Representation of Women on Boards Shows Signs of Expanding

Representation of Women on Boards Shows Signs of Expanding

The percentage of women board members on the corporate boards of companies in the Russell 3000 index exceeded 20% in the second quarter of 2019, marking the first time women have held more than one-fifth of Russell 3000 seats, according to the findings of a quarterly index that tracks gender representation on corporate boards released by corporate governance solutions provider Equilar.

The “Equilar Q2 2019 Gender Diversity Index” (GDI), published on September 11, is the latest report since the GDI was first published in January 2017. Researchers noted that at that time, just 15% of boards seats in the Russell 3000 index—an index that seeks to serve as a benchmark of the entire U.S. stock market by tracking the performance of the 3,000 largest publicly-traded U.S. companies—were held by women, and less than 25% of board vacancies that came open were being filled by women.

The latest GDI found that the percentage of women on Russell 3000 boards increased to 20.2% in Q2 2019, up from 19.3% in the previous quarter, and from 16.9% in Q1 2018. This acceleration caused the GDI to increase to 0.40, with 1.0 representing parity among men and women on corporate boards across the Russell 3000. The index also reported that 41.9% of newly appointed directors in Q2 2019 were women, down slightly from 46.8% in Q1 2019.

In addition, the index showed that as of Q2 2019, just 10.8% (309) Russell 3000 boards were still without a single woman member. Researchers pointed out that this represents a significant decline from the 376 boards without a woman member in Q1 2019. They also noted that the percentage of women who joined these boards as first-time public company board members has surpassed 50% three of the past four quarters.

The index also revealed, however, that just 48 Russell 3000 companies have currently achieved gender parity, while 2,811 have not. According to researchers, the Russell 3000 would require an annual growth rate of women on boards of 8.56% to reach full gender parity by 2030. The GDI Q4 2018 report had projected that based on the rate of growth observed at that time, gender parity on Russell 3000 boards would be achieved by 2034.

Big Data Analysis Is Helping Companies Make Better Decisions

Big Data Analysis Is Helping Companies Make Better Decisions

Although companies now have access to increasing amounts of “big data” that could help them improve the speed and quality of their decision-making processes, culture is preventing many companies from optimizing opportunities to derive insights from these data, the results of a survey released on July 25 by professional services firm Deloitte suggest.

The survey, conducted in April 2019, included 1,048 executives at U.S.-based companies who interact with, create, or use analytics as part of their job. The aim of the research was to get a cross-industry perspective on how companies approach business analytics and artificial intelligence, and where these organizations fall along an analytics maturity continuum.

The results indicated that most executives do not believe their companies are insight-driven, with just 37% placing their company in the top categories of the analytics continuum. The remaining 63% of respondents said they are aware of analytics but lack infrastructure, are still working in silos, or are expanding their ad hoc analytics capabilities beyond silos. However, three-quarters of the executives surveyed reported that their organization’s analytical maturity has improved over the past year, and 70% said they expect business analytics to play a bigger role in the next three years than it does currently.

The survey also found that among the 37% of companies in the survey with the strongest analytics cultures, 48% had significantly exceeded their business goals in the past 12 months, making them twice as likely to have done so than the 63% of companies with less robust analytics cultures.

The findings further revealed that executive sponsorship is essential to this level of organizational change, and that the best potential champion is the chief executive officer. The results indicated that the CEO was the lead champion of analytics in 29% of the companies surveyed, and that these companies were 77% more likely to have significantly exceeded their business goals and were 59% more likely to have derived actionable insights from the analytics they are tracking.

However, the survey also showed that most executives are not yet fluent in interacting with data, as 67% of respondents admitted that they are not comfortable accessing or using data from their tools and resources. Researchers pointed out that the proportion of respondents who expressed discomfort with using data was significant (37%) even at companies with a strong data-driven culture.

In addition, the survey showed that while 64% of the executives reported that their organization relies on structured data from internal systems or resources, just 18% said that they have taken advantage of unstructured data, such as product images or customer audio files, or comments from social media. However, the survey also found that the companies indicating that unstructured data are among their most valuable sources of insights were 24% more likely to have exceeded their business goals.

Concerns about Corporate Culture and Diversity Grow

Concerns about Corporate Culture and Diversity Grow

As the scope of board oversight becomes increasingly complex, public company directors are more engaged in overseeing topics ranging from corporate culture to cybersecurity, and are thinking more broadly about how diversity and social issues fit into their company’s strategy, the results of PwC’s Annual Corporate Directors Survey indicate.

The survey of 714 directors representing a cross-section of U.S. companies from over a dozen industries was conducted in the summer of 2018. Researchers pointed out that from charges of cheating to meet government targets, to sexual harassment, to defrauding customers, corporate culture problems have recently threatened the reputations of a number of high-profile companies. When asked to identify the factors that contribute to problems with corporate culture, the leading response of the directors surveyed was the tone set by the executive team (87%), followed by the tone set by middle management (79%), an excessive focus on boardroom results (74%), compensation plans that drive bad behavior or undesirable outcomes (67%), and a lack of communication or transparency from management (66%).

