Critical for boards to adjust to new normal

The Sunday Mail

Dr Proctor Nyemba

HOW should boards prepare for 2023?

In August 2022, Zimbabwe’s most influential directors’ organisation issued a warning about how the role of boards would evolve.

It was not all bad news, but when the phrase “ever-more turbulent and unpredictable” is thrown around, you know the road ahead will not be easy.

However, while this may be a cause for worry, we must not forget to approach it with a “glass-half-full” outlook.

Future challenges are, after all, simply an invitation to adapt.

Boards have been tackling an unprecedented range of issues in recent years.

From the ongoing Covid-19 pandemic, a changing regulatory landscape, growing stakeholder pressure for corporate accountability, coping with the “Great Resignation” and drastic shifts in customer behaviour and technology-fuelled innovation, there is no shortage of items on the agenda.

As another unprecedented year came to an end, corporate boards of directors continue to navigate the rapidly changing market conditions.

With so much change and volatility, it is crucial that your board understands and prepares for the future of corporate governance, and the issues that will drive corporate governance in 2023.

Stakeholders’ and investors’ continued interest in the efficiency of their board of directors ratchets up the pressure even more.

Boards need to be agile, efficient and well-informed.

As boards and businesses define their operational and corporate governance strategies for 2023, they will continue to focus on environmental, social and governance (ESG), security and the shift to stakeholder governance.

Issues taking up more of their time in 2023 will include value creation and the digital transformation.

Director independence

Independent directors bring new perspectives and new ideas to the board.

They augment the board’s knowledge base and expertise, and can be counted on to keep the company’s best interests at heart.

When members feel tied to the board through relationships (business, personal or social), perks, compensation, interlocking directorate or anything else, they can lose their objectivity.

Independent board members are more impartial because they do not have close ties to the company.

Modern governance depends on this neutrality, so boards can be sure they are making decisions that are supporting the company’s short- and long-term objectives.

Shift to stakeholder governance

Forward-looking boards see the writing on the wall — The world is shifting to stakeholder governance, and they need to keep up.

Modern boards understand that the quest for long-term profitability and the desire to make the planet a better place are not mutually exclusive ideas.

Investor interest in companies practising stakeholder governance is increasing. They see the opportunities, long-term sustainability and improved performance that come from stakeholder governance.

Boards continue to proactively prepare for the shift.

They are ensuring their short- and long-term strategies consider what is best for all their stakeholders, including their communities, investors, employees, suppliers, customers, shareholders and more.

Focus on diversity, equity

and inclusion

The pressure is on companies and corporate boardrooms to create diverse, supportive and inclusive environments — in their advertising, in their c-suites and in their boardrooms. In addition to the bottom-line benefits of having diversity in boardrooms, boards and businesses are improving diversity and inclusion because it is the right thing to do.

Diverse boards include members of different cultural and economic backgrounds, as well as multi-generational members.

For the first time ever, there are five generations in the workforce, and they each bring their own perspectives and experience.

Many boards have opted to hire diversity, equity and inclusion leaders to help them navigate any potential biases and other challenges that come with the desire to increase boardroom diversity.

Board effectiveness and

value creation

A well-functioning board is a competitive advantage. It plays a critical role in the success of its company. This year, businesses will depend on their boards for support.

Effective communication will be key, especially between the board and the CEO (who is feeling all the pressure the board is feeling, and more).

Boards will need to be agile.

Successful boards will be proactive and be able to make good decisions quickly.

They will support the CEO with a forward-looking strategy and keep management accountable for achieving company goals.

Boards will need robust corporate governance practices that mitigate risk, manage compliance, promote accountability, increase transparency and minimise agency conflict.

Continued focus on ESG

In America, the Supreme Court’s West Virginia vs EPA ruling will create some legal hurdles for the Securities and Exchange Commission (SEC)’s proposed climate-change disclosure rules.

But ESG investing is still increasing. Investors are still requesting extensive disclosure information that details companies’ ESG risks.

