It’s been a tumultuous decade so far, with curveballs and wrenches continually thrown at companies—and their employees. But the 200-plus public company board members we surveyed in the fall as part of our annual What Directors Think survey—conducted this year with Diligent Institute and FTI Consulting—say the turmoil is abating and it’s time to get growing again.
Topping the list of priorities as we kick off 2025, “pursuing growth” eclipsed all other agenda items at public companies in the U.S. by a large margin: 26 percentage points ahead of the second-place item of business on boardroom agendas, “optimizing financials” (76 percent vs. 50 percent).
Emerging From Chaos
Some directors report that companies are feeling a sense of urgency to move on from the difficulties of the past five years and get back to growing their business. “Corporate America globally, we all struggled,” says Jill Krueger, a director who serves on the board of NYSE-traded Sonida Senior Living. “We were all trying to survive. And in survival mode, strategy takes a backseat. It has to. Because strategy costs money. Strategy costs time. And when we’re in survival mode and we’re trying to make the numbers meet and refine the operations and streamline, that’s where our energy goes.”
That mindset, she adds, is now past. “It’s time to say, ‘Okay, we weathered the storm. Now let’s take a step back and figure out where we’re going in the next three to five years.’”
“Companies had to take a break for a little while because there was so much chaos happening,” says Jeanne Beliveau- Dunn, who serves on the board of publicly traded Edison International and Xylem. “You have to pick your timing.”
That timing is now, according to our survey. As companies regain their footing, many are ready to deploy the capital that has been accumulating on the sidelines, which could mean a boon to dealmaking in the months ahead. Our data points to renewed interest in M&A: It is the third most cited priority for the year, up 30 percent on the list of issues that directors want to discuss at their next board meeting. It’s also climbing on the list of expertise directors want to add to their board with their next appointment.
“Companies have figured out how to operationalize the companies that they have,” Beliveau-Dunn says. “So now they’re starting to get ready to go out in the street.”
Ready for Deal Driving
Many, particularly large public companies, view M&As as the key to scaling fast, she adds. “It’s always been a great way for public companies to grow,” says Beliveau-Dunn. “I was at Cisco for many years, and we grew the entire company through acquisitions. We certainly had some organic growth too, but we did over 100 M&A transactions.”
Krueger agrees, noting that companies view deals as offering a fast-track to growth. “Early in my career, I really didn’t quite understand M&A and its impact, and I thought, ‘Well, we can just grow from selling new business to new clients, organically,’” she said. “But the fact of the matter is you just can’t get there fast enough. M&A is essential to get you where you need to go to create the financial stability and the margins that we all need to survive.”
The downtrend in interest rates is also playing a big role in the resurgence of M&A interest. “A year ago, you didn’t know exactly when rates were going to come down, so how long were you going to be stuck with paying 12, 13 percent interest?” says Terry Jimenez, board chair for Nasdaq-traded gaming accessory manufacturer Turtle Beach. “Now, while paying 11 is still very high, you know directionally that will become 10 and a half, that will become 10 and a quarter, 10. It’ll come down. And so, I think that also gives us a little bit of confidence in the M&A side of things.”
Plus, he adds, “now that everybody’s kind of anxious to buy, it’s probably not worth sitting on the sidelines hoping for a discount 6, 9, 12 months from now because your competitors are going to buy up all the assets available today. So, yes, companies are probably overvalued, but it doesn’t scare us as much as maybe it historically would have.”
Comprehensive M&A due diligence will be critical to achieving the desired outcome. “As growth returns to the top of the board agenda, M&A comes with it as an attractive way to accelerate strategy. However, M&A is not a simple shortcut to growth,” says Pat Tucker, Americas head of M&A, activism and governance for strategic communications at FTI Consulting. “There needs to be a critical evaluation of transaction execution plans to ensure investors are satisfied with price and value creation strategies, that regulators appreciate the competitive dynamics and talent considerations buy into the long-term strategy.”
