As a counterpoint to last week’s article on EY Center for Board Matters’
investors survey on a variety of issues including board effectiveness, this week we present findings from
PwC’s study on the views of the C-Suite toward their boards. Although, as the study points out, boards are independent from management and not directly accountable to their executive teams, the survey uncovered some significant gaps between management and boards regarding perceived board effectiveness and performance.
PwC’s annual Corporate Directors Survey, conducted with the Conference Board in 2020, includes input from over 550 public C-Suite executives across the U.S. Key findings include:
- Although 90% of executives believe their board has a deep understanding of the company, this does not translate to effectiveness – 40% said their boards are only doing a fair or poor job overall. This effect is much more pronounced in IT executives (74%) than CEOs and CFOs (25%), possibly reflecting the limited interaction with the board that those executives enjoy.
- The vast majority of executives (82%) think at least one director on their board should be replaced; 43% think two or more should be replaced. Only 37% think their directors come fully prepared to meetings while only 30% said their boards respond well in a crisis.
- Executives are much more concerned than directors about director age and overboarding. Interestingly, 25% of C-Suite executives said their board is too reluctant to challenge management (compared to 18% of directors) and only 9% said their board oversteps their oversight role (compared to 18% of directors).
As investors and outside stakeholders continue to focus on issues like board effectiveness, board refreshment and diversity, it is more important than ever for boards to consider a more robust approach to managing board performance. This could include third-party oversight of board evaluations, including seeking feedback from management. A strong commitment to good director onboarding and ongoing education, highlighted in the
Center’s Guide to Director Onboarding, is also a critical deliverable.
