Succession Planning – A Board Matter!
28th October 2021
The Chief Executive of the Institute of Directors (IoD) in Ireland has said that “a board with no succession plan is not future-proofing its business nor planning for the board diversity which is essential for an effective, high-performing board”.
Maura Quinn, Chief Executive, IoD Ireland, made the comment as the leading governance organisation published its latest quarterly Director Sentiment Monitor for Q3 2021, which reveals that
one third (34%) of business leaders say their primary board does not have a succession plan in place to replace board members.
Furthermore, 45% of board members admit they were recruited as a result of a ‘direct approach from a member of the board/the board’ even though a clear majority (96%) of the respondents believes that diversity is important when recruiting new board members.
Maura Quinn, Chief Executive of the Institute of Directors in Ireland, commented: “Board succession planning is an important tenet of good corporate governance. The finding that one third of respondents to our survey say that their primary board doesn’t have a succession plan in place raises many flags, not least in terms of planning board diversity.
“A board with no succession plan is not future-proofing the business nor planning for the diversity which is essential for an effective, high-performing board.
Many of the barriers to positive change on board composition in Ireland can be explained by a sizeable number of boards not having a succession plan in place.
“So, while a clear majority of business leaders in our survey acknowledge the importance of diversity in terms of board recruitment and board performance and effectiveness, the finding that close to half of them say they were recruited as a result of a ‘direct approach from a member of the board/the board’ mitigates against recruiting disparate board members.
Some boards are still relying on their own networks, which is neither an open, transparent, nor independent process.”
Maura Quinn added: “Boards which are personally and professionally diverse are more likely to create a listening, collaborative environment, one which is constructively challenging and accepts and incorporates disparate perspectives to deliver enhanced board effectiveness and, ultimately, company performance.”
The key findings of the IoD’s Director Sentiment Monitor for Q3 2021 include:
Succession plans: When asked, ‘Does the board of your primary organisation have a succession plan in place with regard to the composition of its board?’ the business leaders responded as follows:
•Not sure: 5%
Board recruitment: When asked, ‘How were you recruited to join the primary board on which you currently serve?’ the business leaders responded as follows:
•Recruitment agency: 10%
•Public Appointments process (for a State board position): 7%
•The IoD’s Boardroom Centre: 1%
•Legal/Accountancy firm recommendation: 3%
•Direct approach from a member of the board/the board: 45%
•Other (please specify): 21%
Prior contact: When asked, ‘What approximate percentage of members of your primary board did you know personally/professionally before you joined?’ the business leaders responded as follows:
•10% or less: 41%
Board diversity – performance: When asked, ‘Do you believe that board diversity leads to enhanced board performance and effectiveness?’ the business leaders responded as follows:
•Not sure: 9%
Board diversity – board recruitment: When asked, ‘In your view, to what extent is diversity important when recruiting new board members?’ the business leaders responded as follows:
•Not at all important: 0%
•Slightly important: 4%
•Moderately important: 23%
•Very important: 52%
•Extremely important: 21%
Board diversity – elements: When asked, ‘When it comes to discussions on board diversity, which diversity elements are the main focus of your primary board?’ the business leaders responded as follows: (Respondents were asked to select a maximum of three options)
•LGBTQIA+ identity and expression: 4%