The annual PwC “Board Effectiveness” report repeatedly concludes that stronger governance requires action from both boards and management. Boards must improve agility, oversight practices and use emerging tools like AI, while management must provide clearer information, earlier engagement and be a more transparent communicator. Here are seven things from the report to note:
1. Board Effectiveness Is Improving – But Not Universally: Executive confidence in boards reached a record high, with 41% rating their boards as “excellent” or “good” (up from 35% the prior year). However, perceptions vary dramatically based on proximity to the board. Executives who regularly attend board meetings are far more likely to view boards positively than those with limited interaction, suggesting potential disconnects across leadership teams.
2. Director Capacity and Agility Are Major Concerns: Executives identified three primary obstacles to board effectiveness:
- Directors serving on too many boards (47%)
- Slow response to emerging risks and opportunities (35%)
- Failure to keep pace with digital transformation (34%)
The findings suggest boards may need to rethink agenda design, information flow, director commitments, and how they engage between meetings.
3. AI Expectations Far Exceed Current Board Adoption: Nearly 99% of executives believe boards should use AI in their oversight role, yet only 35% of directors report that their boards currently do so. Executives see AI as a tool to improve governance processes, monitor emerging trends and benchmark peer practices, while most boards remain in the early stages of adoption.
4. Board Assessments Need to Drive Real Action: Although board evaluations are now standard practice, 90% of executives believe assessment processes could be improved. The top recommendations are:
- Link assessment results to succession planning (56%)
- Commit to follow-up actions (41%)
- Conduct individual director assessments (35%)
Executives want evaluations to influence board composition, skills development, and accountability – not merely generate reports.
5. Management Plays a Critical Role in Board Effectiveness: Executives acknowledge that management can do more to help boards succeed. The most frequently cited opportunities are:
- Greater transparency regarding risks and challenges (32%)
- Better follow-through on board feedback (31%)
- Increased director education and training (24%)
The report emphasizes that board effectiveness depends as much on management’s engagement and candor as it does on board processes.
6. External Pressures Are Reshaping Board Agendas: Executives want boards to devote more time over the next year to:
- The U.S. political environment (70%)
- Supply chain management (43%)
- Artificial intelligence (28%)
- Regulatory change (26%)
Boards are increasingly expected to address rapidly changing geopolitical, technological and regulatory risks while remaining strategically focused.
7. Board Committees Face Rising Expectations: Executives see opportunities for improvement across board committees:
- Audit Committees: More rigorous challenge of management assumptions and risk assessments.
- Nominating/Governance Committees: Stronger director evaluations, succession planning, and governance refreshment.
- Compensation Committees: Better integration of non-financial metrics and greater transparency around executive pay decisions.
Authored by
Broc Romanek