PwC Corporate Director Survey: It’s Still Hard to Have Difficult Conversations
PwC’s 2020 annual corporate director survey points to a year of unprecedented challenges with the global health crisis along with the business and governance issues faced by public company boards. “With everyday life upended, boardrooms changed drastically. Gone were the site visits, strategy retreats, and board dinners. Gone was the boardroom itself. But the work didn’t slow, and most directors reported devoting significantly more time to their duties.” The annual survey reports on a number of topics including ESG, company strategy and executive compensation. For fund directors, the survey’s findings on boardroom dynamics may be instructive. Among PwC’s findings:
- On peer review: For the second year in a row, about half (49%) of directors say that at least one fellow director on their board should be replaced. Twenty-one percent (21%) say that two or more directors should go.
- On what stands in the way of board refreshment: Many directors point to board leadership’s unwillingness to have difficult conversations with underperforming directors (20%) or to an ineffective assessment process (19%).
- On getting results from the self-assessment process:In 2014, 50% of directors said their board made changes as a result of their assessment process. In 2020, that figure is 72%. In response to their last performance assessment, 40% of directors say their boards or committees added additional expertise—an increase from 29% saying the same in 2014. The percentage of directors saying their boards chose not to renominate a director changed little since 2014 (12%, up from 9%). And only 14% say their board provided counsel to a director, down slightly from 16%.
- On those difficult conversations: One area where directors give board leadership the lowest marks is in dealing with underperforming directors, with one in four (25%) saying leadership is not very or not at all effective in that area.
- And voicing unpopular opinions: More than one-third of directors (36%) say that it is hard to voice a dissenting opinion in their boardroom. PwC found that for many directors, the problem traces back to the fear that dissenting opinions will damage collegiality. Fifty-two percent (52%) of directors say that the desire to maintain a collegial atmosphere contributes to muffled dissent. Thirty-two percent (32%) say it stems from dominant personalities in the boardroom