- By Sophie Pinkoski

The 2020s has been marked as a decade of profound disruption. Now that the immediate urgency of the pandemic has passed, boards have the responsibility to ensure the organization stays up to date and continue to adapt to global change. The effectiveness with which they pivot their strategy in response to change can determine an organization’s long-term resilience.

Social change that has come from the pandemic has introduced many new concerns for boards and stakeholders alike. A significant part of this is managing public perceptions, and in extension, stakeholder expectations. More and more lately, stakeholders, ranging from investors and customers to employees and communities, have been holding boards and their CEOs accountable, demanding more transparency.

Boards must respond effectively to stakeholders’ evolving needs by addressing their most pressing concerns in a timely and thoughtful manner.

Balancing these multifaceted expectations is paramount for a board to foster long-term success within an organization.

Here are some prevalent corporate governance trends of 2024 to monitor and adapt to in the months ahead:

Board culture –– The most important aspect of an effective board is its ability to make informed decisions. This requires diversity of thought, expertise, and skill amongst its directors, as well as making data easily accessible.

An effective board has clear norms, fostering a culture of openness and psychological safety to facilitate fruitful discussions.

Mitigating barriers preventing such productive discussions ultimately creates a high-functioning board.

Geopolitical climate –– The volatile geopolitical landscape requires boards to adopt a more agile approach to strategy planning and execution. Continued global uncertainty means many boards have begun shifting away from 2 to 3 year strategies in favour of more continuous planning that can be adapted over time. One aspect of global volatility influencing board discussions lately is the looming threat of recession. Half of directors surveyed for an NACD report rated economic instability as their top risk for 2024, a prevalent concern carried over from the previous year.

Continuous monitoring and scenario analysis are crucial for navigating uncertainty and mitigating these potential risks.

Talent Retention –– Building a diverse and skilled board is essential for effective decision-making and future-proofing organizations. Boards should prioritize talent retention and attract young talent to replace retiring directors. However, board diversity is often difficult to fulfill when finding and retaining talent comes with its own challenges. The pandemic had many people reassess their values, carefully selecting initiatives to support that best reflect them. For this reason, boards may have to pivot their engagement tactics by aligning with new recruits’ values and offering career development opportunities.

Board composition should reflect the key skills required to address future challenges the organization are likely to face.

Technological Advancement –– In November 2022, ChatGPT was officially launched, rapidly revolutionizing business models. Its potential for improving efficiency has led many organizations to embrace generative AI, despite the known and unknown risks that come with it. However, more than a year on, people are still wary of AI, with 36% of NACD respondents viewing it as both an opportunity and risk. Boards behind organizations eager to take advantage of AI must weigh the risks before adding AI to its operations, especially when considering cybersecurity threats to sensitive information. A great deal is still unknown about the ethics and security behind the use of AI, which requires appropriate education around the technology to make an informed decision about what is best for your organization.

By fostering a culture of transparency, innovation, and adaptability, boards can navigate the complexities of the modern business environment and drive sustainable growth. It is imperative for boards to update outdated practices, align rules of conduct with the evolving landscape, and ensure board composition reflects the organization's strategic needs.

Ultimately, building resilience in the boardroom is key to building a stronger organization that can thrive amidst uncertainty and change.

Responding proactively to these emerging trends and challenges will promote resilience and ensure organizational success in 2024 and beyond.

Further Reading

Top 10 Governance And Leadership Trends For 2024, Forbes

Trends Shaping Corporate Governance in 2024: Five Areas to Watch, PwC

Top Corporate Governance Trends for 2024 & Beyond, Diligent

The Future of Corporate Governance, Corporate Governance Institute

Charting The Course: Corporate Governance Trends To Navigate In 2024, Forbes

The Future of Corporate Governance: Trends and Predictions for Board Directors, LinkedIn

Looking Ahead: Key Insights for Boards in 2024, National Association of Corporate Directors.

“10 Topics Board Agendas Should Address in 2024”, NACD 2024 Governance Outlook Report, (39–43), National Association of Corporate Directors

“Director Outlook: Top Priorities for 2024", NACD 2024 Governance Outlook Report, (2–8), National Association of Corporate Directors.