New Heidrick & Struggles "Board Monitor" Debuted to Track Board Trends on a Quarterly Basis
Corporate Board Turnover Drops by 22% in 2010, New Research Shows
Apr 4, 2011
CHICAGO, Apr 4, 2011 (GlobeNewswire via COMTEX) --
Heidrick & Struggles International, Inc. (Nasdaq:HSII), the leadership advisory firm providing executive search and leadership consulting services worldwide, today has announced their new Heidrick & Struggles Board Monitor quarterly trend report.
"The dramatic drop in board turnover from 2009 to 2010 reveals a continued risk aversion among the leadership of the Fortune 500," says Bonnie Gwin, vice chairman and head of the North American board practice at Heidrick & Struggles. New director appointments among Fortune 500 companies numbered only 279 last year vs. 356 in 2009, down 22%, according to the newly launched Heidrick & Struggles Board Monitor, which will track board trends in the Fortune 500 on a quarterly basis.
"The ongoing economic uncertainty is causing companies to lean towards those with top-job experience when they do make an appointment," says Ms. Gwin. "Two out of every three new directors brought on board in 2010 were either sitting or former CEOs or CFOs -- only a third of new board members had non-CEO or -CFO backgrounds.
"This overwhelming preference for 'battle-tested' leadership is the strongest trend we're seeing in what boards are looking for. This also means that the demographic makeup of boards is not changing much - the average age of newly appointed directors stayed the same at 57. Women appointments were up slightly but overall, diversity metrics did not appear much changed year over year.'"
The Heidrick & Struggles Board Monitor analyzes directorship profile data from Fortune 500 companies. The current study pulls trends from 2009 and 2010, and the Monitor will be updated quarterly to reflect new director appointments.
Additional key findings from the new Heidrick & Struggles Board Monitor include:
-- CEOs still in high demand for directorship -- 2010 director appointments
included a high percentage of those who occupy or have occupied the top
job, with sitting CEOs numbering 22.2% of appointments and former CEOs
at 27.2% of appointments. These numbers were up slightly from 2009,
which had 21.9% and 26.1%, respectively.
-- Average director age remarkably consistent -- "The magic age of 57
remained strikingly consistent over the past two years, with 57 being
the average age of directors appointed in 5 of the last 8 quarters,"
says Ms. Gwin. "It was only in the 4th quarter of last year that the
average age dropped down to 54, which may indicate the beginning of a
turn toward more youthful directors, but we'll have to monitor whether
this trend will continue."
-- Gender diversity maintaining but not progressing -- "Despite the fact
that there were fewer overall placements, there was still a larger
percentage of female placements in 2010 compared to the prior year --
19.3% versus 17.9%. This small shift shows a continued interest in
expanding the numbers of women in the boardroom, but no dramatic change.
The reality is that most of these were probably 'like for like'
-- Ethnic diversity dropping -- "The numbers of ethnically diverse
directors actually dropped from 14.3 % in 2009 to 13.6% in 2010. This
drop seems to reflect the 'flight to experience' and the small numbers
of diverse directors with classic 'CEO'-level operations experience."
Implications for companies -- a shifting board profile. "These numbers point to some clear questions that boards have to ask themselves as they recruit new members in the coming year," says Ms. Gwin.
"First, how to deal with the coming generational shift as directors 'age' off? Boards often hesitate to add dramatically younger members for several reasons: Will an earlier appointment mean that the director will stay on the board for 30 years or longer? Does a 45-year-old have enough 'life experience' and 'seasoning' to contribute to the board? Will a younger member be viewed as a true peer by the other directors? Does a younger director -- who is more likely than his or her peers on the board to be a working executive -- have the time to devote to board service?
"These are real concerns, but many companies are starting to recognize the impending generational shift that is starting to happen as younger CEOs are appointed and huge consumer trends, especially in social media, impact the business world. Very quickly, boards will need to begin actively considering how to deal with these new generational dynamics and the leading edge boards are already looking to add individuals who bring a lens into the next generation.
"When will we see dramatic shifts in the diversity of boards? During this downturn in the economy, adding battle-tested experience has been more important than almost anything else. Boards wanted experienced hands at the table while they were making death-defying decisions about the future of their company. As the best boards look forward again, continuing to aggressively add diverse perspectives will be important as a competitive advantage, especially for consumer-oriented businesses.
"Regulatory imperatives -- and quotas in particular, are gaining more traction outside the United States. This will be an interesting trend to watch in terms of how it impacts U.S.-based boards."
Bonnie W. Gwin is a vice chairman and the managing partner of North America for the Heidrick & Struggles' Board of Directors Practice. She focuses on searches at both the director and CEO level across a wide range of industries.
About Heidrick & Struggles International, Inc.
Heidrick & Struggles International, Inc. (Nasdaq:HSII) is the leadership advisory firm providing senior-level executive search and leadership consulting services, including succession planning, executive assessment and development, talent retention management, transition consulting for newly appointed executives, and M&A human capital integration consulting. For almost 60 years, we have focused on quality service and built strong leadership teams through our relationships with clients and individuals worldwide. Today, Heidrick & Struggles leadership experts operate from principal business centers in North America, Latin America, Europe and Asia Pacific. For more information about Heidrick & Struggles, please visit www.heidrick.com.
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SOURCE: Heidrick & Struggles International, Inc.
CONTACT: Wendi Taylor Nations
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