London, 13 July 2015 – Economic confidence is improving, but uncertainty around the UK’s continued membership of the EU and a reduction of red tape are strong concerns in the latest FT-ICSA Boardroom Bellwether published today. The twice-yearly survey which shows how boards are responding to the challenges of the economy and the wider business and social climate also found that a third of boards do not now expect to meet the target of 25% women on boards by the end of 2015 – the most pessimistic result since December 2012.
The main findings of the survey are as follows:
- UK economy: Economic confidence is returning after a sharp fall in December 2014. Possibly as a consequence of a more decisive election result than expected, 74% of respondents anticipate improvement in UK economic conditions in the next twelve months, up from 45% in December.
- Global economy: Companies are more optimistic about the global economic outlook as well (up to 57% from 33%), but this optimism is not translating into plans for expansion. Despite the election of a government which emphasizes its support for business, two thirds of those companies replying anticipate no change in their expansion plans in the UK and Europe over the next twelve months.
- Brexit: Some 63% of respondents rated a UK exit from Europe as being potentially damaging to their company, but companies are unwilling to voice this publicly. Only 7% indicated that their company would be willing to speak out for the UK to remain part of the EU. Nervousness about the Government’s position on EU membership could be one reason for the lack of expansion plans.
‘Firms want to see the EU do more of what it does well, like turbo-charging the Single Market in services and digital and signing more trade deals with the rest of the world, such as the Transatlantic Trade and Investment Partnership, and less of what it does badly, including regulating on lifestyle issues. Business also wants to see safeguards to protect countries outside the Eurozone, like the UK’ (Matthew Fell, Director of Competitive Markets, CBI)
- Manifesto commitments: Reduced red tape is the manifesto commitment most companies want.
- Boardroom diversity: After three years of significant progress gender diversity seems to be losing momentum with 31% of respondents now reporting that they will not meet Lord Davies’ target of 25% women on boards by the end of 2015. What is more, 63% of those companies not expecting to hit the target have no plans to do so in the short, medium or long term.
‘Changing the status quo is always hard work, so a stalling of momentum is not a surprise. The important thing in maintaining progress in the long run will be to keep a spotlight on the increasing body of research which demonstrates that diversity of leadership strengthens organisations, economies and society.’ (Rowena Ironside, Chair, Women on Boards UK)
Other findings of note are as follows:
- Ethnic diversity was the lowest scorer in terms of board diversity and succession planning is still not receiving the focus it should.
- Most companies view the top three risks as economic, operational and reputational. Given the reputational risk associated with social media it is surprising that the survey also found that only 37% of respondents describe having a social media strategy as important.
- Culture and behaviour are becoming more of a priority with boards recognising the value of externally facilitated performance evaluation in helping to drive change. Many boards are also actively consulting with employees about corporate culture.
‘Board composition, succession planning and building the talent pipeline are all major considerations for boards. It is time Nomination Committees came out of the shadows. The fact that 63% of those companies not expecting to hit Lord Davies’ target have no plans to do so in the short, medium or long term is worrying,’ says Peter Swabey, ICSA Policy & Research Director. ‘With only 41% of companies taking part in the survey considering the executive pipeline capable of providing a sustainable pool of talented and diverse board members, Nomination Committees need to play a much more active role.’
David Styles, Director, Corporate Governance at the Financial Reporting Council agrees. ‘Succession planning is essential to delivering an effective business strategy. It is pleasing to see that it is identified as an important issue which Nomination Committees should pay closer attention to.’
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Notes to Editors:
- The FT-ICSA Boardroom Bellwether is a twice-yearly survey which seeks to gauge the sentiment inside UK boardrooms. The findings show how boards are responding to the economy, and the wider business, regulatory and social climate. Read more online at: www.icsa.org.uk/bellwether
- ICSA is the chartered membership and qualifying body for professionals working in governance, risk and compliance, including company secretaries. Our members work in all sectors and at every level of seniority. With over 120 years of experience, we champion high governance standards by providing qualifications, training, guidance and technical support, and through our work with regulators and policy makers. Website: www.icsa.org.uk
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