Although more than 80% of the directors polled said their company has taken some action to address culture concerns, just 17% said their company has revised its compensation plans. The most commonly cited approaches to tackling culture problems were enhancing employee training (60%) and improving whistleblower programs (42%). Moreover, just 21% of respondents said their company has reviewed and/or amended its crisis management plan for dealing with the risk of a reputational crisis arising from culture issues, and only 19% reported that they had implemented a culture or engagement component of the company’s strategic plan.

The directors were also asked in the survey how they evaluate their company’s culture. Almost two-thirds of respondents said they use their intuition or “gut feeling” from interacting with management (64%), and/or employee turnover statistics (63%).

In addition, the survey asked the directors whether they support incorporating social issues into their company’s strategy, and, if so, which issues should be emphasized. While 29% of respondents said they think shareholders are too focused on corporate social responsibility, significant percentages agreed that their company should take certain issues into account when forming company strategy, including health care availability and cost (36%), resource scarcity (31%), human rights (28%), and income inequality (15%).

The findings clearly showed that most directors value board diversity: 94% of respondents agreed that diversity brings unique perspectives to the boardroom, 84% said they think diversity enhances board performance, and 81% agreed that diversity improves relationships with investors. The results further indicated that most of the directors surveyed support initiatives to promote diversity and inclusion in the workplace, with 66% saying that public companies should be doing more to promote gender/racial diversity, and only 9% saying that companies should be doing less. However, 45% of respondents admitted that their company does a fair or poor job of developing diverse executive talent, and 39% reported that their company’s overall efforts to recruit a diverse workforce are only fair or poor.

In addition, the survey looked at how board members are dealing with the growing threat of cyber attacks. Nearly all respondents (95%) said that their board or company has taken steps to prepare for potential cybersecurity incidents. When asked to identify these measures, 67% of respondents said their board receives increased reporting on cybersecurity metrics, 57% said that the resources or budget dedicated to cybersecurity has increased, and 56% said that third-party advisors have been engaged.

From Benefit Trends Newsletter, Volume 61, Issue 11

The information contained in this newsletter is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. This newsletter is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2018 Liberty Publishing, Inc. All rights reserved.

Building Ecosystems to Gain Competitive Advantage

Building Ecosystems to Gain Competitive Advantage

As global business leaders become increasingly concerned about disruptions to their current growth strategies, many report that they are seeking to gain a competitive advantage by building ecosystems in which they join forces with other companies to share data, customers, technology, and industry knowledge, a recent study by professional services provider Accenture Strategy has reported.

The findings of the study, “Cornerstone of Future Growth: Ecosystems,” are based on a survey of 1,252 C-level executives at large companies spanning 13 industries and seven countries that was conducted in January 2018. The survey found that only 25% of the business leaders indicated that they are very confident they will achieve their 2020 growth targets, while 56% said they are concerned that current growth strategies are at high risk of disruption. The results also showed that 76% of the executives polled agree that their current business models will be unrecognizable in the next five years, and that ecosystems will be the main change agent.

In the study, an ecosystem is defined as a network of cross-industry players who work together to define, build, and execute market-creating customer and consumer solutions. Researchers estimated that ecosystems enabled by digital platforms could unlock $100 trillion of value for business and society over the next decade, and noted that the companies that are currently in the strongest position to take advantage of the synergies provided by ecosystems are operating in the telecoms, banking, and utilities sectors. Examples of such ecosystems include a furniture retailer partnering with an online job site to connect customers with workers willing to assemble the furniture, or health care providers that partner with rideshare services to transport patients to appointments.

The business leaders surveyed reported that they are seeking to capitalize on the opportunity by forming ecosystems to make major innovation plays (63%), increase revenue growth (58%), access new markets (55%), and attract new customers (55%). The results showed that 60% of respondents are looking to build ecosystems to disrupt their industry, 46% are actively seeking partners, and another 77% believe their company will generate more than half of its revenues from ecosystems in the next five years.

The study also pointed out, however, that many executives lack the experience and capabilities needed to design and execute market-leading ecosystems, and thus are not realizing the revenue growth they had predicted from ecosystem participation. The survey found that 58% of respondents targeted a growth rate of 3-4% from ecosystems, but only 40% are achieving it; and that just 12% are seeing growth of 5% or more from ecosystems.

Moreover, while half of executives surveyed said they are using platforms to share data and/or information across businesses, more than one-third admitted they are concerned about sharing intellectual property data (34%) and about cybersecurity (35%). In addition, while nearly two-thirds (63%) of respondents agreed that the technology/platform is the most important thing to get right in an ecosystem, nearly half (44%) acknowledged that they are worried about sharing company assets and secrets.

Nonetheless, large shares of the executives surveyed anticipate that ecosystems will have an impact on their business over the next three to five years: 56% of respondents said they believe ecosystems will create a new competitive advantage, 50% predicted that ecosystems will allow them to use data and analytics to better serve customers, 46% said they believe ecosystems will create new customer experiences, and 44% expressed confidence that ecosystems will drive innovation and disruption over this time period.

