NEW DELHI (India CSR): As India’s corporate landscape continues to evolve, a significant shift is underway in the boardrooms of its leading companies. The ‘2024 Heidrick & Struggles India CEO and Board Survey’ reveals that nearly three out of five Indian companies are poised for a board refresh or the hiring of new directors in the next 12-18 months.
This development marks a critical juncture in the corporate governance of Indian businesses, influenced by the nearing end of a 10-year period set by the Companies Act, 2013 for hiring and integrating new directors.
Survey Insights
The survey, which analyzed responses from 150 top-level executives like managing directors, board chairs, and chairs of subcommittees, sheds light on the current priorities and perceptions surrounding board refreshes in India. It indicates that 74% of companies are planning a boardroom refresh due to the retirement of a director, while 48% aim to infuse new skill sets into their boards.
The Need for Board Refresh
Embracing Change
Puneet Pratap Singh, partner-in-charge at Heidrick & Struggles India, emphasizes the imminent change and the need for boards to navigate disruption effectively. The refresh is seen as an opportunity for strategic realignment with the company’s overall strategy, focusing on the future and the evolving skills matrix.
Talent Acquisition Challenges
The survey indicates that finding the right talent is a significant challenge, with 50% of respondents acknowledging this. With emerging areas like cybersecurity risk and artificial intelligence gaining prominence, there is a heightened need for board members with relevant skill sets.
Prioritizing Experience and Expertise
Executive Experience
A significant proportion of respondents (41%) prioritize executive experience in new director appointments. This reflects a continued preference for leaders with prior board experience, despite a trend of senior leaders seeking additional certifications and training.
Beyond Traditional Approaches
Suresh Raina, a partner at Heidrick & Struggles India, advocates for a departure from traditional approaches in hiring new board members. He suggests robust succession planning for a dynamic and inclusive boardroom, which includes considering first-time candidates to expand the talent pool.
Leveraging the Companies Act
Two-thirds of the respondents view the two-term limit mandated by the Companies Act as an opportunity to introduce new skills and fresh thinking to boards. This aligns with the need for cross-sector experience and subject matter expertise, as highlighted by 46% of the respondents.
Building Future-Ready Boards
Key Priorities
The imperative for Indian companies is to build future-ready boards. This involves valuing board members who bring specialized expertise, cross-sector experience, and fresh perspectives.
Integrating Succession Planning
Experts stress the importance of integrating succession planning into the ongoing board process to maintain a competitive edge.
Cultivating an Inclusive Board Culture
Beyond Diverse Hiring
The survey findings suggest that creating an inclusive board culture is crucial. This goes beyond merely diverse hiring; it involves embedding inclusion in all levels of processes and leadership. It’s about ensuring that directors from varied backgrounds can contribute fully and authentically.
Key Findings
Here’s a table summarizing the key findings from the ‘2024 Heidrick & Struggles India CEO and Board Survey’:
| Heading | Key Findings |
|---|---|
| Board Refresh Timeline | 59% of Indian companies plan for a board refresh or new director hiring in the next 12-18 months. |
| Reasons for Board Refresh | – 74% cite retirement of a director. <br> – 48% aim to infuse new skill sets into their boards. |
| Survey Demographics | Responses from 150 managing directors, board chairs, and chairs of subcommittees. |
| Anticipated Change | Significant board changes expected, focusing on navigating disruption and infusing new perspectives. |
| Strategic Focus of Board Refresh | Aligning board composition with the company’s overall strategy and future-oriented skills matrix. |
| Talent Acquisition Challenge | 50% view finding the right talent as the top challenge in the board refresh process. |
| Emerging Areas of Focus | – Cybersecurity risk (32%). <br> – Incorporating artificial intelligence (31%). |
| Executive Experience Priority | 41% emphasize prioritizing executive experience in new director appointments. |
| Approach to Hiring New Members | – Encouragement to look beyond traditional approaches. <br> – Emphasis on robust succession planning. |
| Companies Act Impact | 66% see the two-term limit as an opportunity to add new skills and fresh thinking to boards. |
| Focus on Board Diversity | 46% suggest cross-sector experience is key for board diversity improvements. |
| Future-Ready Boards | – Need for board members with specialized expertise and fresh perspectives. <br> – Importance of succession planning. |
| Inclusive Board Culture | – Necessity of creating an inclusive culture. <br> – Embedding inclusion in leadership and processes. |
(India CSR)
