Economic confidence is improving, but uncertainty around the UK’s continued membership of the EU and a reduction in red tape are strong concerns in the latest FT–ICSA Boardroom Bellwether report.
The biannual survey, which shows how boards are responding to the challenges of the economy and the wider business and social climate, also found that one-third of boards do not now expect to meet the target of 25% women on boards by the end of 2015—the most pessimistic result since December 2012.
Rowena Ironside, chair of Women on Boards UK, said: “Reduced red tape is the manifesto commitment most companies want, according to the survey. Changing the status quo is always hard work, so a stalling of momentum is not a surprise. The important thing in maintaining progress in the long run will be to keep a spotlight on the increasing body of research which demonstrates that diversity of leadership strengthens organisations, economies and society.”
According to the survey, economic confidence is returning after a sharp fall in December 2014. Possibly as a consequence of a more decisive election result than expected, 74% of respondents anticipate improvement in UK economic conditions in the next twelve months, up from 45% in December.
Companies are more optimistic about the global economic outlook as well (up to 57% from 33%), but this optimism is not translating into plans for expansion.
Despite the election of a government that emphasises its support for business, two-thirds of those companies replying anticipate no change in their expansion plans in the UK and Europe over the next 12 months.
UK exit from the EU
Sixty-three percent of respondents rated a UK exit from Europe as being potentially damaging to their company, but companies are unwilling to voice this publicly. Only 7% indicated that their company would be willing to speak out for the UK to remain part of the EU.
The report noted that nervousness about the government’s position on EU membership could be one reason for the lack of expansion plans.
Matthew Fell, director of competitive markets at the CBI, said: “Firms want to see the EU do more of what it does well, like turbo-charging the single market in services and digital and signing more trade deals with the rest of the world, such as the Transatlantic Trade and Investment Partnership, and less of what it does badly, including regulating on lifestyle issues.
“Business also wants to see safeguards to protect countries outside the eurozone, like the UK.”
According to the report, culture and behaviour are becoming more of a priority, with boards recognising the value of externally facilitated performance evaluation in helping to drive change.
Many boards are also actively consulting with employees about corporate culture.
Ethnic diversity was the lowest scorer in terms of board diversity, and succession planning is still not receiving the focus it should.
Peter Swabey, ICSA policy & research director, said: “Board composition, succession planning and building the talent pipeline are all major considerations for boards. It is time Nomination Committees came out of the shadows. The fact that 63% of those companies not expecting to hit Lord Davies’ target have no plans to do so in the short, medium or long term is worrying.”
David Styles, director of corporate governance at the Financial Reporting Council, agreed: “Succession planning is essential to delivering an effective business strategy. It is pleasing to see that it is identified as an important issue which Nomination Committees should pay closer attention to.”