Changing Regulatory Compliance, Over-Reliance on Paper, Cybersecurity Top List of Concerns
OnBoard recently published its fourth annual Boardroom Insights Survey, which surveys board professionals and stakeholders about the dynamics and trends impacting board effectiveness. The survey included more than 350 responses, including many board professionals in the health care sector. Professionals surveyed included CEOs, board presidents, C-suite and other executives, general counsels and corporate secretaries, and board administrators.
Top External Trends Impacting Effectiveness
According to respondents, two factors tied for the title of “most impactful” to boards and organizations’ effectiveness in 2024: Changes to regulation and compliance rules and the increasing pace of technological change. Rounding out the top three concerns was increased risk due to cybersecurity concerns.
Across all industries, 74% of top board leaders like CEOs, presidents, C-suite leaders, and executives cited rapid accelerating tech advancements, cyber threats, and the advent of the AI (Artificial Intelligence) era as the most trends expected to most impact board and organizational effectiveness.
This year’s survey also revealed a downward trend in cybersecurity confidence. Only 54% of survey respondents said they became more confident in board security over the past 12 months. That’s down from 71% in the 2023 survey, reaching a peak of 89% confidence in 2022.
What Boards Are Doing Best
Asked to identify their boards’ biggest strengths, survey respondents identified the top three as meeting participation, preparation, and onboarding.
Nearly nine in 10 directors said high levels of engagement in board meetings was their primary strength, while 77% said their boards are moderately or highly effective at preparing for meetings.
Nearly two-thirds of respondents (66%) said their boards are effective at onboarding new members and establishing new meetings.
Health Care Boards Lag Behind on Digital Solutions
Health care boards use digital solutions, such as board management software, Google Drive, SharePoint, Dropbox, Microsoft Excel or Teams, or Zoom, at a 19% clip, which is below average across industries.
While 61% use email and/or PDF attachments — which is roughly middle of the pack — a whopping 20% still rely on paper, the highest percentage of any industry group. With the inefficiencies that are inherent with a paper-based solution, including delivery of board books and the difficulty of making late changes to those books, this presents an opportunity for many health care boards to operate more efficiently by opting for a more modern, secure, streamlined solution.
Insufficient Preparation Time
On a related note, many survey respondents identified limited time as a constant challenge. For administrators, the challenges center on tight time frames to gather and distribute board materials.
Nearly 60% said they distribute materials to board members less than a week in advance of meetings, and about half of those send them less than four days in advance.
As a result, board members often must do marathon cram sessions to prepare for meetings as many juggle board duties with careers and other responsibilities. Forty-one percent of respondents said they spend four to six hours prepping for meetings, while 50% said they spend more than six hours. Only 9% said they spend less than two hours preparing for meetings.
Opportunities for Improved Effectiveness
In addition to their boards’ strengths, survey respondents also identified their key weaknesses. Many see a need to bolster cybersecurity and make better use of technology.
About four in 10 boards indicated there is significant room for improvement when ensuring cybersecurity relative to board information and meetings and to facilitating effective board communication outside of meetings.
Nearly one-third of survey respondents (32%) said their organizations are not effective at utilizing technology. In addition, 31% said their boards could do a better job of staying informed on industry trends.
Ineffective Board Members Remain a Challenge
As boards work to navigate evolving technology, regulatory demands, and economic and social pressures, many remain frustrated about what they see as inept board members.
More than 70% of survey respondents said they could identify at least one ineffective board member on their board today, and more than half said at least 1 in 10 board members are ineffective.
Survey results suggest that approximately 17% of board members are ineffective, down from 25% in 2023. In what could be a silver lining, respondents from the health care sector cited the lowest number of ineffective board members across the industry types that were surveyed (12% on average).
Asked how board members could be more effective, the top five responses were:
- Increased engagement and preparation
- More utilization of better technologies
- More efficient governance practices
- Improved training and education
- More communication and clearer expectations
While Problems Remain, Solutions Are Available
The results of this year’s Boardroom Insights Survey illustrate the challenges health care boards face in today’s rapidly evolving environment. Boards face myriad difficulties, from cybersecurity to time constraints, disengaged peers, technological difficulties, and other pressures such as increased compliance requirements.
That said, their survey responses demonstrate ongoing progress. Board management solutions, such as OnBoard, offer several capabilities and benefits to help organizations streamline processes and better protect vital board information and communications.