In 2023, a number of unexpected developments are expected to have an impact on organisational governance. These go beyond the typical topics such as shareholder activism, cybersecurity, cryptocurrency, ESG and politics, and instead reflect a unique set of ethical, economic, technological, regulatory and public health concerns that are poised to affect organisational leadership in unforeseen ways.
The Board-Management Relationship: The dynamic between the board of directors and executive leadership will face new pressures as directors become more involved in organisational/business affairs due to operational and financial challenges and fiduciary expectations. To maintain a balance between governance and management and support, their critical collaborative partnership, directors and executives will be encouraged to clearly define their roles, responsibilities and lines of authority.
Reinforcing Ethical Standards: Organisational leadership will be required to establish a clear "business tone” in response to indications that unethical behaviour, such as "deception," may be becoming more acceptable among the workforce. Both board members and executives will be expected to send a clear and consistent message to all employees that ethics and honesty are of paramount importance to the company, through their words and actions.
An Unpredictable Economic Climate: The board of directors will face growing challenges in closely monitoring economic conditions due to the uncertainty surrounding high inflation, low employment levels, and the potential for a recession. The financial review will be further complicated by concerns that the impact of geopolitical tension, the ongoing global COVID-19 pandemic, supply chain disruptions, and rising interest rates may not be temporary or easily reversible.
Calculated Risk Taking: The recent success of various space missions highlight the importance of taking calculated risks in business. This can inspire business leaders to pursue bold and innovative initiatives, not just in technology but in other areas as well. NASA's success (Artemis) offers a valuable lesson on the value of carefully planning and developing projects despite uncertainty and risk. It also encourages leaders to actively shape their organisation's future rather than simply reacting to it.
Combatting Falsehoods: Governance will focus on addressing the issue of misinformation as a potential risk to the organisation. This will involve internal discussions on the impact of misinformation on the company and its workforce culture, as well as the question of whether the company should monitor it and to what extent. This will be a high-level task that addresses important topics such as the definition of misinformation, its spread, and the potential privacy and freedom of speech implications for employees as a result of company policies related to it.
Antitrust Measures Impact Strategic Planning for Growth: With heightened antitrust enforcement, boards of directors are reevaluating their approach to non-organic growth opportunities such as mergers, acquisitions, and collaborations. These types of transactions, which may have gone unchallenged in the past, are now facing increased scrutiny and opposition. Directors must now weigh the potential risks of antitrust violations against the potential benefits of these growth opportunities and consider alternative options for expansion.
The Challenges of Serving on a Board: With greater demands for accountability and diversity among board members, there will be increased pressure for more frequent changes in board composition. Alternative methods of refreshing the board, such as peer evaluations and earlier departure, may need to be considered in addition to term limits and mandatory retirement. Directors will need to be prepared for the possibility of leaving their position before their term is up.
Corporate Governance Confronts Ongoing Public Health Vulnerabilities: Organisational governance will need to address the ongoing vulnerability of both the country and the workforce to COVID-19 and other diseases. The board will need to work with management to apply the lessons learned from the pandemic to the workplace and to establish a strong attitude towards illness among the workforce. Additionally, the company may take a more active role in advocating for national preparedness for future public health crises.