s evaluation process results in developing specific action plans to address opportunities, weaknesses and risks. Evaluations uncover insights that determine actions, strengthen board oversight, and better prepare the board and CEO to anticipate challenges and identify opportunities.  

3. Drive efficient and meaningful board engagement through the implementation of governance processes, practices and tools. 

84% of survey responses indicated they expect increased or sustained scrutiny and time requirements for board service. In recent years, many boards have adopted new meeting practices and engagement tools that contribute to improved efficiencies and cost savings, deeper board member engagement and enhanced timeliness and quality of information delivered. Only 7% of respondents indicated that they hold all boards meetings in person. 
 

The survey found that more than 90% of respondents use board portals, the most common functions being to post meeting materials (29%), schedule board engagements (14%), securely communicate (12%) and obtain board approvals (12%). 23% of responses indicate that more board discussions and effectiveness can be improved by sharing educational resources in the board portal. Here at Nasdaq, we provide a suite of solutions that enable boards to expand knowledge, boost efficiencies and optimize board functioning with new technologies. 

4. Govern for long-term growth with a focus on strategy, risk, and topics and trends on the horizon.

Through conversations with board members, the Nasdaq Board Advisory team has found that boards remain steadfast in their need to focus on strategy and risk areas to promote organizational success and maintain a strong competitive advantage. Survey responses indicated that a clearly defined and articulated strategy and goals (16%), human capital management (13%), and technology, digital innovation, and AI (10%) are top areas expected to impact organizational success over the next 12 months. In addition, 25% indicated the need for boards to have a deeper understanding of business conditions, industry trends, competitive landscape, and legal and regulatory environments. Leveraging their experience and building expertise in new areas, board members and executives must establish clear organizational goals and constructively discuss performance, risks and opportunities.  
 

The board is responsible for ensuring an organization fulfills its purpose and pursues its mission. In fact, 26% of survey responses reported the board holds an annual strategic planning meeting and reviews management performance against the strategic plan, suggesting a correlation between boards with an annual strategy session and those that appropriately monitor performance. A more proactive and defined approach to strategy enables better board oversight.  

What Comes Next

A strong understanding of these key considerations is necessary for a board to guide and oversee strategy. Looking to next year, survey data recorded that having a clearly defined and articulated strategy and goals will be most important to ensure organizational success over the next 12 months. Human capital management and technology, digital innovation and AI round out the top of the list, which reflects key trends in the landscape. Data driven boards and organizations are prepared to make informed decisions, adapt to current and future business environments and maintain competitive advantage. 
 

Nasdaq Governance Solutions supports organizations on their journeys to achieve governance excellence with technology, advisory and community. For more insights, download the full Nasdaq 2023 Global Governance Pulse report here

© 2023 Nasdaq, Inc. The Nasdaq logo and the Nasdaq ‘ribbon’ logo are the registered and unregistered trademarks, or service marks, of Nasdaq, Inc. in the U.S. and other countries. All rights reserved. This communication and the content found by following any link herein are being provided to you by Nasdaq, Inc. and/or certain of its subsidiaries (collectively, “Nasdaq”), for informational purposes only. Nasdaq makes no representation or warranty with respect to this communication or such content and expressly disclaims any implied warranty under law. At the time of publication, the information herein was believed to be accurate, however, such information is subject to change without notice. Nothing herein shall constitute a recommendation, solicitation, invitation, inducement, promotion, or offer for the purchase or sale of any investment product, nor shall this material be construed in any way as investment, legal, or tax advice, or as a recommendation, reference, or endorsement by Nasdaq.