Director Optimism Declines For 7th Consecutive Month

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After peaking in April, board members’ outlook for the future of business slipped further in November, driven by renewed Covid fears, inflation and a tight labor market.

Corporate Board Member’s Director Confidence Index, conducted in partnership with Diligent Institute, fell to its lowest level of the past 12 months in November, to 6.4—measured on a 10-point scale where 10 is Excellent. That is a 15 percent slide since the leading indicator peaked in April, before the spread of the Delta variant delayed an anticipated return to normalcy.

This month, the emergence of the Omicron variant added to an already-long list of concerns that includes inflation, monetary policy, increasing regulations, corporate tax hikes, a tight labor market and supply chain delays, according to the survey of 143 U.S. public company board members.

“Prior to the Omicron variant, I would have rated the conditions more favorably,” said a director who sits on the board of two publicly traded companies in the consumer discretionary and industrials sectors.

A director on the board of two companies in the financials space agreed: “I would have marked higher, despite my concerns about inflation. However, with the new Omicron virus threat—which is very uncertain—things could get worse or stay the same.”

“High inflation, tight labor market, higher corporate taxes + Omicron,” said a director on the board of a company in the materials sector to explain his forecast of 4 out of 10.

Those concerns, which were shared by the great majority of participants in our November flash poll of U.S.-based public company board members, were for the most part forward-looking, as directors’ assessment of current business conditions remained flat month-over-month, at 6.7 on our 10-point scale. Polled directors say it’s the overall uncertainty and instability that is fueling their downgrade of 2022.

“A lot of volatility makes forecasting and guidance difficult,” said a director on the board of both a regional bank and a global manufacturer.

“Very difficult to lead a company with the state of flux in our nation today,” said a director on the audit and nom-gov committees of a mid-cap multi-bank holding company, who rates his forecast for 2022 a mere 3 out of 10.

“Leaders will need to react quicker to major developments,” echoed a fellow audit and nom-gov committee member on the board of a mid-cap industrials company.

Strategy Influencers

Among the issues most cited by directors, talent (35 percent) and the economy (25 percent) top the list of those that they expect will continue to be true game-changers in executing corporate strategy in the months ahead.

“I believe inflation is and will continue to hamper business growth along with the continuing effects of Covid-19,” said the director of a mid-cap financials company.

“Until there is acceptance that inflation is an issue, conditions for business will be sub-optimal,” said a director on the board of an energy company.

“Inflationary concerns, economic slowdown due to higher taxes, higher prices, higher gas prices, supply chain back up and overall economic policy” are the reasons a director on the board of an emerging healthcare organization cited for a forecast of 3 out of 10.

“Unemployment is very low right now, and people are spending money,” said the governance committee chair of a mid-cap financials company. “[But] I’m concerned about rising inflation, out-of-control energy costs and inability for workplaces to fill the many vacant positions.”

“2021 is a challenging year and the year ahead will be more challenging,” said the director of a small consumer discretionary company, who says the economy will be the #1 game-changer in 2022.

The Year Ahead

Overall, 51 percent of polled directors expect business conditions to worsen in 2022, up from 43 percent just a month ago in October. Across the C-Suite, sentiment has also deteriorated over the past month, with increasing proportions of CEOs (40 percent), CFOs (37 percent) and CIOs (34 percent) forecasting a grimmer year ahead.

Nevertheless, under these circumstances, directors remain confident in their organizations’ ability to meet pent-up demand. More than four out of five board members surveyed (85 percent) say they expect revenues to increase in 2022 (up 3 percentage points since October)—and 73 percent expect the same of profits (unchanged month over month).

What has changed is the proportion of board members whose companies are planning to increase capital expenditures in this uncertain climate: 53 percent vs. 59 percent the month prior. After a brief climb over the past two months, that number is now back in line with August levels, when directors voiced concerns over the prolonged uncertainty related to the Delta variant and its impact on a return to business.

A director in a small Nasdaq company commented: “I maybe an outlier here, but I have a sense that many boards have been more preoccupied with the current Covid, supply chain and inflation issues than planning for 2026. Perhaps a strong 2021 may encourage many to shift their thinking and start planning for the future.”

About the Director Confidence Index

The Director Confidence Index is a monthly survey of public company board members on the state of the overall economy, the outlook for business and other topical issues impacting public companies. Conducted in collaboration between Corporate Board Member and Diligent Institute, the Index benchmarks confidence among the governance community and is a forward-looking indicator of market movements and corporate strategies.

About Corporate Board Member

Corporate Board Member, a division of Chief Executive Group, has been the market leader in board education for 20 years. The quarterly publication provides public company board members, CEOs, general counsel and corporate secretaries decision-making tools to address the wide range of corporate governance, risk oversight and shareholder engagement issues facing their boards. Corporate Board Member further extends its thought leadership through online resources, webinars, timely research, conferences and peer-driven roundtables. The company maintains the most comprehensive database of directors and officers of publicly traded companies listed with NYSE, NYSE Amex and Nasdaq.

About the Diligent Institute

Diligent Institute is the corporate governance research arm and think tank of Diligent Corporation. The Institute produces publicly available cutting-edge research on corporate governance practices by directors, for directors, with a global perspective. Learn more at

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