Director Confidence Hits New Low In March

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Director optimism in future business conditions hit its lowest level since September 2020 when we began polling directors for the Director Confidence Index, as concerns over politics, inflation and labor grow.

At the end of the first quarter of 2022, public company board members are increasingly concerned about the effects of prolonged inflation and labor shortages. Their assessment of both current and future business conditions dropped significantly in March, mainly due to inflation concerns. Directors say ongoing supply chain disruptions, the war in Ukraine, labor shortages, distrust in the current White House and tension over the upcoming election are also driving their downgrade of business conditions 12 months out.

Those are the key findings of our March Director Confidence Index, conducted March 21-25 in partnership with the Diligent Institute. Our leading indicator is now at 6.3, as measured on a 10-point scale where 10 is Excellent and 1 is Poor. Optimism has been on a near-constant decline since this time last year, down 14 percent, and has ultimately reached its lowest point since we began polling directors in Q3 of 2020.

Record-high inflation and worries of stagflation continue to top the list of concerns for polled directors, followed closely by labor shortages. Board members we polled say wage and price pressures brought on by the race for talent and macroeconomic issues are creating a challenging business environment. These issues coupled with geopolitical conflict and the upcoming midterm election hinder directors’ hopes that business and travel will boom over the course of the next year.

These findings align with what we see in the Corporate Sentiment Tracker, Diligent Institute’s AI-powered tool which tracks which issues corporate leaders are speaking about most frequently in the news and whether they’re speaking about those issues in a positive or a negative way. At the time this report is being written, overall corporate leader sentiment is at 60% positive, and the most frequent topics being discussed in the last 14 days are “inflation,” “growth,” and “Ukraine,” in that order.

A director on the board of a large hospitality company believes business conditions will deteriorate slightly over the coming months due to “the inability to attract a sufficient workforce for skilled and unskilled positions. The employment picture is much less positive than the Fed and elected officials indicate,” he said.

“My forecast is driven mostly by wage pressures, related to inflation and a tight labor market,” said a director on the board of a large bank holding company who also expects conditions to deteriorate by this time next year.

Bob Murley, chair of medical waste disposal company Stericycle, says inflation, the war in Ukraine, supply chain issues and the Feb rate hike all weigh significantly on his forecast that business conditions will decline this year. “The other elements driving my forecast are the level of U.S. deficit, decreasing consumer confidence, the major risk of recession in Europe and lastly, the potential for stagflation in the U.S.,” he said.

Overall, directors say inflation is the one element having the most significant impact on their forecast for business, rating it a 4 out of 5, on a 5-point scale, where 1 is No impact and 5 is Significant impact. This is at least 10 percent higher than the impact of other elements, such as supply chain disruptions (3.6/5), the invasion of Ukraine (3.2/5) and the recent Fed interest rate hike (3.2/5).

Directors’ sentiment surrounding the current business environment also dipped this month, to 6.6 from 6.9. That is a decline of 4 percent month-over-month and 2 percent below their rating in March 2021 (well before any Covid-related mandates were removed). Nevertheless, their assessment of the current environment is still higher than their forecast for the future, which they attribute to fears that inflation, federal government policies and perhaps even another wave of Covid-19 will slow economic growth and stifle business activity.

“The likelihood of major cybersecurity attacks and resultant issues drives down my rating,” said the audit committee chair of an automotive retailer who expects conditions to decline from an 8/10 to a 7/10 one year from now. “I am also concerned about another Covid-19 wave after watching Europe and Hong Kong struggle.” Her concerns echo the results from our annual What Directors Think Survey, where directors rank cybersecurity first on the list of difficult issues to oversee, and three-quarters of directors now say they’re more concerned about their company confronting a cybersecurity/data breach over any other crisis. 

The director of a materials-making company says his forecast is dampened by “increased regulation from the Biden administration, especially regarding energy policy or lack thereof.” He believes conditions will drop from an 8 out of 10 to a 6 by March 2023 as a result.

Interestingly, CEOs’ ratings for both current and future conditions—collected as part of sister publication Chief Executive’s CEO Confidence Index—increased in March, post Ukraine invasion—albeit by a modest 1 percent. They rated their forecast for business 12 months from now a 6.7/10, 7 percent higher than directors’ rating. The main reasons given were the unified condemnation of Russia’s aggressions from the West and the courage of U.S. businesses to suspend operations in the country.

The belief that recovery from Covid-19 will boost the business environment also seemed encouraging to CEOs. In fact, their worries over inflation and the supply chain were tempered by hope that by this time next year, the pandemic, inflation and supply woes will be largely controlled, all while consumers continue to spend.

The optimism is not as widely spread among the governance community: 44 percent of directors surveyed say they expect business conditions to deteriorate over the next 12 months, compared to 38 percent of CEOs who expect the same.

Twenty-eight percent of directors say they believe conditions will improve, encouraged by more industries opening up and shifts away from the Covid-19 ways of doing business.

“Covid-19 decline/reopening pushes more consumer spending into categories like travel and entertainment and away from e-commerce,” said the director of a media company who expects business conditions to increase from 6 out of 10 to 7 out of 10.

The remaining 28 percent say they expect conditions to remain the same. Their reasons are similar to those who forecast deteriorating conditions and include supply and labor shortages and overall instability in the world.

“There are multiple basic disruptions occurring at the same time,” said the board chair of a bank. “This creates a lot of uncertainty, which negatively affects how people and businesses behave. Combining that with a very reactive, somewhat unpredictable administration results in an unsustainable situation. I believe this ultimately creates a risk of a declining overall business environment.”


Despite their declining outlook for business, a larger proportion of directors forecast increases in profits and revenues over the next year, compared to the prior year. The proportion of those expecting increases in profits ticked up by over 1.3 percent, to 76 percent, and that forecasting increases in revenues is up for the first time in 2022, up 5 percent since February, to 88 percent.

In an inflation setting, it’s no surprise that fewer directors now plan to increase capital expenditures in the year ahead. That proportion dropped 6 percent, to 53 percent.

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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