Romanian boards of directors will focus on strategy and performance but lack interest for talent, succession and innovation
Bucharest, 28 November 2014 – More than half of the directors (58%) in Romania focus on strategy and performance, according to Deloitte’s Global Director 360°: Growth from all Directions survey which was launched during the “Corporate Governance- State of Affairs” organized today by Deloitte Romania together with the Bucharest Stock Exchange (BSE).
Executive remuneration (21%) and the global financial crisis as well as anti-corruption/ anti-fraud (each 16%) are also high up on the boards’ agenda.
The Global Director 360°: Growth from all Directions survey provides the perspective of 317 boardroom directors at public and private companies across 15 countries and regions. The survey highlights changes in key governance, regulatory and compliance concerns that companies around the world are facing in today’s challenging business environment.
“The top three issues that are on the agenda of the Romanian boards of directors mirror the global results. These results may indicate that boards are moving away from austerity policies and are focusing more on company performance,” said Ahmed Hassan, Country Managing Partner Deloitte Romania.
At other end, among the least important on the directors’ agenda are talent, succession planning, competition and environment as none of the directors have shown interest in these topics. Even more, they are not considering these topics as their priorities in the near future.
Ahmed Hassan further comments: “It appears that boards consider strategy and performance as key issues but when they come to talent and succession planning, they do not put it on their agendas, which can be considered counterintuitive in many ways. Also in light of all the recent discussions around technology security incidents and data breaches, it is surprising that we are not seeing an increased number of boards planning to discuss the security risks facing their company. Failure to take preventative measures to protect against breaches in security poses a huge risk to organizations. Such risks can adversely expose organizations to internal control deficiencies and reputational risks; that may ultimately result to in lost revenues.”
While looking at the next 12 to 24 months, the perspective slightly changes: while strategy and performance remain top priorities for directors (staying at 58%), along with regulation, governance and compliance (37%), growth becomes a more important issue (from 5% to 37%). Surprisingly, executive remuneration is completely deleted from the directors’ agenda for the future as none of them take it into account. Furthermore, anti-corruption/anti-fraud is no longer such a big concern, dropping from 16% to 5%.
Operational infrastructure has gained significant focus on the boards’ future agenda, as 16% of directors would consider it as a focus area.
And even though 5% of directors surveyed said diversity had been a concern in 2013, none of them said this is now a concern going forward.
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Highlights from the survey for Romania include:
- Processes to evaluate board performance are not sufficiently robust: Less than 50% of the Romanian directors surveyed considered the processes for evaluating board performance to be sufficiently robust. It is the general feeling that board performance evaluations are an area for improvement.
- The results of the board performance assessment are not used to affect future change: Romanian director respondents widely believed that the results of the board performance assessment are not used to affect future change. However, a strong minority (37%) held the opposite view.
- Diversity in the boardroom: In Romania, diversity policies for board composition are implemented less frequently than the global average (26% vs. 37% globally), as well as most European Union member states. However, these levels are expected to increase as diversity directives are adopted at the EU level.
- Interaction between shareholders and boards expected to increase: The overwhelming majority of the director respondents in Romania believed that their level of interaction with shareholders will increase in the years to come. This trend may push boards to implement more transparent policies and procedures, allowing shareholders to access information once privy only to boards and management.
- Social media not used by majority of board directors: Nearly two-thirds of all directors surveyed stated that their board does not use social media, which is in line with the global trend. However, directors apparently do show interest in using social media as a marketing instrument.
- Global financial crisis no longer a key concern: Based on the survey responses, boards are becoming more confident that markets are emerging from the global financial crisis.