Executives Feeling Better About Their Boards, Says PwC

Over a third (35%) of executives now think their board is doing an excellent or good job, up from 30% last year, according to PwC’s fifth annual Board Effectiveness: A Survey of the C-Suite.

Why it matters: As directors are called upon to do more than ever before, with unprecedented levels of scrutiny and even personal risk, it’s critical that executives are confident in board effectiveness. The study shows progress, but there is considerable room for improvement.

What they’re saying: Executives reported higher levels of confidence in the board’s ability to engage with shareholders (88%), guide the company through a crisis (70%) and assess their own performance (60%).

• Confidence varies by role, with CEOs significantly more confident than CIOs. This could reflect the CIO’s view that boards are unprepared to handle AI, cybersecurity, or digital transformation.
• Board refreshment is a major concern (only half of executives think the board can remove underperforming directors, while less than a third think they have the right expertise).
• PwC recommends mechanisms like term limits and mandatory refreshment, but the bottom line is that very few companies are willing to take this step. A recent Society survey found the vast majority (75%) of respondents lack any kind of change-forcing mechanism.

Overstepping the role: Interestingly, the number of executives claiming directors are overstepping into management’s role doubled to 32% this year. Ironically, this is likely caused by the increase in expectations of the board – to oversee talent, culture, risk, and AI. Management wants directors with deep skills and expertise in these areas, but that may come with the price tag of high involvement.

• Almost all directors reported that they understand the difference between oversight and management, so clearly there is a disconnect.
• PwC recommends providing enough information in advance that directors feel comfortable they understand areas of risk and where their advice is helpful, not invasive. It may be necessary to revisit charters and frameworks to ensure the lines are clear.

The full report includes the survey results as well as a plethora of additional helpful reads.