UK boards lack trust in executives, focus on cybersecurity

Heidrick & Struggles has published its annual Board Monitor Report for 2024, providing detailed insights into the habits and concerns of boards of the UK's FTSE350 companies.

The report analyses the responses of more than 3,000 CEOs and company executives from various firms globally, focusing on trends and shifts in board operations and priorities.

Key findings from the report include that over a fifth of UK respondents feel that the board does not fully trust their executive teams to effectively accomplish tasks. Additionally, 96% of UK board members believe that the board should engage more closely with employees deeper within their organisations. In terms of cybersecurity, 55% of UK boards have increased their focus on the issue, compared to 68% of boards within the European Union.

A significant trend observed was the increasing operational involvement of board members. Almost three-quarters of respondents in the UK indicated that boards have become more involved in operational affairs. The reasons for this heightened involvement range from a desire to understand more about operational processes (43%) to the CEO needing assistance due to demands on their time (21%). Concerningly, 22% of respondents believe that this increased involvement stems from a lack of trust in the executive team.

Additionally, UK respondents expressed a higher interest in board engagement with various groups of employees (61% vs. 34% global), though only a small percentage (6%) think appointing direct employee representatives to the board is a good idea. Alice Breeden, Regional Practice Managing Partner for CEO & Board of Directors at Heidrick & Struggles in Europe and Africa, commented, "The relationship between the board and management, and particularly the chair and the CEO is critical to driving a high performing organization. As the pressures, expectations, and responsibilities of board members continue to expand, it is easy to see how this pressure is then put back on executives to provide as much detail and access as the board feels is necessary to govern the business. With this constant balancing act adding stress to both sides, the need for a stronger pulse on the business without overreaching will continue to be a challenge."

The report also examined which stakeholders have seen their influence grow in the post-Covid environment. The broader workforce, regulators, the CEO and leadership team, and consumers have all seen increases in influence, while the influence of mainstream and activist investors has not grown as significantly. Only 22% of members report increased influence among mainstream investors, dropping to 13% for activist investors. Despite this, most UK board members (76%) are satisfied with the current level of shareholder influence.

Kit Bingham, Partner and Head of UK Board Practice at Heidrick & Struggles, noted, "The pressure on boards continues to increase and comes from multiple sources including investors, regulators, government, media, and wider society. The spread of issues also continues to proliferate, ranging from environmental, social, and governance to geopolitics to AI and cybersecurity. Combined, the challenges and expectations on boards are ultimately greater than ever. Board directors now need breadth of experience, as well as a depth of expertise in particular topics, combined with agility and a willingness to learn."

The Board Monitor report also highlighted shifts in how boards spend their time, with a significant increase in focus on emerging technology and AI at 71%, while attention toward cybersecurity concerns has decreased. Other areas of focus include sustainability, geopolitical volatility, financial performance and risk, and diversity, equality, inclusion, and wellbeing (DEI).

In terms of gender representation, the representation of women on FTSE 350 boards has exceeded the 40% target set for the end of 2025. Alice Breeden stated, "Most boards remain committed to building companies that reflect the employee and customer populations they serve. The long-term trends reflect strong progress and uncover room for improvement. There is always room to do better."

The 2024 Board Monitor Report underscores the evolving landscape of board operations, priorities, and challenges, providing a comprehensive view of how UK boardrooms continue to adapt to an increasingly complex business environment.