Leveraging data from PwC’s annual corporate directors’ survey, "Board Effectiveness: A Survey of the C-Suite" from PwC and The Conference Board reveals the results of a fall 2023 survey of more than 600 public company C-suite executives on their views of the performance of their boards of directors as compared to (where relevant) directors’ perspectives on the same topics from PwC’s 2023 Annual Corporate Directors Survey (which we reported on here).
Notably, respondent executives gave directors high marks on their oversight of corporate strategy (80%), key business risks and opportunities (71%), and executive compensation (70%). In addition, more than three-quarters of executives trust their boards to engage with the company’s shareholders and about two-thirds trust their boards to make decisions consistent with the company’s purpose and values; guide the company through crisis; and effectively identify CEO succession candidates—all representing measurable improvement in management’s trust in the board from the prior year’s survey.
While the reported gaps in perspective between executives and directors are instructive, they also reflect fairly significant variability in viewpoints among different management roles represented by survey (see respondent demographics on page 37 of the report) based, at least in part, on the quantity and quality of each respondent’s interactions with their board. This is evidenced by the survey findings on overall board effectiveness, wherein 20% of all respondents reported their boards’ overall effectiveness as “poor,” compared to responses from respondents represented by roles that tend to have the most interaction and engagement with the board, board committees, and individual directors. In that regard, just 2% of CEO respondents and 8% of CFO respondents characterized their board’s overall effectiveness as “poor.” Similarly, 86% of CEO respondents and 64% of CFO respondents—vs. just 30% of all respondents—characterized their board’s overall effectiveness as “excellent” or “good.” Divergent views by function/role were also evident in a prior year survey that reported certain results in this manner (p8). The foregoing notwithstanding, significant variations in perspective may themselves impede board effectiveness or be indicative of an opportunity to enhance board or management behaviors or practices.
Subject to the foregoing context and other board-management dynamics that are not apparent based on the survey data alone, other significant gaps in perspective on board effectiveness between directors and the C-suite include:
Board composition—92% of executives vs. 45% of directors believe at least one director should be replaced. 41% of executives compared to just 4% of directors believe that more than two directors should be replaced.
Overboarding—69% of executives, compared to just 7% of directors, think their directors are overboarded.
Board issue-specific oversight—Directors generally received mixed reviews from management teams on their understanding of key company issues, as shown here:
Board meeting preparedness—94% of directors report having enough time to prepare for board meetings. However, nearly half of executives (49%) indicated they consistently observe unprepared directors.
Director expertise—Executives identified Industry expertise, Regulatory / Public Policy expertise, and Environmental / Sustainability expertise as the most important areas of expertise to have represented on the board. In contrast, directors cited Finance, Risk Management, and Operations expertise.
The report includes suggested action items for executives and directors to help bridge the perspective and performance gaps. Complete survey findings are in the Appendix.
See the key takeaways online; “Backlash in the boardroom: More CEOs and C-suite executives want to see board members ousted” (Fast Company); and additional resources on our Board Practices page.