Worried About Resilience
These considerations may be why 42 percent of directors find strategy oversight their biggest challenge today—even ahead of cybersecurity, which had until now topped the list year after year. The directors we spoke with say it’s that nagging fear of another black swan event that is forcing them to take a different approach to it all. Directors say companies are now testing for the durability of the strategy, ensuring it can withstand unexpected turns in the market. Though this has always been the advised path, notes Liane Pelletier, who serves on the boards of Frontdoor and Expeditors International of Washington, the more recent dynamics have turned strategy into more of a tabletop discussion.
“What if” conversations abound, Pelletier says, noting that companies are approaching strategy in a more recurring, scenario-planning fashion, like piloting it in one region or market before deploying it at large, as a risk mitigation strategy. “These strategic rollouts help capture learnings, so you can react if something’s not performing as expected.”
Brian Anderson, who currently serves on the boards of PulteGroup and Stericycle, says he’s seen that change as well. “We’ll have the management team run a bunch of scenarios on macro factors and what it could do to our business,” he says, noting that prior to Covid, his industry went through a housing crisis that put many builders out of business and led to billions of dollars in impairments. “So, it’s important for us to do as good a job as we can in modeling and asking the management team to model the business if interest rates spiked, if we get massive supply chain disruptions for any reason, if we use a lot of lumber, for example. We go through each of those major macro factors and try to present a downside case and upside case to assess the probability and severity of each of those events happening, either singularly or in combination.”
While PluteGroup’s home-building industry is long-cycle and entails multiyear forecasting, the concept of long-term planning—in 10-, 15-year increments—is being challenged across many sectors. “I did a lot of strategy at KPMG, and I was always the person to say, ‘let’s look out 10 years.’“ says Krueger. “I’m becoming a believer that that’s really hard to do and that all of a sudden, my window of strategy isn’t 10 years from now. I don’t think there’s anything wrong with trying to ask, ‘Where are we going to be in 10 years?’, but I don’t know that you can even do that anymore because the world changes so quickly. I don’t know that there’s as much point in a long-term strategy as there is in a strategy that’s got a little bit of a shorter time horizon.”
Concern about the efficacy of longterm strategic planning has risen in the wake of Covid, supply chain interruptions and other disruptive events. Only 30 percent of directors rate their board’s ability to understand the company’s long-term strategy as “excellent,” according to our survey, evidencing the challenge with today’s long-term view.
Contingency Planning
While caution has become the name of the game, very few directors were concerned about an existential corporate crisis stemming from any of 13 potential risk scenarios highlighted in the survey, ranging from a pandemic or natural disaster to a geopolitical event or major cybersecurity incident. That’s not to say such events wouldn’t have some consequences. For instance, 69 percent of board members polled felt that the sudden departure of their CEO or key executive would have “significant” consequences, and 61 percent said the same of a major cyber incident.
Perhaps for that reason, CEO and C-Suite succession planning has emerged among the issues that will be prioritized by boards in 2025. It ranked fourth on the list of top priorities, second on the list of most challenging issues to oversee and third on the list of most pressing agenda items. Meanwhile, only 21 percent rated their board’s current CEO succession planning process as “excellent.”
“Directors ranking succession planning a high priority for 2025 while indicating low levels of confidence in their processes is a potential cause for concern,” says Dottie Schindlinger, executive director of the Diligent Institute and a partner in this research. “The stakes are higher than ever. Effective succession planning is not just about identifying potential leaders but also about creating a sustainable process that ensures organizational resilience in increasingly uncertain times. In the face of the next black swan event, boards need to be proactive and prepared for any eventuality to safeguard the company’s long-term success.”
Krueger isn’t surprised that leadership succession has become a priority in the wake of shorter tenures and an increase in talent poaching at the leadership level. She knows firsthand the importance of having a robust plan. “I’ve been on a board where we had an unplanned departure, and we had no succession plan. And I said to the board, ‘We can never let this happen again.’ It was a fire drill like no other,” she recalls.
