There’s a lot on board and leadership agendas, with every issue seemingly more urgent than the next. And considering the accelerated pace of business, a generational shift in the labor market, a series of global conflicts, unrelenting supply chain issues and advancements by leaps and bounds in new technological capabilities that can turn just about any business on its head in the blink of an eye, there’s hardly any indication that the laundry list will be getting smaller anytime soon.
Wrapping your head around all of the concerns plaguing business these days—from growth and innovation to compliance and regulation to talent and economics, amid ongoing global conflicts and a presidential election in the U.S.—and how each of those matters can affect the business in both the short and long term appears to be an increasingly daunting task for companies and their boards. And some studies indicate this fast-moving, highly disruptive environment may be creating misalignment between the board and the C-Suite’s areas of focus.
Let’s consider the following findings from our 2024 What Directors Think research, a survey of 250 U.S. public company board members conducted in collaboration between Diligent Institute, Corporate Board Member and BDO USA:
- When asked to list the external elements that are most likely to impact performance over the next two years, directors placed the business cycle and capital markets at the top of the list, choosing to focus on the economy.
- In contrast, AI developments ranked 10th, with only 6% of the votes.
Meanwhile, a Weber Shandwick poll of 100 top executives at global companies found generative AI a “top priority” for 51% of respondents—behind economic factors like inflation and interest rates (26%), flipping the order of priorities compared to boards.
The discordance may sound alarming, but it brings up an important question: does this constitute misalignment between boards and their leadership teams—or is the order of concerns just part of the job?
Generative AI has been a top discussion area for business for nearly two years now. Yet, companies that have reported being able to harness the power of this new technology remain few and far between. As companies continue to scratch their heads on how to make use of the technology—and how to avoid being beat by it—boards are tasked by shareholders with taking a longer-term view.
As management teams think about day-to-day operations, issues like the opportunities presented by generative AI may rank, naturally, as more significant and pressing priorities. Meanwhile, it is possible that boards are choosing to wait to take up the matter in greater depth until they are presented with a plan from management to address these issues.
It is the board’s duty of care and long-term strategic focus that is at play—and clearly demonstrated when looking at our survey, where directors ranked capital allocation, CEO succession planning and M&A; all mission-critical strategic oversight items—as most pressing than AI for them to discuss.
So, while it may appear as though directors and the C-Suite have different goals, many of these discrepancies may come down to role delineation. As each do their part to build organizational success, the ways in which they do so will, naturally, be different.
Still, it’s important to keep in mind that there is a point at which misalignment can be detrimental to the company. If generative AI, for example, is integral to an organization’s strategic plan for the next two years, the board should make it a priority and an area of focus. Without a base level of understanding and agreement on how management plans to lead the organization, the board will be unable to provide proper oversight.
Read more about what’s topping the list of priorities and concerns for directors this year >>
