Talent, technology, and cyber risk
Top private company board agendas for 2016
Private company boards really can’t do justice to one issue without addressing the other two. In addition to scheduling time to address these issues internally, boards should consider bringing in outside perspectives to help deepen their understanding.
What boards are tackling in 2016
March 18, 2016
A blog post by Roger Nanney, national managing partner for Deloitte Growth Enterprise Services, Deloitte LLP
Recently in this space, my colleague Maureen Bujno, a director in Deloitte Center for Board Effectiveness, laid out some key considerations for private-company leaders looking to strengthen their governance infrastructure and processes. Now our attention turns to three broad-based issues that are increasingly the focal point of those conversations: talent, technology, and cyber risk.
By all indications, private companies are looking to supplement their workforces at this point in the economic cycle. In our latest survey of more than 500 mid-market executives (America’s economic engine: Tapping the brakes), the majority of companies reported their workforces grew over the past 12 months, and a similar proportion expects that to continue in 2016.
The challenge is, it’s getting tougher to find those workers. Nearly two-thirds of the survey respondents say it is difficult to find new employees with the skills and education necessary to meet the needs of their business. Holding onto them is another challenge–60 percent of the companies we polled have seen voluntary attrition increase over the past 12 months.
Of course, part of this issue speaks to a labor market that is tighter than it’s been in years. But there is also plenty of room for improvement in the ways that private companies attract and engage top-shelf workers. Private companies offer a special value proposition to prospective employees–the chance to build something and participate meaningfully in an organization’s culture and growth.
To help sell that proposition, talent strategy should be a regular item on private company boards’ agendas. Board members should actively oversee the talent programs of the company, particularly those related to executive leadership succession. Working without a succession plan for key leaders can invite problems such as disruption, uncertainty, and conflict. Boards should conduct a regular analysis of the talent pipeline, with a focus on identifying critical roles and grooming potential successors at every rung of the organizational ladder.
Along with a focus on finding and developing talent, technology investments are also rising in importance. Nearly half of the middle-market executives polled in our annual technology survey indicate that their company’s leadership views technology as a “critical” differentiator and a key to future growth. Technology is also a key lure in attracting new talent, as younger workers now expect to have access to productivity-enhancing tools that help them work from anywhere and gain access to data.
Increasingly, though, private companies are worried about the costs tied to those tools. Our America’s economic engine survey found that the cost of keeping up with technological advances is a growing concern among mid-market executives, with more than a quarter calling the issue an obstacle to their company’s growth. These competing forces help explain why C-suite executives are getting more involved in technology decisions.
These investments are prompting another level of discussion around risk at regular board meetings. Cyber risk is a real and growing threat, and mobile and social media investments have the potential to make companies more vulnerable even as they make them more productive. In fact, our technology survey of the mid-market found that only half of the companies polled believe they have the most up-to-date and robust security measures in place. Governance leaders need to ensure that they have the right controls around their most sensitive assets. It’s not just about building a higher wall–private companies need detection and interdiction capabilities to quickly deter cyber criminals and limit the damage when they do get in.
These three issues–talent, technology, and cyber risk–are increasingly interconnected. Private company boards really can’t do justice to one issue without addressing the other two. In addition to scheduling time to address these issues internally, boards should consider bringing in outside perspectives to help deepen their understanding. Staying private has a number of strategic advantages, but it can also be isolating when the search for answers has organizational bounds.