Some Inconvenient Issues Just Got Added To A Crowded Governing Board Agenda
The Forbes article, "Some Inconvenient Issues Just Got Added To A Crowded Governing Board Agenda," was based on our paper, "2021 Global Leadership Monitor: Leadership Preparedness for the Road Ahead." The article is excperted below.
A new leadership survey from the governance consulting firm Russell Reynolds contains several surprising results that should attract the attention of boards and corporate executives across industry sectors. These results may affect how boards orient the purposes of the company, maintain the respect of the management team and oversee talent management, among other tasks. Russell Reynolds' “2021 Global Leadership Monitor” identifies some troubling issues that may require prompt attention before the board can comfortably turn to more pressing strategic concerns.
The survey received responses from over 1,300 business leaders across 53 countries and all major industry sectors. It is intended to track both the top business issues, and leadership’s preparedness to face them. The survey findings highlight the significant challenges and implications business leaders have faced since the beginning of the pandemic, as well as their expectations regarding the pathway forward.
As corporate leadership embraces “the reopening” and shifts into full “business resiliency” mode, the survey provides a useful resource to governing boards—even as it raises some possibly inconvenient and troubling concerns. To that end, several “take-aways” are worthy of board member focus:
The first key takeaway is that the evolution away from concepts of shareholder primacy seems to be proceeding more rapidly than many have otherwise expected. The survey concludes that while the customer is the stakeholder that will most directly impact business strategy over the next five years, employees—and not investors—are perceived as the second most important stakeholder group.
This relates, of course, to the new standard of corporate responsibility adopted by the Business Roundtable in 2020, reflecting a commitment of service to the full breadth of corporate stakeholders including customers, employees, suppliers and communities as well as shareholders. The new survey results suggest that companies are increasingly recognizing the long term value to themselves (and to society in general) from a commitment to meeting the needs of all stakeholders.
This recognition will likely be manifested within the boardroom in two ways. First is the extent of board oversight of workforce culture issues such as return to work policies, workplace health and safety, gender equity and just compensation. Second is the extent to which the interests of the non-traditional stakeholders (e.g. employees, consumers, vendors, the community) shape board decisions. This is particularly the case with respect to corporate decisions to adopt positions on social justice that are consistent with the interests and perspectives of their workforce.
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