Investor Relations

Are Board Directors Facing Unrealistic Expectations?

Sixty percent say a gap exists between expectations placed on the board and what board members can actually do to accomplish strategic objectives.
Sean AlloccaOctober 24, 2016

Board directors are feeling pressure from unrealistic expectations and shaky prospects for future economic growth, according to a new survey conducted by Spencer Stuart and the Women Corporate Directors Foundation.

Group of businesspeople standing with laptop behind tableThe 2016 Global Board of Directors survey polled more than 4,000 board directors from 60 countries about the perceived political and economic landscape, strategy and risks, board governance and diversity, and other topics.

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Sixty percent of directors see a disconnect between the expectations placed on boards and what board members can actually do to accomplish strategic objectives. Of the 60%, a quarter believes the expectations “far exceeded reality.”

“Directors themselves may be more qualified than ever, but they are facing higher expectations than ever,” said Julie Hembrock Daum, head of North American board practice at Spencer Stuart. “These expectations are coming from multiple stakeholders — investors, consumers, regulatory bodies, the media — in a climate of unprecedented demands for transparency and accountability.”

Not surprisingly, public and private company directors cite different challenges to meeting strategic objectives. Forty-three percent of public company directors say the regulatory environment is their top challenge, while 48% of private directors say attracting and retaining talent is their biggest roadblock.

“We see directors seeking to stay ahead of these demands and devoting more time to board prep and information gathering,” Daum said.

With fallout from the United Kingdom’s Brexit vote still looming, 61% of board directors are uncertain about the prospect of future global growth. Directors in North America and Western Europe are particularly concerned (63%).

The survey also measured directors’ opinions on board diversity and why the number of women on boards has remained stagnant in recent years. The answers landed along gender and generational divides. Male directors say the primary reason for the paucity of women directors is the lack of qualified candidates, while women contend that diversity is not a board priority. Younger males, 55 and under, believe traditional networks are mostly male-dominated.

Both male and female directors believe that support by board leaders for diversity is the number one way to build a more diverse board. Respondents did not favor setting diversity requirements or demands from shareholders as effective measures.