The global pandemic, racial and social justice movements, geopolitical tension, wars, increased polarization, and climate change urgency; in recent years, the world experienced a series of shockwaves and unprecedented events impacting society, communities, and organizations. Together, these experiences have left an undeniable mark on our society and all actors in it. In the corporate environment, companies have been reconsidering how to do business. This has manifested in a drive towards individual and organizational purpose.
Corporate leaders are more and more turning towards board directors with expertise and experience in areas like sustainability, cybersecurity, and diversity, equity & inclusion (DE&I). While knowledge in these areas was once a nice-to-have, today those characteristics are rapidly becoming mission-critical for board members to guide corporations in navigating the changing landscape and managing unexpected - yet inescapable - crises.
The golden egg
In the past, corporate board diversity has been largely catalyzed by legislation. Today, companies are embracing the opportunity to attract new directors with a skill set that brings traditional governance knowledge and experience together with command in the fields of cybersecurity, sustainability, or from different industries. Corporate leadership is increasingly finding this mix of skills in first-time directors – a trend that started in Q3 of 2020.
According to Heidrick and Struggles, in 2021, 449 board seats in Fortune 500 companies were appointed to directors who had never been board members at a public company before. At 43%, this is the highest percentage of first-time director appointments since Heidrick and Struggles started reporting in 2015.
First-time directors can be the board’s golden egg to establish more demographic and professional diversification, bringing a broader spectrum of knowledge and skill sets inside the boardroom. For example, the number of board directors at Fortune 500 companies with a background in cybersecurity has doubled to 17% in 2021 (from 8% in 2020), thanks to a wave of first-time directors with digital expertise landing a board position. Similarly, the percentage of directors with ESG experience increased from 6% in 2020 to 14% in 2021 because of new appointments.
In these unprecedented times, companies need the experience of board members who have been through decades of economic cycles just as much as the fresh perspective from new directors to prepare and tackle today’s challenges and unfolding crises.
Doing good while doing well.
There is no perfect recipe for board composition. Depending on the company’s maturity, industry, location(s), and strategy, the leadership has to create the right mix of skills, expertise, knowledge, experience, and mindset around the top table. However, the board of an organization should embody the long-term corporate goals and purpose in order to arm the company against future obstacles. From this perspective, first-time directors can be the answer to bringing more diversity and the needed knowledge inside the boardroom, killing two birds with one stone.
At Corporate Boards USA, our mission is to prepare executives to be highly qualified board candidates. We offer our members educational courses and events, networking opportunities, boardroom news, workshops, and mentorship programs. If you’re serious about getting on the path to the boardroom, apply for membership. We Make You Board Ready.