Topics:   Corporate Governance

Topics:   Corporate Governance

March 5, 2021

Directors Rank Top 2021 Trends, Reveal Room for Improvement in New Survey

March 5, 2021

A tumultuous 2020 forced organizations to adapt quickly to a highly unusual business environment. Furthermore, social justice movements throughout the year have elevated and created new urgency around diversity and inclusion initiatives. As the prospect of returning to in-person work grows ever closer, boards and the organizations they oversee will have to make difficult choices regarding which of the practices adopted out of necessity in 2020 will be carried into 2021 and beyond. The 2020-2021 NACD Trends and Priorities of the American Boardroom report provides an overview of these and other issues that directors feel are most likely to impact boards in 2021, and explores the areas in which they believe their boards most need to improve to oversee their businesses effectively.

Among the top five trends directors believe will most influence their organizations in 2021 are several that reflect fundamental changes to the ways in which companies get work done as a result of the COVID-19 pandemic. Given the increased reliance on technology over the past year to reach customers and connect employees, it may be no surprise that the increasing pace of digital transformation is the most widely cited trend, with 50 percent of respondents ranking it among their top five. Many organizations rapidly changed their information technology infrastructures to enable and secure remote work or hastened automation initiatives to minimize in-person, labor-intensive work. Meanwhile, maintaining a safe work environment for employees as they return to shared office spaces and other workplaces is a key concern, particularly among those operating in sectors that do not lend themselves readily to remote work, with 49 percent of respondents ranking it among their top five.

Boards had to adapt many of their own practices in 2020, as well. Director time spent on public-facing duties and travel was necessarily reduced due to pandemic restrictions. However, time spent in (virtual) board and committee meetings and on reviewing reports and materials from management increased by 10 percent and nine percent, respectively, in 2020. Independent public company director time spent on director education also increased by more than a third relative to the prior year, but many board members would like to up this number: 49 percent of survey respondents feel that their boards did not dedicate sufficient time to director education in 2020.

As previously noted, last year was also an inflection point for social justice movements. Diversity, equity, and inclusion (DE&I) practices are now front and center for many organizations as a result of heightened social expectations from consumers following the summer 2020 protests against racial injustice. Stakeholder groups, including large institutional investors, are demanding greater accountability for and disclosure on organizations’ DE&I efforts. These widespread calls for action in mind, 43 percent of respondents feel that their boards did not dedicate sufficient time to the oversight of organizational diversity and inclusion in 2020. Directors are also beginning to look for ways to bring the benefits of diversity to the board level itself. More than a quarter of respondents (26%) indicate that more time should be dedicated to listening to diverse voices in the boardroom, and 28 percent want to allocate more time to expanding the diversity of management voices presenting to the board.

These trends and priorities, and more detailed in the 2020-2021 NACD Trends and Priorities of the American Boardroom report, reflect a world forever altered. Organizations and their boards should work to grow from and capitalize on the lessons of 2020 and these resultant trends to get a head start on whatever trends come next.


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