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Jul 25, 2023

Gender tops boards’ considerations of new directors, research finds

Refreshment is one of board’s key duties

Gender tops the list of criteria taken into account when boards are looking for new members, according to new research on board refreshment from Corporate Secretary.

Asked which factors their board uses in its considerations when recruiting new directors, gender is mentioned by 87 percent of respondents. It is followed by relevant experience from an industry other than the company’s, which is mentioned by 80 percent of those taking part in the research, then race/ethnicity (75 percent), ESG skills and experience (60 percent) and cyber-security skills and experience (54 percent). Soft skills and age are each mentioned by half of the respondents.

The findings come at a time when boards are facing pressure from investors, regulators and other stakeholders to increase the diversity of their ranks both in terms of identity and experiences. They are part of a new report – Board refreshment: Finding the right directors to move forward – based on a global survey conducted among governance professionals such as general counsel, corporate secretaries and their teams.

Boards’ key duties include renewing their memberships to help the company thrive going forward amid evolving risks, opportunities and strategies. The report includes data in areas such as assigning oversight of refreshment around the board, how candidates are identified, whether boards are building pipelines of potential directors and how board composition information is shared publicly.

Gender is mentioned by all respondents at mid-cap companies as a factor in selecting new board members. This compares with 93 percent of those at large-caps, 80 percent of those at small caps and 74 percent of those at mega-caps.

About two-thirds (63 percent) of respondents at small-cap companies and 67 percent of those at mega-caps say race/ethnicity is taken into consideration, compared with 86 percent of those at both mid-caps and large caps.

ESG skills and experience are mentioned by 45 percent of respondents at small-cap companies and 59 percent of those at large-cap companies, compared to 70 percent of those at mega-caps and 77 percent of those at mid-caps.

Regionally, professionals in North America mention race/ethnicity (86 percent), age (55 percent) and sexual orientation (33 percent) more frequently than their peers in Europe (66 percent, 28 percent and 17 percent, respectively).

More than three quarters (76 percent) of respondents in Europe mention looking at ESG skills and experience, compared with 57 percent of those in North America. Almost three-fifths (59 percent) of those in North America say cyber-security skills and experience are taken into account, compared with 38 percent of those in Europe.

You can access the whole report for free by clicking here.

Ben Maiden

Ben Maiden is the editor-at-large of Governance Intelligence, an IR Media publication, having joined the company in December 2016. He is based in New York. Ben was previously managing editor of Compliance Reporter, covering regulatory and compliance...