The patterns that have influenced recent years, including heightened requirements for sustainability reporting and growing gender diversity in corporate boardrooms, are anticipated to persist, albeit with emerging challenges and possibilities ahead. So how can boards effectively prepare their board work in 2024? In this article, we dig into what can be expected in 2024 and give examples of what boards can do to ensure optimal performance.
2023 in hindsight
The recent year has been a demanding one, to say the least. We have tackled heightened inflation, a conflicted world with unstable economies, war, and overall social unrest in many societies. All of this has caused many companies to rethink their way of work. Many have redistributed their supply chains and have been forced to implement new strategies. In 2023 we have also faced a new giant, artificial intelligence (AI). Something that has significantly impacted corporations globally.
What can we expect in 2024?
In the coming year, corporate governance will still be influenced by matters that have been accumulating in the last few years. What we can expect is that political and geopolitical events will affect corporate governance, for example, important international elections will play out. We can also expect rapid movements in the tech sphere, where AI most likely will play a more decisive role in corporate tasks.
Peter Gleason, incoming CEO of the National Association of Corporate Directors, states in this article by Craig Guillot and Chief Executive, that what will concern many board executives in 2024 is the foremost economic uncertainty. He says “According to our survey, the greatest concerns, in order of importance, are global economic uncertainty, increased regulatory burden, significant industry changes, business model disruptions, and cybersecurity threats. The recent election seems to have reduced fears about regulation and taxes, but the other issues are likely to linger or even grow as concerns.”
Gleason further states that in the current century, volatility, uncertainty, disruption, and risk define the business landscape. It’s imperative for directors and boards to collaboratively guide companies in facing these challenges directly. To effectively respond to this volatility, they must develop a vision that encompasses both the long-term perspective and the broader picture, while also ensuring a robust flow of information.
How can you best prepare your board work in 2024?
As we mentioned, boards face a rapidly evolving business environment characterized by political shifts, technological advancements, and heightened cybersecurity concerns in the upcoming year. To navigate these challenges, a strategic and multifaceted approach is essential.
Firstly, boards must maintain vigilance in monitoring political and regulatory landscapes, leveraging expert insights to understand and respond to these changes effectively. Simultaneously, embracing and understanding emerging technologies like AI is crucial to stay competitive and relevant. Cybersecurity, for example, demands a proactive stance, with boards needing to implement robust strategies and regularly review and update their cybersecurity measures. This ensures the organization’s resilience against growing digital threats.
Adaptation and continuous learning are key. Boards should engage with industry trends and innovative practices, fostering a culture that is agile and responsive to change. This can be ensured by continuously evaluating the status of the board. Situational analyses and board evaluations are key components here.
Risk management and scenario planning are also vital, preparing the board to anticipate and navigate potential disruptions from various fronts, including political and technological changes. This can be done as a second step, or follow-up, from an analysis or evaluation. And what this eventually leads to is transparency. Ethical leadership and adherence to governance standards are non-negotiable in today’s corporate climate. Boards must ensure transparency and align their actions with legal and ethical guidelines.
The importance of governance evaluations
Governance evaluations are essential for maintaining a healthy democratic system. They provide a framework for assessing the performance of government bodies and officials, ensuring that they adhere to principles of good governance, including accountability, transparency, and responsiveness to citizens’ needs.
What insights can we expect from governance evaluations?
Governance evaluations are critical tools for assessing the effectiveness, transparency, and accountability of public institutions. By systematically analyzing governance structures and processes, these evaluations can offer profound insights into how well a society is managed, where improvements are needed, and how changes can be implemented.
Performance assessment: Evaluations can highlight the effectiveness of government policies and programs, helping to identify successful strategies and areas that require attention or improvement.
Transparency and accountability: Through these evaluations, the level of transparency in government operations can be assessed. This includes the openness of government decision-making processes and the extent governments are accountable to their citizens.
Policy effectiveness: Evaluations can provide insights into the impact of specific policies on various segments of the population, thereby guiding future policy development.
Public trust: Regular governance evaluations can enhance public trust in institutions by showing that governments are committed to self-assessment and improvement.
Corruption identification: These evaluations can be instrumental in identifying and addressing corruption within public institutions, thereby promoting integrity and ethical standards.
Resource allocation: Evaluations can show how effectively public resources are being managed and allocated, ensuring that they are used most efficiently and equitably.
Stakeholder engagement: They can also reveal the extent of stakeholder engagement in governance processes, highlighting the involvement (or lack thereof) of civil society, the private sector, and other actors in decision-making processes.
Comparative analysis: Governance evaluations often provide an opportunity for comparative analysis, allowing countries or regions to learn from each other’s experiences and best practices.
In what ways can we evaluate our board?
There are various ways you can conduct board evaluations. In short, there are four ways in which you can evaluate your board. These are:
- Internal and personal
- Internal and digital
- External and personal
- External and digital
There are pros and cons to every type of evaluation. However, to ensure maximal objectivity the external-digital evaluation is preferable. It makes your processes more streamlined, likewise, they can be systemized to be conducted on a timely basis. Another positive factor with external and digital evaluations is the enhanced possibility of transparency. When all documentation is done digitally it enhances transparency. Data and information are stored and cannot be manipulated. As well as while the answers can be kept discretely. Also, attendees tend to be more transparent when they are assured no one is collecting their data, knowing it’s from them.
Conclusion
Boards have faced many challenges in the past year, and trends are forecasting the same expectations for 2024. A way for the board of directors to navigate these new circumstances is by conducting various analyses, such as situational analyses or board evaluations. Governance evaluations are vital for the continuous improvement of public administration and policy. They provide a range of insights that can lead to more effective, transparent, and accountable governance, ultimately contributing to a better-functioning democracy and society. As governments worldwide strive to meet the evolving needs of their citizens, these evaluations play an increasingly important role in shaping the future of governance.
How can we help?
At Governance@work we provide evaluations for your board, management team, and CEO. If you are looking for an external provider for board evaluations, we can help you! Don’t hesitate to reach out. You can get in contact here. We’d love to help you and your company on your journey for better governance performance.