Further, as noted by Brian Kushner, a director at both NYSE-listed Resideo Technologies and Nasdaq-listed Cumulus Media and a senior managing director at FTI Consulting, “2023 and 2024 were two of the highest years on record for CEO transitions, and we are in the midst of a generational shift in both the C-Suite and boardroom of public companies as baby boomers retire and hand over the reins of governance.”
As leadership teams get younger, it can be easy for boards to pay less attention to succession, but that doesn’t mean it’s any less important. “Our CEO is relatively young,” Anderson said, but the company has a succession plan with “three to four candidates that we’re actively considering, at different stages of their career, as well as an emergency backfill for the proverbial run-over-by-a-truck scenario.” Krueger adds. “You don’t need to say it’s going to be so-and-so who will be the new CEO, but you certainly need to have a process in place. What’s the emergency succession plan?”
Cyber Concern Ebbing
More than a third (37 percent) of directors polled say they don’t believe a major cyber breach would have a consequential impact on their business. That proportion rises to 41 percent in the healthcare space, where HIPPA regulates the protection of personal data, to 67 percent in the energy sector, to 71 percent in the real estate industry and to 77 percent in the materials industry. This means that, across most of these sectors, a majority of directors don’t view a major cyber breach as a hindrance to strategy and growth.
This confidence could be the result of “doing the work,” says Beliveau-Dunn. “There was a period of time, maybe about four or five years ago, where the risks were all going up, but the companies weren’t in a good position to deal with them as much as they are now,” she says. “A lot of companies have matured their practices in cybersecurity, and boards, in the last three years, have also been much more focused on it. So, it’s just where we are on the journey. We’re on a maturing journey. We’ve gotten past the hype stage, if you will. It’s still incredibly important, but there are fewer unknowns.”
Krueger says part of that oversight maturity can be credited to the number of case studies now available to boards and management teams. “To see what’s happened to other companies, what can happen if you don’t focus on it. Regulations create awareness, but at the end of the day, I think this really is determined by the pain of the situation. And we’ve seen a lot of pain by a lot of companies, especially in healthcare.”
Another reason for the confidence may be that 58 percent of directors reported there now is at least one director with cyber expertise on their board, and 71 percent say their CISO/CIO (or other senior leadership team member responsible for cybersecurity) regularly meets with the board to discuss the evolution of cyber risk and the company’s strategy.
“Companies are better prepared to mitigate cyber risks today than in years past, but I worry this might be creating a false sense of confidence,” says Jordan Rae Kelly, head of cybersecurity for the Americas at FTI Consulting. “In my experience, I rarely see companies create contingencies around how strategies, especially long-term growth plans, would be impacted by a significant incident. Reallocating resources, transforming cybersecurity programs and rebuilding the trust of stakeholders can all potentially delay strategic goals.”
What is also surprising, according to Kushner, is that “many of the critical issues of the last few years—human capital, supply chain, nearshoring/onshoring, cybersecurity and digital transformation— are all down the priority list in this year’s survey. Some of this may be due to competing priorities, but it is hard to be overconfident on any of these issues, and from a capital allocation perspective, all are areas of continuous investment.”
Reputation Risk Rising
Another risk highlighted by directors participating in the survey entails the potential for reputational damage after a CEO or other senior management team member speaks publicly on a divisive or controversial issue. Eighty-five percent of directors say there is greater risk in taking a stance on social issues than in refraining from giving an opinion; that proportion is up 14 percentage points from when we last asked the same question in 2017 (71 percent).
“We have seen a positive switch of companies returning to their roots and realizing that they represent a diverse workforce and customer base, and they need to be careful of discriminating against part of their stakeholders,” says a director participating in the survey who asked to remain anonymous.
“There’s definitely risk with little reward,” another board member notes. And that risk can be substantial: Half of the directors polled said boards should have the right to take action against a CxO, including the CEO, who makes a public statement that harms the company. That proportion is up 20 percentage points, from 30 percent in 2017.
To mitigate that risk, boards and their companies are being proactive: 81 percent said they have drafted a policy regarding which individuals, if any, can make public statements on behalf of the company—and where/why/how. Another 17 percent said while they don’t have a formal policy, it is well understood across the organization. Overall, 61 percent say corporate officers represent the company even in their private dealings and should always check with the board before making public statements that carry a potential risk for the company.
