Chair of the future—United States

Chair of the future—United States

This is the latest in a global Deloitte series of similar reports based on interviews with board chairs of leading companies throughout the world.

Chairs are not dwelling on past problems; they are aware of the past but are actively seeking new solutions. They are taking on a wide range of issues that modern boards should address—including the very processes by which boards operate. They are passionate and purposeful.

For these and other reasons, we believe that the chairs of the future can create boards of the future—boards that will be resilient, will identify, grow, and empower the next generation of leaders, and will continue to drive excellence.

Boards need to evolve, but how?

The role of the board in the United States has been and remains “oversight.” However, as the agenda for business has broadened, the number and complexity of responsibilities of boards of directors have dramatically increased. In addition to perennial topics such as strategy, succession planning, and financial reporting, boards are now expected to address, and are addressing, a much broader range of issues, including diversity, equity, and inclusion; workforce health and well-being; climate change and sustainability; and the very nature of the corporation’s role in society. In fact, there is arguably no area of corporate activity for which the board is not viewed as responsible. While business has emerged as the most trusted institution,¹ the pressure to maintain momentum is high as critical decisions across return to work, employee safety, and meaningful action on social issues are made. As a result, boards are experiencing unprecedented scrutiny and pressure, with the understanding that any act or omission is likely to be greeted by the media, investors, the government, and the public at large with the question, “Where was the board?”

Many boards understand that they need to evolve in order to address the ongoing expansion of their responsibilities. However, the steps needed to evolve are not clear.

Look to the board chair

Our experience working with boards strongly suggests that board leadership—that is, the board chair—is a critical determinant of whether and how boards rise to the challenges of their many new and growing responsibilities. In short, boards need chairs of the future to become the boards of the future—and without a chair of the future, a board may not be able to get there.

Rethinking board leadership

With an understanding of the collective mindset of chairs today, we identified nine areas that chairs are keeping front and center as they seek to transform their boards for the future. These represent not only the substantive matters boards oversee, but also their processes, and how the two intersect and may need to evolve.

Board composition
Disruptive issues such as crisis resiliency, technology, cyber, and the future of work are demonstrating the importance of a mix of competencies and experiences as a critical element of board composition. There’s also a positive dynamic at the intersection of demographic diversity and diversity of skills.

Board education
Chairs are experimenting with techniques to encourage a mindset of continuous learning through formal programs and otherwise to stay knowledgeable on the areas affecting their organizations, to enhance directors’ ability to govern effectively, and to help new directors onboard.

Board meetings and materials
Chairs are giving careful consideration to the pre-reads and other materials provided to the board and to the conduct of the meetings themselves. They are also focusing on and rethinking details that may have been “givens” in the past but that can make a great difference in the time available to boards and committees of the future.

The board’s role
Chairs are giving considerable thought to how the role of the board could and should evolve. As one chair points out, get comfortable with change.

Committees
Chairs are thinking about the roles of these committees, whether other committees are needed, such as a talent committee, and how the role of committee chair can help to improve individual directors’ performance.

Corporate purpose and the role of the corporation
Until recently, the purpose of the corporation and its role in society were not on many boards’ agendas. This is yet another topic to which the chairs have given considerable thought.

Management succession planning
Boards are reassessing what it means to be a successful CEO in today’s environment. Chairs are treating CEO succession planning as a significant responsibility.

Stakeholder engagement
The interviews conducted in countries outside of the United States suggest that one of the key roles of the chair is that of “company ambassador”, but may be viewed differently within the United States, where the role of company spokesperson is generally regarded as residing with management rather than the board or its chair.

Strategy
Chairs are recognizing strategy as being dynamic and is discussed at many, possibly all, board meetings throughout the course of the year.

Looking ahead

Even as we may be emerging from the COVID-19 pandemic, we know that we will continue to face surprises, undoubtedly including some unpleasant ones, as well as the uncertainty that both bad and good surprises create. Chairs of the future can help their boards to be effective and prepared to adapt to these changes.

To achieve and maintain high levels of performance in a constantly evolving environment, companies must continue to attract and retain talent at all levels, including the board and its leadership. As applied to the role of the chair, this will call for many traditional attributes, but also many evolving ones, such as a focus on interpersonal relationships and leadership, an understanding of the corporation’s role in society, addressing the needs of the workforce, and maintaining a reputation for integrity. Our interviews convince us that these and other attributes are available and that our great chairs of the future will help to create great boards of the future.

Endnote

1 Edelman Trust Barometer, Business: Beware the siren song, Richard Edelman, May 20, 2021.