Traditional boardroom competencies are undergoing a shift in prioritisation as businesses and business leaders deal with a “perfect storm” of unforeseen and hugely challenging global events with implications for the governance and leadership of organisations.
These findings are contained in the latest quarterly Director Sentiment Monitor research conducted amongst business leaders by the Institute of Directors (IoD) in Ireland between 23rd June and 12th July 2022, and published today, 8th September 2022.
The new research has also found that business leaders are less confident about the economy, and that geopolitical/economic stability is the single biggest risk facing respondents’ organisations.
The research also found that there has been a change in the experience/expertise matrix needed to navigate an uncertain future. In this context, there have been a few notable movements between this Q2 2022 survey and that of one year ago, Q2 2021.
When the business leaders were asked, 'In respect of your primary organisation’s board and its future success, what do you believe will be the most desired experience/expertise needed over the next two years?’ 62% of the respondents selected ‘strategy’ in Q2 2022 compared to 35% in Q2 2021; 32% chose ‘risk management’ in the latest survey compared to 21% in Q2 2021; and 22% selected ‘human resources and people management’ in Q2 2022 compared to 18% in Q2 2021.
Notable decreases over the past year include cyber security, which was selected by 12% of the business leaders in Q2 2022 compared with 22% in Q2 2021 to; business continuity planning, which was chosen by 9% of business leaders in Q2 2022 compared to 17% in Q2 2021; and digital, which was chosen by 14% of respondents in Q2 2022 compared with 21% in Q2 2021.
Commenting on the findings, Caroline Spillane CDir, Chief Executive Officer of the Institute of Directors (IoD) in Ireland, said:
“Our new research comes at a time of an increasingly uncertain and unpredictable world where nothing can be taken for granted, especially future stability. We have had a succession of negative global events, a perfect storm, if you like, that has seen business confidence under severe downward pressure. It is notable that only 1 in 10 (9%) of respondents are positive about the Irish economy, and they see geopolitical/economic instability as the biggest single risk facing their organisation. It follows that business organisations are now looking at risk management, as well as ESG and strategy, as the more crucial competencies to navigate their boards in these uncharted waters. It is interesting to note that risk management did not figure as highly in our equivalent survey in Q2 2021, but is now seen among the top three competencies.”
Caroline Spillane CDir added:
“It is important that all directors and business leaders are cognisant of this evolution in the governance area and, indeed, that they keep abreast of what boards are looking for in order to meet the highest standards of good governance.”
The findings in this survey have been rounded up or down to the nearest decimal point.
The key findings of the IoD’s Director Sentiment Monitor for Q2 2022 include:
Current Director Experience/Expertise: When asked, 'What do you believe is the main experience/expertise that you bring to your primary board?' the respondents chose as follows when asked to select their top three choices from the list provided below:
- Strategy: 75%
- Corporate governance: 40%
- Risk management: 31%
- Marketing/sales/business development: 26%
- Finance: 24%
- Stakeholder engagement: 15%
- Human resources and people management: 15%
- Innovation: 13%
- Compliance and regulation: 12%
- ESG (Environmental, Social, and Governance issues): 9%
- Business continuity planning: 9%
- Shareholder engagement: 7%
- Communications and/or public relations: 6%
- Other: 5%
- Digital: 4%
- Accounting/auditing: 3%
- Cyber security: 2%
- Tax: 1%
- Data protection and GDPR: 2%
(Please note for this question, respondents were given the option to select multiple responses. Therefore, each response given is a percentage of the full sample, for example, strategy is 75% out of 100%. For this reason, the responses will not add up to 100%.)
Future Director Experience/Expertise: When asked, 'In respect of your primary organisation’s board and its future success, what do you believe will be the most desired experience/expertise needed over the next two years?' the respondents chose as follows when asked to select their top three choices from the list provided below:
- Strategy: 62%
- Risk management: 32%
- ESG (Environmental, Social, and Governance issues): 29%
- Marketing/sales/business development: 24%
- Innovation: 22%
- Human resources and people management: 22%
- Finance: 17%
- Corporate governance: 16%
- Digital: 14%
- Stakeholder engagement: 13%
- Cyber security: 12%
- Compliance and regulation: 12%
- Business continuity planning: 9%
- Shareholder engagement: 5%
- Communications and/or public relations: 5%
- Accounting/auditing: 2%
- Data protection and GDPR: 2%
- Tax: 1%
- Other: 2%
(Please note for this question, respondents were given the option to select multiple responses. Therefore, each response given is a percentage of the full sample, for example, ESG is 29% out of 100%. For this reason, the responses will not add up to 100%.)
Business Confidence in the Irish Economy: When asked, 'In respect of the Irish economy, how do you feel now compared to the previous quarter?', the respondents answered as follows (Q2 2022 compared to Q2 2021):
More optimistic
- Q2 2022: 9%
- Q2 2021: 61%
More pessimistic
- Q2 2022: 64%
- Q2 2021: 11%
No change
- Q2 2022: 28%
- Q2 2021: 28%
Risk Factors: When asked, ‘At present, what do you believe is the single biggest risk facing your organisation?’ the respondents selected as follows from a list of 20 options (Top 5 choices below.)
- Geopolitical/economic instability: 20%
- Inflation: 19%
- Labour sourcing/quality/capability/retention: 12%
- Global Supply Chain Issues: 8%
- Negative Consumer Confidence: 8%