It's apparent that 2017 is no longer business as usual. Between Brexit and an unprecedented US election that has already delivered the reversal of significant trade policies and healthcare legislation, along with massive cyber-security breaches, business leaders must step up their vigilance across all aspects of their organizations.
These political, regulatory, and technology upheavals require changes in the boardroom as well. Whether you rely on a Board of Directors, an Advisory Board, or both entities, your business requires advisors that bring expanding skillsets, knowledge, contacts, and accountability.
Peter Gleason, CEO of the National Association of Corporate Directors, predicts that the next 5 years "will be one of the most challenging periods in the history of corporate governance."
Here are the 4 most important requirements and predictions for boards in 2017 and beyond:
1: The need for global experience.
The new Administration is expected to revisit every global agreement to determine if it is in America's best interest. Relationships that have remained stable for decades are now experiencing uncertainty. Board members with strong global experience and connections will be essential for all companies looking to build an international presence.
2: The need for strong regulatory knowledge.
The New Administration is changing and reversing regulatory policy across virtually every industry. Here are just a few of the forthcoming regulatory changes:
- Healthcare sector: Trump is dismantling the Affordable Care Act.
- Telecommunications sector: Trump is rolling back net neutrality policies.
- Energy and Environmental sectors: Trump has revived the Keystone XL and Dakota Access pipelines.
- Education sector: Trump is proposing 4 new initiatives in his education policy.
- Financial sector: Trump is promising to dismantle the Dodd-Frank Act.
3: The need for strong cybersecurity experience.
Cybersecurity is the biggest risk to organizations of all sizes today. 43% of all cyberattacks target small and medium-sized businesses according to the Symantec's 2016 Internet Security Threat Report.
The average recovery cost for these businesses is $36,000. The National Cyber Security Alliance reported in 2016 that 60% of these businesses end up having to close their doors within six months of the breach. In 2017, this could add up to 550,000 business failures.
Supplementing existing boards with strong CIO/CSO experience is an important strategic initiative to ensure your organization has access to the most robust protections and strategies possible.
4: The need for greater diversity.
Greater board diversity will be instrumental to board performance, specifically in these areas:
- Race & nationality
- Generational (5 generations make up our workforce today. According to Millennial expert Gabrielle Bosche, millennials are the largest segment, and work & lead much differently than their predecessors.)
- Skillsets (technology, leadership, marketing, etc.)
- Company experience (private, public, nonprofit, and companies of various sizes)
- Industry experience (going outside your industry for new approaches to market penetration)
It has never been more important to integrate different perspectives, experiences, and problem-solving approaches into a board composition, and to ensure your Board accurately represents your employee and customer bases.
Starbucks is committed to raising the bar for Board diversity, and establishing a new precedent, with the appointment of Sam's Club CEO Rosalind Brewer, Microsoft CEO Satya Nadella, and Lego Chairman Jørgen Vig Knudstorp.
One more trend
According to the National Association of Corporate Directors, 2017 will see a dramatic increase in companies using third party search firms to seat their boards. They recognize the value in partnering with firms that specialize in helping organizations select the best advisors and directors for their organization.
Successful Culture can validate this trend. As one of the leading organizations that helps companies select and implement advisory boards using our patented SCALE Model, we see a continued increase in service requests from companies of all sizes, across all industries. Our experience confirms the increased need for these four areas of expertise.
A strong Board is one of the most important strategic weapons a business can have in its arsenal to protect against threats, and strengthen its position. How are you surrounding yourself and your company with those you need to not only survive, but thrive?