The FT–ICSA Boardroom Bellwether is a twice-yearly survey of FTSE 350 companies that seeks to gauge the sentiment inside UK boardrooms. It canvasses the views of their company secretaries to find out how boards are responding to the challenges of the economy, market conditions and the wider business and governance environment.
Questions cover a range of business concerns, topical issues and specific governance concerns to provide unique insight into what British boards are thinking. Some questions change from survey to survey, but the core remains the same to reveal trends and shifts in opinion.
Use the tabs below to explore the key findings of the Winter 2018 FT–ICSA Boardroom Bellwether Survey, which took place in December 2018 and was published on 21 January 2019.
Responses to this latest survey show that confidence in the global economy and respondents’ own sector has taken a sharp turn for the worse. Just 11% of respondents believe that global economic conditions will improve, down from 25% six months ago, and only 15% predict improvement in their sector, down from 28%.
This pessimism pales into insignificance, however, compared with lack of confidence in the UK economy. Just 2% of respondents predict an improvement and 81% a decline. This negativity is doubtless linked to the uncertainty surrounding the UK’s exit from the EU as evidenced by the 73% of respondents who predict that Brexit will result in damage for their company.
Progress towards achieving boards that are more representative of their customers and markets remains slow despite continuing pressure to improve gender balance and broaden ethnic and cultural diversity.
While gender diversity is showing signs of improvement (72% of respondents rate their board as diverse in terms of gender, the highest figure since we started tracking it in 2012), ethnic diversity remains an area of concern with only 32% of respondents considering their board to be diverse and 48% believing that it is not.
On a more positive note, for the first time, we have seen more than half of our respondents believing that their executive pipeline is sufficient. Companies that are effective at managing their pipeline are more likely to be able to develop a wide and diverse pool of ‘board-ready’ executives, so it is encouraging that we are seeing more confidence in this area.
Cyber risk remains the top risk concern, with 80% of respondents reporting that they see cyber risk as increasing and 91% of respondents revealing that their board is increasing spending on mitigation of cyber risk. Technological disruption has moved higher up the agenda with more attention now being paid to Artificial Intelligence with 56% of boards now having discussed the risks and opportunities (up from just 36% in winter 2017).
Other areas that boards are focusing their attention on include sexual harassment guidelines and the ability to employ skilled staff. More work remains to be done on preventing sexual harassment in the workplace. 55% of respondents indicated that their boards felt that current policies and guidelines on sexual harassment in the workplace were fit for purpose, but some 26% of respondents gave the ‘average’ response and 19% did not know.
In terms of a skills shortage, 43% of respondents feel that their company’s ability to employ appropriately skilled staff has not changed over the last two years, although 31% feel that it has worsened. Reassuringly, virtually all of the companies who indicated that it was an issue are taking actions to address it.
The majority of companies were ready for the General Data Protection Regulation (GDPR) requirements that came into effect in May 2018 – just 7% reported that they were not.
In terms of getting the workforce voice into the boardroom, only 2% of respondents indicated that the issue had not yet been considered. The most common response from companies (26%) favoured the designated non-executive director option, ahead of 9% preferring a works council or similar. 39% preferred a combination of options. 48% of respondents believe that action will improve the way in which their board is aware of the views of their workforce.
Reporting on the gender pay gap has thus far failed to result in changes to many companies’ pay policies or strategies; 67% of companies said that it hadn’t and only 24% said that it had. Although 65% of respondents indicated that their company would be taking action to reduce the gender pay gap, only 34% have published an action plan.
Engagement between companies and investors on remuneration issues appears highly effective with 65% of our respondents’ remuneration committees making changes to a remuneration policy following feedback from investors and 4% not having done so because no changes were requested. Remuneration committees are also sensitive to pay structures and incentives across the workforce with 89% of respondents saying that their remuneration committee took note of these elements when discussing executive remuneration.