Dear Clients and Friends,
As we reflect on 2023 and consider the possibilities for 2024, our Board Practice extends our heartfelt gratitude for your ongoing trust and support. It has been a dynamic and transformative year for the corporate landscape, and we are delighted to have navigated it alongside you. Leadership in the boardroom and C-Suite is simply indispensable.
In 2023 we initiated the Russell S. Reynolds, Jr. Chairman of the Year Award. The Chair of the Year Award was established to celebrate the legacy of one of the search industry’s greatest leaders and icons, Russ Reynolds, who has spent more than 50 years advising boards and CEOs on leadership. The award recognizes a Chair who successfully led a public company Board of Directors through significant business or governance challenges. As featured in Fortune magazine, the inaugural award was presented to Sarah Nash, Chair of Bath & Body Works, at our annual Directors Dinner in New York in October. Sarah demonstrated remarkable leadership juggling a spin-out of Victoria’s Secret, managing a CEO succession, handling activists as well as other business challenges all seemingly simultaneously. We were delighted to recognize her extraordinary governance and business guidance. We hope that many of you will join us for next year’s Directors Dinner and Chair of the Year Award.
Throughout 2023, the RSR Board Practice continued to act as the heart of our firm, not only assisting a wide range of clients with their critical governance related needs, but also informing and distinguishing our executive recruiting efforts. As we reflect on the coming year, we have several thoughts on governance issues that we expect to be at top of mind in boardrooms in 2024:
- Alignment of board culture, a learning mindset, and diversity of opinions are now more important than ever on boards as companies face geopolitical risks. The world has changed and what worked in the past will not work in the future. It is therefore more important than ever to perform a robust and comprehensive board competencies gap analysis. It also might be worth establishing a committee or an advisory committee to focus on geopolitical risks.
- Risk governance requires boards to focus not only on current urgent risks, but to also more carefully consider low probability or unknown risks that may have enormous impact on the business. There have been too many “Black Swan” events emerging, and as a result, boards need to do more creative scenario planning.
- Perform a board culture audit. Does the board foster an environment of intellectual curiosity, and an open and constructive dialogue without limiting different viewpoints or alienating members? Should the board have more executive sessions? Having the right culture is the foundational element of a high-performing board.
- Don’t be left behind on AI. The NACD recently reported on the acceleration of science, technology and/or innovation committees formed at the board level, noting that 67 Fortune 500 companies now have one or more of these committees.. Does your board have the skillsets in existing directors to understand generative AI, emerging/disruptive technologies, and cyber risk? Or should new directors join the board to help meet these challenges? Does your board understand and have the proper governance structure to oversee the company’s generative AI efforts?
- Improve board evaluations, including board and committee leadership, and individual directors. The Universal Proxy Card will be used in proxy contests to target the performance of individual directors. It is important to establish action plans and accountability. Evaluations can help boards plan for succession and recruit to fill gaps in skills and experience.
- Activism will increase in 2024. Is your board prepared? Do you have the right advisors?
- A new risk has emerged – 74% of executives surveyed by Mercer (Global Talent Trends report) stated that the majority of their workforce cannot adapt to the new world of work. People are the key source of competitive advantage and value creation – it is critical to know in what environments employees are productive and feel appreciated.
- Increased board and committee oversight of human capital management is required, especially in light of the new SEC disclosure rules coming in 2024.
- Lastly, board burnout is real. Time demands on directors have increased substantially. Be mindful of the capacity of directors and their ability to absorb board communications and information, as well as time allocated to meetings.
We look forward to continuing to assist our clients with their most important, complex, and sensitive leadership and governance concerns in 2024. We believe that RSR Partners is uniquely situated in the industry to provide unparalleled access to and insight into top-performing business leaders. In addition to our board recruiting capabilities, we offer our clients a broad set of other Board and CEO services. Should you have any important board or C-Suite leadership needs in the coming year, we would be delighted to share our insight and expertise to help you. More importantly, we look forward to our continued friendship with you all.