Anderson says after an incident at one of their regional posts a few years back, the company doesn’t take this risk lightly. “One of the things we’ve considered is including in our tabletop exercises some reputational catastrophe to ensure that we’ve got a good rapid-response playbook, and we know who ought to have the ball depending on what the issue is,” he explains.
According to our survey, the consensus seems to be that CEOs should refrain from taking a stance publicly on issues that are unrelated to the business. “I hate to say this, but if you’re Tractor Supply, for instance, I’m not sure that any statement about DEI is relevant to your brand,” says Beth Kaplan, who serves on the board of Crocs and Howard Hughes Holdings.
AI Oversight Imperative
Most strategic conversations today include at least a sidebar on AI technology and its potential impact on business. Among public company directors polled, 80 percent say their company has taken some type of action with respect to AI/gen AI, the most common being incorporating the technology into one or more areas of the business, including products and services (55 percent). Nearly half say their board also requires the presence of the CTO or senior leader in charge of AI/gen AI at meetings when AI/gen AI is discussed.
The challenge, however, is the lack of internal capabilities and knowledge among leadership teams. It is the No. 1 risk of AI/gen AI highlighted by survey respondents, even ahead of data privacy (29 percent) and false information (26 percent).
Directors surveyed expressed concern that companies not paying attention to how these new technologies can disrupt their business models are headed for an unpleasant surprise. “It is woefully naive to ever think you’re all good,” says Kaplan, who is also the former president and COO of early digital disruptor Rent the Runway. “We have demonstrated in general a lack of ability to imagine what is possible and what is totally discontinuous. We’re really bad at black swans; who could have imagined some things that have occurred?”
Boards need to shake the habit of sticking to the tried-and-true, she says. “As directors, we’ll make investments in physical plants. We’ll make investments in inventory. We’ll make investments in people, all before we’ll make an investment in a capability that is sort of not sure that you can prove it out yet. If we can’t prove the ROI, we don’t do it, and we’ll just do a bunch of small stuff. [But] what you need strategically is to step back every year, get some consult from outside the boardroom and think about how technology could reinvent your business for you; do those scenarios.”
While the risk of being upended by disruption is real—much like the risk of a cyber hack—it’s how fast a company can pivot that is key, argues Kaplan. “And it’s always better to not have to do that under pressure. Particularly as a public company… there’s very little patient capital anymore. There are too many opportunities, alternatives. So, you continue to move forward and try to be as nimble and flexible as you can, as you learn more. And if you need to redirect and pivot, do whatever you need to do but if you hit a pause button, I think strategically it will set the company way back. No. 1, what are you communicating to your people and your teams?”
It’s important that boards regularly discuss with the CEO what the technology means to their industry, says Anderson. “What we’ve started to do is encourage the CEO to have every function do some kind of rational experimentation in various areas, with a particular focus on not just the back-office productivity, but how can we use this to differentiate ourselves competitively with customers and how is this likely to change how people make decisions.”
The home-building industry hasn’t fundamentally changed in about 50 years, Anderson adds, “so you do worry about people just revolutionizing how a home gets built. There’s been some talk over the years on 3D printing of various home components, so we’re always mindful of disruption, but at the same time, it’s a highly regulated industry in terms of code requirements that you have to meet in different jurisdictions around the country, so that’s somewhat of a barrier. But obviously, you can never be asleep, because you never see the bullet that kills you.”
Other directors note that while boards have a responsibility to get educated on the topic, it’s management’s responsibility to connect the dots between tech and strategy—and to permeate this culture across all levels. “It should bubble up within the organization,” Jimenez says. “Your head of HR should be well astute on AI, and your CFO should be well astute. It shouldn’t be just one person at the organization. It should be really blended across the executive team.”
