"In our 11th report, it is clear there is an increased recognition of the benefits of a diverse board. More than ever, boards are acting to refresh their composition with different backgrounds, experiences and perspectives," said Deb DeHaas, vice chairman and national managing partner, Center for Board Effectiveness, Deloitte. "The results of this effort will help boards develop new approaches to address both their fiduciary responsibilities and other strategic risks and opportunities."
In January, Deloitte's Center for Board Effectiveness released the latest "Missing Pieces Report" — a multiyear study published by the Alliance for Board Diversity (ABD), in collaboration with Deloitte — that showed the number of Fortune 500 companies with greater than 40 percent diversity has more than doubled since 2012. As a sign of future progress, 94 percent of 2018 respondents of the Board Practices Report said their boards are looking to increase diversity. The majority of 2018 respondents (61 percent) said their boards are looking to increase gender diversity —exceeding race and ethnicity (48 percent) and professional skills or experience (43 percent). Boards seeking to increase their diversity most commonly look to referrals from current directors (77 percent), suggesting that networking is still key to board succession, though search firms came in a close second (73 percent).
Industry-specific experience topped the list of board recruitment priorities. Other sought-after professional experiences included: business leadership; accounting; digital or technology strategy (e.g., artificial intelligence, cryptocurrency and social media); cyber; and information technology (e.g., infrastructure, operations). While other types of professional experience, such as marketing and HR, may be underrepresented on boards (and could contribute to diversity), they do not seem to be gaining traction as standalone recruitment priorities.
Additional key findings include:
Company culture and behavior: Forty-two percent of boards are increasing focus on corporate culture as it pertains to their company's strategic priorities. Seventy-five percent of boards allocate corporate culture risk to the full board followed by 20 percent that allocate it to compensation committee. The top ways boards evaluate and participate in the company's culture are through hotline reports (78 percent), findings from investigations (68 percent) and cultural surveys (58 percent).
Shareholder engagement: Fifty-four percent of shareholders have discussed, or asked to discuss board composition and diversity, while 42 percent said social responsibility and social impact, and 35 percent say climate change and other environmental matters.
Transparency and disclosure: Fifty-six percent anticipate their companies will increase disclosure related to corporate social responsibility, sustainability and social impact in the next 12-18 months. Twenty-six percent anticipate an increased level of disclosure related to a board skills matrix, suggesting that companies are paying attention to investor demands for more information about board oversight.
Top discussion topics: Boards cited strategy as a top topic discussed at every board meeting (41 percent); followed by regulatory matters (23 percent); capital allocation (20 percent); and mergers and acquisitions (17 percent).
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