From Benefit Trends Newsletter, Volume 61, Issue 8

The information contained in this newsletter is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. This newsletter is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2018 Liberty Publishing, Inc. All rights reserved.

Role of Employers in Providing Benefits Expected To Diminish

Role of Employers in Providing Benefits Expected To Diminish

When it comes to providing health insurance and retirement benefits and ensuring the financial security of workers, Americans expect the role of individuals and government entities to increase and the role of employers to decrease over the next 10 years, according to results of a recent survey by the American Benefits Council.

The survey of 800 registered voters was conducted on November 5-9, 2017. When asked which entity they trust the most to provide them with high-quality health coverage, 43% of employed respondents said employers, while smaller shares cited the individual health insurance market (28%), the Federal government (13%), or state government (8%). However, when asked which entity they trust the most to provide them with opportunities to save for retirement, 56% of working respondents cited the individual financial services market, while 27% named employers and 9% cited the Federal government.

The working survey participants were also asked to identify the type of benefit they consider most important in the next 10 years. The top response was employer-provided health insurance coverage (35%), followed by employer-provided retirement benefits (31%). Much smaller shares of respondents cited student loan reimbursement and tuition assistance (7%), a financial and retirement planning program (7%), paid medical and family leave (6%), or paid vacation (5%).

When asked which entity they expect will play a larger role in providing individuals with health insurance and retirement savings opportunities over the next 10 years, more than half (52%) of respondents said they anticipate that individuals will play a larger role, while significant shares said they believe the Federal government (45%) or the state government (39%) will play a larger role. By contrast, only 29% of respondents said they expect employers will play a larger role, with the remaining respondents indicating they expect the role of employers to become smaller (35%) or stay the same (34%).

The survey participants were also asked to identify the tax incentives they view as most important over the next 10 years. More than one-quarter of respondents chose tax deferral on contributions to retirement plans (27%) or tax-free employer-sponsored health coverage (26%), while smaller shares selected the mortgage interest deduction (20%), a lower rate on capital gains (13%), or a deduction for charitable giving (9%).

Moreover, when asked if they would prefer a compensation package that emphasizes quality benefits or more take-home pay, 60% of respondents said they would prefer more generous, high-quality benefits in exchange for lower take-home pay; while 34% of respondents indicated that they would prefer less generous, lower-quality benefits in exchange for higher take-home pay.

From Benefit Trends Newsletter, Volume 6,1 Issue 1

The information contained in this newsletter is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. This newsletter is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2018 Liberty Publishing, Inc. All rights reserved.

Many Executives Are Flying Blind When Choosing Innovation Strategies

Many Executives Are Flying Blind When Choosing Innovation Strategies

While global executives value innovation, many lack confidence in their ability to innovate, and are facing challenges in aligning their innovation efforts with their business strategies, according to a report recently released by professional services firm PwC.

The report’s results and insights are based on a survey of over 1,200 executives and business leaders from 44 countries and all major sectors conducted between September 12, 2016 and January 27, 2017. More than half (54%) of respondents reported that they struggle to bridge the gap between their business and innovation strategies, and are thus flying blind as they place bets on innovation.

Most of the respondents also indicated that they have low levels of confidence in their company’s innovation prowess, with just over one-quarter saying they believe they lead their competitors in innovation. However, 20% of these innovation leaders, but only 13% of the remaining respondents, said they expect their company to grow by more than 15% in the next five years.

When asked about the metrics they use for measuring the success of their company’s innovation strategies, the top response was sales growth (69%), followed by customer satisfaction ratings (43%), number of new ideas in the pipeline (40%), market share (36%), number of new products in the pipeline (31%), the net value of the innovation portfolio (28%), and time to market (24%).

The survey findings suggested that companies are becoming more inclusive, and are increasingly adopting open innovation models that bring more voices to the table, including employees and customers. When asked to name the most important internal and external partners for innovation at their organization, 60% of respondents cited internal employees, 50% mentioned technology partners, and 35% cited customers via focus groups, data mining, and other forms of feedback. Moreover, when asked what operating models their organization currently uses to drive innovation, the respondents were most likely to cite an open innovation model (61%); followed by design thinking (59%) and co-creating with customers, partners, and suppliers (55%). By contrast, only around one-third (34%) of respondents cited traditional R&D.

In addition, the report looked at what types of companies are more focused on incremental change, and what sectors are more focused on breakthrough innovation, or making significant innovations that result in the development of major new technological or market applications. The survey results showed that the companies that are most likely to be focused on breakthrough innovation are in the technology sector (58%); followed by in the pharmaceutical and life sciences (51%), health services (47%), communications (45%), and automotive (43%) sectors.

From Benefit Trends Newsletter, Volume 60, Issue 6

The information contained in this newsletter is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. This newsletter is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2017 Liberty Publishing, Inc. All rights reserved.