Hindsight, Foresight, Insight: 2023 Year in Review
This is a ONE THING article, which is featured in Future Directors’ monthly newsletter. Sign up to receive this in your inbox or join the Future Directors Hub to receive this and more.
ONE THING is for the busy (speak of the devil) Future Director, in which we pick just one thing Future Directors oughta know or do or stew on for the next month. We hope you get something (at least one thing) out of it.
For the final One Thing of 2023, Future Directors Paul Smith and Aisling Blackmore, alongside our international governance network, reflected on the year that was and the year that’s coming.
What did we see?
Future Directors Founder, Paul Smith
Future Directors Head of Programs & Consulting, Aisling Blackmore
Growing awareness of the importance of (proactive) good governance rather than (reactive) crisis management. However, the ongoing barriers to accessing support are funding and time.
Where organisations have accessed capacity-building funds through government or philanthropy, we’ve seen boards embrace change enthusiastically.
Focus on board and committee recruitment processes. There is an increasing appetite for inclusive, transparent approaches that reach beyond the immediate network of the organisation and the current board. While some organisations are turning to large board recruiters, we’ve been fortunate to explore options with organisations to build internal capability in board recruitment and help design innovative methods grounded in their unique culture and values.
More interest from boards and organisational leaders in how they can transform or evolve their governance structures. This seems to have two key drivers:
The need to shape board dynamics so everyone around the table can contribute confidently.
The realisation that you won’t manage what is not measured
To round out this section of looking back at the year that was, we asked a few governance geeks for their One Thing.
Here’s what they had to say…
Lisa Coletta
Lisa Coletta (The Governance Collective, Australia): Boards have displayed a significant shift in their risk appetite, towards taking on more risk. To support them, they’re becoming more effective at seeking and implementing support from internal (committees) and external groups (advisory bodies)
Matt Fullbrook
Matt Fullbrook (Canada’s #1 board effectiveness expert): What struck me the most in 2023 wasn't anything new. It was my own realization, that most of the highest-profile boardroom problems have been completely unchanged since what seems like forever. Boards want to spend more time on strategy. Boards need more diversity. Boards are too independent or not independent enough. How is it possible that all of these issues have stuck around for so long?
Maali Khader
Maali Khader (CEO of the Middle East Institute of Directors): With increased regulation, I have seen more focus on certain best practices; such as the appointment of independent directors, board evaluations, and ESG disclosures. Whilst there has been more discussion on diversity, not much has shifted in reality.
Paul’s (one more) One Thing: AI, AI and AI. With the explosion of generative artificial intelligence with the likes of ChatGPT, our world is now moving into a new technology age. As an interesting aside, we saw more stories about poor board governance hit the media, and one of those concerned OpenAI, the company behind ChatGPT.
John Harte
What’s coming?
We challenged ourselves to take a guess (or a wish!) at one change or trend we will see in the new year.
Giselle McLachlan
John Harte (Managing Director of Integrity Governance): We all hear about the VUCA world - Volatility, Uncertainty, Complexity, and Ambiguity. We are in a world that is arguably more unstable than 1938. It’s a major year for elections. Good boards and their chairs are going to need to demonstrate their own VUCA - Vision, Understanding, Courage, and Adaptability - as a response.
Giselle McLachlan (Founder of Grounded Governance, New Zealand): I hope for a greater sense of shared leadership and teamwork across organisations, whatever their structure. From “us and them”, to “more we” - and I’ll be doing what I can to make this happen!
Aisling’s Prediction: Declining social cohesion becomes a risk that needs to be discussed in all boardrooms. We’re experiencing a decline in social cohesion globally and this is likely to worsen in 2024. As a result, all organisations will need to think about how they maintain operations and social licences in a world that is less trusting, more unequal, and increasingly fragmented.
Paul’s prediction: I expect to see a deeper examination of the role of the board chair and the idea of them as “first amongst equals”. The Chair is a critical role and is now expected by many external stakeholders to take on a more active leadership posture when it comes to decisions, board culture, and accountability.
Lisa’s Prediction: The most successful companies would have significantly increased their rate, speed and agility of decision-making in boardrooms compared to past years, especially given the increase in quality information available.
Maali’s Prediction: This would need to be divided into two parts: (a) expected: more board reporting and disclosures of performance, remuneration, etc.; (b) desired: more focus on the process of director election and how transparency, fair and accountable is such process to ensure a diverse and best-fit board.
So what?
There’s an opportunity for governments, philanthropists and larger corporations to continue to evolve their concept of supporting sustainability to focus more on governance maturity and evolution.
There’s no room for directors who only read the paper pack anymore. Directors must engage in ongoing education about models of decision-making and consensus-building and be deeply curious about what is driving change and events in the world around them.
Technology and data are game-changers for boards, but they need to learn how to embrace this fast-paced world and not bury their heads in the sand. AI will continue to disrupt and dominate the governance of all types of entities.
How did we do this time last year?
Finally, and for a bit of fun, here’s our scorecard for last year’s review
View from 2022: COVID continues. COVID is not over, and as new variants develop, the active role for organisations in promoting and supporting positive public health measures will continue to be important.
Now we’ve been through 2023: we’ll give ourselves a tick for this one.
View from 2022: Maturing approaches to diversity and inclusion. It continues to be increasingly important for organisations to have mature approaches to diversity and inclusion.
Again, we’ve seen DEI continue to be a major issue for boards. So a tick for us. However, discontent continued to surface in many areas. With elections coming in many parts of the world, elements of DEI could be key ideological battlegrounds.
View from 2022: Burnout and cumulative stress impacts. Cumulative negative impacts on mental health and wellbeing across all sectors, meaning boards must take much more action to support and care for the wellbeing of their people.
Now we’ve been through 2023: Tick here too - boards are experiencing pressure in two directions on this issue - increasing regulatory requirements for management of work health and safety including psychosocial injury whilst exposure to traumatising events has increased due to escalating global conflicts.
View from 2022: Innovation and technology. We can’t outsource the need for boards to have a basic competency in understanding the technology stack in your business, the horizon needs, and how to manage a wide spectrum of risks to your organisation. There is a strong onus on boards to ask enough questions to genuinely understand - you can’t plead ignorance or say “the CEO didn’t tell us”.
Now we’ve been through 2023: Tick. It’s an obvious ongoing concern.
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