1.New Board Focus Required: Workforce well-being
Workforce strategies must again be spotlighted on 2021 boardroom agendas.
The health and well-being of the workforce, including the C-suite, is a new challenge arising from the pandemic. Studies show that the average American workday increased 40% during COVID-19,2 as work and home life blend together. Fourteen percent of women and 11% of men are considering job resignations due to COVID-19–related work-family conflicts,3 and adult anxiety and depressive disorders reported have increased by 300%.4 Interestingly, the Securities and Exchange Commission (SEC) adopted new rules in 2020 that, for the first time, will require companies to provide disclosures on human capital management. Boards therefore must now consider a longer-term focus on whether their businesses are enabling or facilitating workforce health, both physical and mental, since the start of the pandemic. This includes board oversight of company measurements illustrating both value creation and risk mitigation, such as the ROI from workplace mental health programs, and the financial impact of improved attrition rates.
The health and well-being of the workforce, including the C-suite, is a new challenge arising from the pandemic. Studies show that the average American workday increased 40% during COVID-19,2 as work and home life blend together. Fourteen percent of women and 11% of men are considering job resignations due to COVID-19–related work-family conflicts,3 and adult anxiety and depressive disorders reported have increased by 300%.4 Interestingly, the Securities and Exchange Commission (SEC) adopted new rules in 2020 that, for the first time, will require companies to provide disclosures on human capital management. