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Representation of Women on Boards Shows Signs of Expanding
Nov 27, 2019 | Corporate, Employment, Executive, Workforce Management
The percentage of women board members on the corporate boards of companies in the Russell 3000 index exceeded 20% in the second quarter of 2019, marking the first time women have held more than one-fifth of Russell 3000 seats, according to the findings of a quarterly index that tracks gender representation on corporate boards released by corporate governance solutions provider Equilar.
The "Equilar Q2 2019 Gender Diversity Index" (GDI), published on September 11, is the latest report since the GDI was first published in January 2017. Researchers noted that at that time, just 15% of boards seats in the Russell 3000 index—an index that seeks to serve as a benchmark of the entire U.S. stock market by tracking the performance of the 3,000 largest publicly-traded U.S. companies—were held by women, and less than 25% of board vacancies that came open were being filled by women.
The latest GDI found that the percentage of women on Russell 3000 boards increased to 20.2% in Q2 2019, up from 19.3% in the previous quarter, and from 16.9% in Q1 2018. This acceleration caused the GDI to increase to 0.40, with 1.0 representing parity among men and women on corporate boards across the Russell 3000. The index also reported that 41.9% of newly appointed directors in Q2 2019 were women, down slightly from 46.8% in Q1 2019.
In addition, the index showed that as of Q2 2019, just 10.8% (309) Russell 3000 boards were still without a single woman member. Researchers pointed out that this represents a significant decline from the 376 boards without a woman member in Q1 2019. They also noted that the percentage of women who joined these boards as first-time public company board members has surpassed 50% three of the past four quarters.
The index also revealed, however, that just 48 Russell 3000 companies have currently achieved gender parity, while 2,811 have not. According to researchers, the Russell 3000 would require an annual growth rate of women on boards of 8.56% to reach full gender parity by 2030. The GDI Q4 2018 report had projected that based on the rate of growth observed at that time, gender parity on Russell 3000 boards would be achieved by 2034.
The Challenges of Moving Up To the Top Job
Aug 15, 2019 | Executive
The chief executive officers of some of the world's largest companies report that although they felt confident in their experience and operational know-how when they were appointed CEO, they struggle with the human demands of the role, and recognize that they need to transform themselves in order to keep up with the pace of business disruption, according to a study conducted by leadership advisory firm Egon Zehnder.
The study, "The CEO: A Personal Reflection," explores the human side of the CEO role. Released on April 17, the report's findings are based on a survey of 402 CEOs from companies headquartered in 11 countries who lead organizations with estimated combined revenues of $2.6 trillion. The study found that a majority of CEOs believe they had the hard skills and professional experience to step up to the role, but found certain personal aspects of the role more challenging than they had expected: while 74% of respondents said their prior achievements and experience prepared them to be CEO, less than one-third (32%) said that with hindsight, they felt fully prepared. In addition, 50% of the respondents said driving culture change had turned out to be more difficult than they had anticipated, and 48% indicated that finding time for themselves and for self-reflection turned out to be harder than they had expected.
The findings further indicated that many of the CEOs surveyed believe they lacked some necessary supports before stepping up to their current position, with 44% of all respondents—54% of those promoted externally and 36% of those promoted internally—saying their appointment was not part of a planned and formal succession process. The survey also showed that the CEOs appointed from within a company felt less prepared than those hired from outside: only 28% of internally-selected CEOs said they felt fully prepared, compared to 38% of external hires. Moreover, while 65% of respondents said there was some succession planning underway for their own successors, just 32% said that there was currently a clear process in place.
The survey results also suggested that the CEOs are moving toward a more reflective and collaborative approach to leadership, as they recognize the importance of these soft skills and their need to adapt and change. More than half (54%) of respondents agreed that transitioning into the role required an intense period of personal reflection, and 79% said they recognized they needed the capacity to transform themselves as well as their business. However, while 78% of the CEOs said they are comfortable admitting mistakes and 70% said they are comfortable taking the heat for unpopular business decisions, only 57% of CEOs indicated they are comfortable showing emotions.
From Benefit Trends Newsletter, Volume 61, Issue 5
The information contained in this newsletter is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. This newsletter is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2016 Liberty Publishing, Inc. All rights reserved.
Many CFOs Lack a Succession Plan That Ensures a Smooth Transition
Apr 4, 2019 | Executive
Even though the departure of a key member of the executive team is among the biggest disruptions a company can face, chief financial officers (CFOs) often fail to put in place a succession plan that can help to ensure a smooth transition when they leave the organization, the findings of a survey conducted by Robert Half Management Resources indicated.
The results of the survey of more than 1,100 CFOs at U.S. companies with 20 or more employees were released on December 20, 2018. The survey found that only 52% of all respondents reported that they have identified a successor for their position, and that just 37% of the CFOs polled who are at a small business (20-49 employees) said they have an heir apparent.
Of the respondents who indicated that they do not have a succession plan, 64% said they lack such a plan because they are not planning to leave the company in the near future. The other reasons given by these respondents for not having a succession plan included a lack of qualified candidates within their current organization (17%), being focused on other priorities (14%), and a lack of concern about the company's future after they have left (4%).
Researchers pointed out that although companies faced with an unplanned departure frequently appoint an interim leader to fill the gap while a search is performed, it is prudent for executives to anticipate such a situation to ensure an orderly succession, and to prevent a protracted leadership void. They also warned that a company that does not engage in executive mentoring and knowledge-sharing can struggle with retention and run the risk of institutional expertise, and that high-level executive absences and departures can cause strategic decision-making to be put on hold. Finally, they cautioned that the lack of a defined advancement protocol can get in the way of internal promotions and undermine organizational confidence, which can negatively affect the professional development not just of executives, but of managers and staff.
Executives Report Barriers to Improving Worker Experience
Oct 10, 2017 | Executive
While executives say they understand the importance of worker experience and its impact on customer experience—and, thus, on customer loyalty and revenue—many business leaders struggle to fully implement programs that create meaningful links between worker experience and customer experience, according to a study conducted by Forrester Consulting on behalf of global services company Appiro.
The results of the study are based on interviews and an online survey carried out between February and April 2017 of 450 business leaders at the manager level and above in the United States, the United Kingdom, Germany, France, Japan, and Australia. The findings indicated that 90% of the business leaders surveyed believe engaged workers are able to provide superior customer service, and that 88% believe that worker experience directly affects their company's bottom line, including revenue and the overall return on investment of business objectives.
However, 87% of the executives surveyed reported that they face hurdles when trying to improve worker experience in meaningful ways. Researchers also observed that many leaders lack focus in their approaches to improving worker experience: 70% of respondents identified more than eight solutions for improving worker experience, and 48% admitted that they address worker experience in an ad hoc way that results in less substantial implementation.
The findings further suggested that worker experience is not an implementation priority for most executives: only 26% of the business leaders surveyed said their company has a formal, dedicated worker experience program, and 20% admitted to doing nothing to address worker experience directly.
Researchers also pointed out that while there is a growing belief that worker experience affects customer experience and the bottom line, relatively few companies evaluate worker experience by assessing improvements in their customer experience rates. When the executives were asked what metrics they use to evaluate the success of worker experience efforts at their company, the top responses were worker productivity (56%), worker retention (46%), engagement with work (44%), and profitability (43%). By contrast, the respondents were less likely to say they use customer experience scores (42%) and customer retention (32%) to measure the success of worker experience initiatives.
The survey results also indicated that more than three-quarters (79%) of the respondents acknowledge that their business faces challenges in delivering a superior customer experience, several of which are related to worker experience. When asked to identify the sources of these problems, 29% said organization structures prevent the business from delivering the intended customer service, 28% admitted that workers aren't empowered to fix the customer experience when they find problems, 26% said the business lacks the technology it needs to properly support customers, and 26% acknowledged that workers' goals don't reflect the business' customer experience goals.
Many Executives Are Flying Blind When Choosing Innovation Strategies
Aug 29, 2017 | Corporate, Executive
While global executives value innovation, many lack confidence in their ability to innovate, and are facing challenges in aligning their innovation efforts with their business strategies, according to a report recently released by professional services firm PwC.
The report's results and insights are based on a survey of over 1,200 executives and business leaders from 44 countries and all major sectors conducted between September 12, 2016 and January 27, 2017. More than half (54%) of respondents reported that they struggle to bridge the gap between their business and innovation strategies, and are thus flying blind as they place bets on innovation.
Most of the respondents also indicated that they have low levels of confidence in their company's innovation prowess, with just over one-quarter saying they believe they lead their competitors in innovation. However, 20% of these innovation leaders, but only 13% of the remaining respondents, said they expect their company to grow by more than 15% in the next five years.
When asked about the metrics they use for measuring the success of their company's innovation strategies, the top response was sales growth (69%), followed by customer satisfaction ratings (43%), number of new ideas in the pipeline (40%), market share (36%), number of new products in the pipeline (31%), the net value of the innovation portfolio (28%), and time to market (24%).
The survey findings suggested that companies are becoming more inclusive, and are increasingly adopting open innovation models that bring more voices to the table, including employees and customers. When asked to name the most important internal and external partners for innovation at their organization, 60% of respondents cited internal employees, 50% mentioned technology partners, and 35% cited customers via focus groups, data mining, and other forms of feedback. Moreover, when asked what operating models their organization currently uses to drive innovation, the respondents were most likely to cite an open innovation model (61%); followed by design thinking (59%) and co-creating with customers, partners, and suppliers (55%). By contrast, only around one-third (34%) of respondents cited traditional R&D.
In addition, the report looked at what types of companies are more focused on incremental change, and what sectors are more focused on breakthrough innovation, or making significant innovations that result in the development of major new technological or market applications. The survey results showed that the companies that are most likely to be focused on breakthrough innovation are in the technology sector (58%); followed by in the pharmaceutical and life sciences (51%), health services (47%), communications (45%), and automotive (43%) sectors.
Effective Compliance Risk Management Starts at the Top
Dec 5, 2016 | Executive
Companies seeking to embed compliance risk management into both their strategy and everyday operations should set the right tone at the top, assess their compliance and ethics risks in collaboration with other risk functions, and build governance and oversight structures that effectively monitor regulatory matters, an annual report on compliance prepared by professional services firm PricewaterhouseCoopers recommended.
Released on September 14, the findings of the report on the state of compliance are based on a survey of more than 800 global executives, most of whom are legal counsel or compliance officers. The survey showed that while 98% of the executives surveyed believe that their company's senior leaders are committed to compliance and ethics, 55% reported that senior leaders provide only ad hoc program oversight or delegate most compliance and ethics oversight activities. In addition, just 48% of respondents reported that their organization assesses its "tone at the top," or whether executives consistently communicate and model a commitment to compliance and ethics; and only 36% of respondents indicated that compliance officers are inherently integrated into or play a key role in strategic planning.
Moreover, while 77% of the executives surveyed reported that there is an enterprise risk management (ERM) process at their organizations, and 88% of these respondents said that the ERM process covers compliance and ethics-related risks; just 54% of these respondents indicated that the framework their company uses for compliance and ethics risk assessment aligns with the framework it uses for its ERM process, and another 54% reported that they needed to conduct at least some additional compliance and ethics-specific risk assessment activities in order to fully address their organizations' compliance and ethics risks.
The report's authors further noted that although compliance and ethics teams rely heavily on the top of the organization when conducting risk assessment activities, they may be neglecting to obtain valuable information from middle management and rank-and-file employees: while majorities of the executives surveyed indicated that their organization includes interviews with management (59%) and/or board/management input (55%) in their compliance and ethics risk assessment process, only 21% said their company includes employee surveys.
The survey also asked respondents about how their company's reporting structure supports its compliance and ethics oversight responsibilities and accountabilities. While nearly two-thirds (65%) of respondents indicated that an audit committee oversees most compliance and ethics programs at the board level, just 20% said that their company's board of directors had formed a separate, stand-alone compliance/ethics committee to provide oversight of the compliance and ethics program. However, 72% reported that their company has a dedicated business unit or business area compliance officers.
From Benefit Trends Newsletter, Volume 59, Issue 10
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