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The 2025 Board
by Professor Pedro Nueno
In my book “The 2020 Board” (2016), I anticipated a change in the nature of the boards of directors towards more professionalism; moving away from being a place of reward, or prestige, towards becoming a body of support in the design of the corporate strategy as well as the management structure of the company, and in stimulating the necessary strategic and operational changes.
How might boards look in 2025? It seems very reasonable to expect the board to continue to advance in stimulating the company’s evolution in the conditions that affect all its sectors: an increase in the speed of business, a sharp increase in the levels of internationalization (towards globalization), and incorporating digitalization in all business processes.
It's clear that this evolution will require a relevant work in adapting the role of the board to that of a corporate governance body that can facilitate and stimulate the necessary evolution of the company. This will lead to having more efficient and effective boards and will require greater preparation of the board members, the collection and distribution of the necessary information to the board members, and ensuring an effective and efficient discussion of all the relevant issues in the board meetings. As a result, changes in the board will follow: the number of board members will go down (having deep and fruitful discussions is difficult with high numbers of board members), there will be an increase in the number of and duration of board meetings, and a better quality of interaction between the board and the management team.
Good corporate governance will be difficult with fewer than eight board meetings per year, lasting less than five hours, and with the board members receiving the relevant information for the meetings less than one week before the board meeting.
In the long term, it is reasonable that there may be as many women as men on boards, or even more women than men. In the short term, this will be difficult because the number of women occupying leadership positions in companies is still lower than that of men, and the main criteria for putting a board together must be the experience and preparedness of its directors. But when looking for the replacement of one board member for another, for example, it is important to look for the highest caliber of candidates.
Lastly, I believe that we should not expect to see many changes when it comes to the profiles of board members. A minority could be company executives (the CEO and, for example, the CFO). Others might represent shareholders. If it’s a family business, there might be family members or certain individuals chosen by the family to protect their interests. If there are financial shareholders (investment funds, venture capital firms, banks that have transformed debt into shares), they’ll want a seat on the board. And it is important that there are independent board members with a vision of what may be best for the company in the long run, although it may be uncomfortable for directors or shareholders in the short term. Independent directors are also able to appreciate the difficulties the company may face in its future given the evolution of its sector, and will be in a better position to reach the conclusion that it’s in the best interest of the company to be sold out to another company in a better situation to benefit from the acquisition.
Finally, we see that boards are gradually being held accountable to a higher degree, and therefore it’s very important that things be done very well in the company from both a legal and a professional perspective. Business failures may also be detrimental to board members’ careers. The information they receive must be correct, and management (or company owners, for that matter) should not deceive themselves by only highlighting the positive and forgetting about the negative. Board members must ensure the appropriate auditing of the company and, if necessary, conduct an independent study that positions the company in its sector.
Pedro Nueno
Professor of Entrepreneurship
IESE Center for Corporate Governance
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