Optimism may be growing that there is a future for business beyond the pandemic, but confidence among C-suite members also appears to have wilted over the past year. Recent research appears to show that while company chiefs are upbeat about a come-back after Covid-19, they seem less certain of their ability to deal with digital strategy or diversity and inclusion issues. Elsewhere, a hefty proportion of chief executives feel unable to rate the advice they receive from boards. What’s going on?
The findings come from research conducted by global headhunter Russell Reynolds after questioning 1,300 board directors, chief executives, C-suite members and next-generation (one or two levels below executive level). They find “bullishness” among leaders about their pandemic response with 91% “very positive” about addressing the impact of Covid-19. But they are much less so when it comes to digital strategy, ESG and diversity and inclusion. For example, around 74% of board directors and chief executives feel their business are up to managing ESG issues, while only 57% of C-suite members feel likewise.
Indeed, C-suite members register some of the lowest levels of confidence in their company’s ability to manage digital, ESG and diversity. Board members for the most part remain more optimistic.
For some observers, nervousness about digital could simply stem from a lack of capacity to manage the issue given management resrouces were directed to deal with the challenge of Covid. Gaps in company ambitions and what they can achieve could open up.
Russell Reynolds notes that these results, especially diversity, come at a time of intense debate about the role of boards on these topics, perhaps catalysed by recent events but also fuelled by public and employee sentiment, as well as demands from investors that companies take a “stakeholder” approach to company management.
But Russell Reynolds also suggests C-suite members have less confidence because they might know more about the situation in their own organisations.
“Since these areas are typically overseen by C-level leaders, their limited confidence may come from a more realistic and less idealistic vantage point than that of others,” the report says.
C-suite confidence in counsel
Confidence levels might also be driven by other issues. When drilling down into in key factors, the research finds the lowest levels of optimism in the question of executive teams having the “right capabilities to lead the organisation”. Board directors remained fairly sure they did; scepticism among chief execs, the C-suite and next generation managers were all below benchmark.
But there are also problems between executive leaders and board members. Around 40% of chief executives could not say they received good advice from their supervisory boards. There are even higher levels of doubt among C-suite and next-gen managers. Naturally, more than 80% of supervisory board members rate themselves as providing decent counsel.
What’s going on here? Russell Reynolds believes it may be a result of blurring the lines between boards and executives. The “pressures” of serving on contemporary boards might be a part of it.
“In an era when investors are exerting direct or indirect pressure on boards,” says Dean Stamoulis of Russell Reynolds, “we have seen directors feel more responsible for the practices in the company, which leads them to get more closely involved.”
But there are other potential explanations. One is a difficulty for boards to keep up with developments. According to Jacqui Ferguson, a non-executive and former executive in the tech industry, the problem could be that the volume and rate of change in digital technologies and the intense focus on ESG issues has accelerated the rate of disruption in business. “How many board members have experienced that level of change and are in a position to offer advice?” she asks. “These are unprecedented times.”
Some of these tensions will no doubt resolve in the near future as the pandemic recedes. Smart board members will be keeping watch on the shifting boundaries between executives and non-executives. That said, ESG issues remain, some of them transformed permanently by Covid-19. Boards may be yet to fully catch up with those.