They know that a company’s ESG performance has an impact on its overall performance and sustainability.

In 2023, boards will need to continue to prioritise how they can take advantage of the business value of ESG, while mitigating its risks.

Consumers are beginning to understand the negative impact industry has on the planet, and they are holding companies responsible for being good corporate citizens.

Regardless of the progress of the SEC’s disclosure rules, forward-looking boards and businesses will continue to take action on ESG issues because they understand the correlation to their business’s short- and long-term success.

Executive pay/compensation governance

In addition to consumers putting pressure on companies to be good corporate citizens, they are also focusing on executive pay and CEO benefits packages. The pandemic highlighted the pay disparity, with low-wage workers struggling and countless businesses closing while CEO compensation skyrocketed.

Boards need to reassess the executive and CEO compensation structure, which has continued to grow exponentially faster than the salaries of typical employees.

The increasing wage gap is a stark reminder of the inequality that exists in the c-suite and boardrooms.

A thorough assessment and understanding of the executive pay structure (compensation, incentives, bonus, etc) will ensure that it is competitive, and ensure pay equity and equality throughout the organisation.

Board evaluations and


One of the easiest ways to ensure your board is operating as effectively as possible is to conduct periodic board evaluations and assessments.

The increased demands being put on boards in 2023 (and beyond) make regular board performance evaluations a necessity.

Regular reviews of your board’s governance structures and processes will show exactly where your board is succeeding and where its challenges lie. Board effectiveness evaluations foster a productive and future-focused board.

Board evaluations help ensure investors, regulators and stakeholders know that your board is operating as effectively as possible.


The SEC is increasing its requirements for cybersecurity disclosures, so boardroom security will certainly continue to be a priority for boards in 2023.

The new rules would require “ . . .  current reporting about material cybersecurity incidents” as well as “ . . . periodic disclosures about a registrant’s policies and procedures to identify and manage cybersecurity risks, management’s role in implementing cybersecurity policies and procedures, and the board of directors’ cybersecurity expertise, if any, and its oversight of cybersecurity risk”.

By their nature, boards of directors have access to a company’s most sensitive information, from trade secrets to customer information.

Many rely on board management software/corporate governance software to provide an additional layer of protection. Boardroom technology and cybersecurity in the boardroom is imperative.

It is crucial that board members do not represent a corporate security risk for the company.

They need to understand the risks they pose to the company, and to follow strict security protocols, including making sure their devices are always updated with the latest security.

Secure board portal software can help.

Digital transformation

Technology is fundamentally changing the shape of business across industries, and overseeing that transformation requires a board that understands and appreciates the opportunities the digital transformation brings.

They need to be tech-savvy themselves and determine how technology can improve every aspect of the business, from the boardroom to the factory floor.

In 2023, technology oversight will continue to be a priority for boards of directors, including data management and cybersecurity protocols.

Forward-looking boards know that the impact new technology will have on their businesses will only grow, and they are keen to mitigate the risks and capitalise on the opportunities. Having board members who are tech-savvy will be a huge advantage.

Tone in the middle

A tone in the middle culture assesses the standards and ethical behaviour of employees to predict the likelihood of ethical breaches taking place at the company.

The idea is that most employees interact with the company’s executives and board members at “the top” of the company on a very limited basis.

Their examples about the company’s moral and ethical culture are set by their managers and supervisors in middle management positions.

People in middle management positions are more likely to be in tune with the prevailing attitudes of the typical employees, far more than the executives and board members.

In 2023, it will be crucial for board members to be aware of any disparity between the ethical culture of the company that is happening at the top versus what it is in the middle.

Arguably, it is at this middle, employee level, where the true corporate culture lies.

These trends, and many others, will affect how boards do business in 2023.

Being prepared to navigate these challenges and opportunities will set your board up for success in the new year and beyond.


Dr Proctor Nyemba helps board members and executives understand their role in governance so they can succeed in the boardroom.


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