There’s also a difference in how digital-native companies think about AI compared with non-digital native companies. Digital-native companies are thinking about growth and innovation and investment strategy, while non-digital-natives are exploring the technological capabilities in terms of operational efficiency, as a way of boosting productivity and automating some processes that are clunky as opposed to innovation in the space.
In the insurance industry, for instance, where Insurtech is disrupting legacy firms, 80 percent of directors say their company has incorporated AI/gen AI into one or more areas of the business, including products and services. And 60 percent have expanded the mandate of one or more board committees to address the risk and strategy. In comparison, those numbers fall to 33 percent and 17 percent, respectively, in the automative and industrials sector.
“As companies embark on their AI integration journeys, the initial focus will naturally be on optimization and efficiency,” says Schindlinger, who notes that these steps are crucial for establishing a robust AI infrastructure. “However, the true innovation with AI—where businesses can harness its full potential to transform their operations—will come later. It is in this stage that we will see the implementations that genuinely disrupt and elevate entire industries.”
The Boardroom of Tomorrow
This year’s survey found a growing presence of specific skillsets and professional backgrounds among boards, from cyber to HR to AI. “Digital expertise” ranked third of the list of criteria boards are seeking to add, ahead of “strategic planning” and “financial expertise,” which have long ranked at the top of musthave attributes needed to join a public company board.
One, however, does not necessarily preclude the other. “Cyber capability has gotten to be so important that you can attract board members who have high cyber competency but are more all-around athletes,” points out Kaplan. “We just brought on someone to the Crocs board who checks both of those boxes [cyber and business experience]. We had done a search before that was very narrow and said, ‘No, we don’t want just the one-swim-lane person.’ But we were able to bring on somebody incredible who both had a great strategic mind and was living the day-to-day life in cyber strategic decision-making. I think AI will be the same way. You will find people, over time, who will have had transformational experiences with AI.”
Some directors express reservations about this approach. “One of the concerns I have, and it was the same thing with cyber, I worry that if there’s one person on the board who is a quote unquote expert, that the rest of the board will just always defer to that person,” says Anderson. “The more people in the room who are comfortable engaging in meaningful dialogue and challenge around the issue, I think the company and the board would be better served.”
As the IT person in the room, Mike Goodwin, who serves on the board of Burlington Stores and has more than 30 years of technology experience as the former CTO of PetSmart and Hallmark, agrees. “I didn’t want to be, as an IT person, the person responsible for teaching the board AI. I’m not in IT every day [anymore].” Plus, he says, it shouldn’t be all about one person’s perspective (in this case, his). So, Goodwin shares articles with his board members and suggests consultants to bring into meetings. “I will coach the CIO of the companies to bring a broader perspective in and add a little bit of education and context of what they’re doing. So yeah, I may be the catalyst for it, but I’m not the one who’s driving it all.”
Most directors agree on one point: Even without the professional background in a specific area, directors have a duty to get educated on every topic relevant to the business. “I personally don’t have any patience for somebody who says, ‘Well, I don’t have time for that,’” says Pelletier, who notes that directors should be monitoring business news and asking themselves, “Could that be us?” “That is your job. If you have this very rare seat and opportunity to help guide this company, you put in the time. You are on the board to help the firm.”
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About Diligent Institute
Founded in 2018, Diligent Institute serves as the global corporate governance research arm and think tank of Diligent Corporation, the largest SaaS software company in the Governance, Risk and Compliance (GRC) space. Diligent serves more than 25,000 organizations and over 750,000 corporate leaders in more than 90 countries. Diligent Institute is able to tap into that broad network and highlight the diverse perspectives of corporate leaders from around the world.
Diligent Institute produces original research both on our own and in collaboration with partners, including institutions of higher education and thought leaders in the corporate governance space. We produce over a dozen reports each year, ranging from our monthly “Director Confidence Index,” which measures how corporate directors are feeling about the economy, to in-depth reviews of issues such as ESG (environment, social, governance) practices, to our AI-powered “Corporate Sentiment Tracker” that analyzes data from thousands of public sources to discern what’s on the minds of corporate leaders. Learn more at diligentinstitute.com.
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