A survey to understand business priorities for 2024 and the perception of current managing directors, board chairs, and chairs of subcommittees around the board refresh, has revealed that three in five (59%) are undergoing a board refresh or hiring a new director in the next 12-18 months.
Of those undergoing a board refresh, about three-quarters (74%) cite the retirement of a director as the reason they are undergoing a refresh, and one in two (48%) aim to infuse new skill sets into their boards.
The 2024 Heidrick & Struggles India CEO and Board Survey reveals key insights as organisations grapple with the boardroom refresh mandate, marked by the 10-year milestone of The Companies Act in 2013.
Challenges in navigating The Great Board Refresh
Amid a talent war, half (50%) of those surveyed for 2024 Heidrick & Struggles India CEO and Board Survey, indicated the top challenge they anticipate when undertaking the refresh is access to the right talent.
With key areas such as cybersecurity risk (32%) and incorporating AI (31%) being top issues organisations are expected to face in the new year, many recognise the need to identify board members who possess the skillsets and capabilities relevant in navigating these new challenges.
In addition, two in five (41%) respondents emphasise prioritising executive experience when appointing new directors to Indian boards. Despite senior leaders taking the initiative to obtain additional certifications and training to bolster their credentials, many large companies still have a strong preference for hiring leaders with prior board experience.
Prioritising cross-sector experience and specialised backgrounds
Two-thirds (66%) of respondents see the two-term limit mandated by the Companies Act as an opportunity to support the need to add new skills and fresh thinking to boards. Almost half of respondents (46%) indicated that in terms of board diversity improvements, cross-sector experience should be a key focus. This is aligned with the wider senior leader talent landscape, where organisations are looking for subject matter experts and specialists.
There is also a move towards finding talent with deep expertise to fill in gaps in the boards where traditionally directors are more generalists. Candidates must leverage their specialised perspectives within the context of their companies and future business priorities to drive success in the challenging and volatile environments of today.
Developing future-ready board members
Building future-ready boards will be a top priority for Indian organisations as they undergo The Great Board Refresh. Companies are increasingly recognising the value of board members who can bring subject matter expertise, cross-sector experience, and a fresh perspective to the table.
To gain competitive advantage, it is important to integrate succession planning as part of the ongoing board process. Organisations must adopt a long-term approach to director hiring by starting succession planning sooner. This begins with identifying the organisation’s strategic objectives and purpose, evaluation of the board’s current capabilities against said goals, and filling the gaps in skills or backgrounds.
Boards will also benefit from creating an inclusive board culture, led by board chairs and the nominating and remuneration committees. This means going beyond diverse hires but also embedding inclusion throughout various levels of processes and leadership, such as ensuring directors who represent a variety of backgrounds can contribute fully and authentically, so that the board will be united and work effectively.
“We will witness a notable shift in the role of the board where navigating disruption effectively and infusing new perspectives are critical,” said Puneet Pratap Singh, Partner-in-Charge at Heidrick & Struggles India.
“To build future-ready leadership, companies are encouraged to look at implementing robust succession planning, for a dynamic and inclusive boardroom. Whether a board ultimately appoints an internal or external successor, companies must start long-term succession planning sooner. This leaves more room to consider candidates with various strengths and skillsets that lead to building a stronger leadership bench. Embracing first-time candidates can also expand the talent pool and infuse boards with diverse perspectives and untapped capabilities,” said Suresh Raina, Partner in Heidrick & Struggles India.