WASHINGTON, April 7, 2011 /PRNewswire/ -- The National Association of Corporate Directors (NACD) reported today that for the second straight quarter, U.S. corporate directors' confidence continued to rise, according to the NACD Board Confidence Index (BCI), a leading indicator of the health of the economy as viewed through the corporate boardroom lens. The Board Confidence Index revealed overall board confidence increased to 64.9 in Q1 2011 from 64.4 in Q4 2010.
Despite this growing confidence, directors' optimism in the progress made over the past year and past quarter was tempered by a slight decline in expectations of future economic conditions. Overall, expectations for the next quarter dropped from 60 in Q4 2010 to 57 this quarter, while projections for the next year dropped from 71 last quarter to 69. However, companies with revenues of more than $10 billion were more confident across the board about both conditions compared to a year ago and looking ahead to the next year.
"NACD's Board Confidence Index gives a voice to directors about the state of the economy and their own companies' plans," said Ken Daly, president and CEO of NACD. "Since directors play such an important and integral role in managing and directing companies, their insights are a strong indicator of overall trends in corporate America."
NACD introduced its quarterly Board Confidence Index in October 2010 to measure corporate directors' level of confidence in the overall economy as well as provide a board perspective on the state of specific industry sectors. Ratings above 50 represent positive sentiments about the state of the economy, based on average scores between 0 and 100 assigned by directors.
The NACD BCI for the first quarter of 2011, compiled each quarter in collaboration with executive compensation consulting firm Pearl Meyer & Partners and leadership advisory and executive search firm Heidrick & Struggles, reflects the views of 176 leading corporate directors about the state of the economy and their own organizations' plans for the future. The data was broken down by sector and by company size based on revenue.
"Directors continue to be guardedly optimistic about the future, a trend that began last winter," said Theodore L. Dysart, vice chairman at Heidrick & Struggles. "While directors no longer show the hesitancy seen the last quarter of 2010, the current business conditions have not yet improved to a point that encourages outright enthusiasm."
When asked to compare the current state of the economy compared to a year ago, the directors registered a confidence index of 73 in Q1 2011, up from a level of 69 in Q4 2010. Looking at changes in conditions from the previous quarter, as opposed to the previous year, directors' confidence also improved, registering a 61 in Q1 2011 versus 59 in the previous quarter. In general, the financial, industrials, and information technology sectors were more confident about their industries in relation to the overall market.
"As the economy improves and more companies seek to poach top talent from their competitors, they all will be more challenged to balance retention concerns with the need to preserve a meaningful tie between pay and long-term performance," said David N. Swinford, president and CEO of Pearl Meyer & Partners.
The NACD Board Confidence Index provided some positive signs for job growth. A third of the directors said their companies' hiring practices resulted in a net gain last year, while 48% said their hiring remained the same. Looking forward, 35 percent of the directors indicated their companies planned to expand their workforce in the next quarter.
The results from the NACD BCI for Q2 2011 are scheduled for release in June.
The National Association of Corporate Directors (NACD) is the only membership organization delivering the information and insights that corporate board members need to confidently confront complex business challenges and enhance shareowner value. With 11,000 members, NACD advances exemplary board leadership. NACD is focused on creating more effective and efficient boards through director-led education and peer forums to share ideas and leading practices based on more than 30 years of primary research. Fostering collaboration among directors and governance stakeholders, NACD is shaping the future of board leadership. To learn more about NACD, visit NACDonline.org. To join, please contact Kelly Dodd at [email protected] or 202-380-1891.
About Pearl Meyer & Partners
For more than 20 years, Pearl Meyer & Partners (www.pearlmeyer.com) has served as a trusted independent advisor to Boards and their senior management in the areas of compensation governance, strategy and program design. The firm provides comprehensive solutions to complex compensation challenges for companies ranging from the Fortune 500 to not-for-profits as well as emerging high-growth companies. These organizations rely on Pearl Meyer & Partners to develop programs that align rewards with long-term business goals to create value for all stakeholders: shareholders, executives, and employees. The firm maintains offices in New York, Atlanta, Boston, Charlotte, Chicago, Houston, Los Angeles and San Jose.
About Heidrick & Struggles
Heidrick & Struggles International, Inc., (NASDAQ: HSII) is the leadership advisory firm providing senior-level executive search and leadership consulting services, including succession planning, executive assessment and development, talent retention management, transition consulting for newly appointed executives, and M&A human capital integration consulting. For almost 60 years, we have focused on quality service and built strong leadership teams through our relationships with clients and individuals worldwide. Today, Heidrick & Struggles' leadership experts operate from principal business centers in North America, Latin America, Europe and Asia Pacific. For more information about Heidrick & Struggles, please visit www.heidrick.com.
Henry Stoever, Director of Marketing
National Association of Corporate Directors
SOURCE National Association of Corporate Directors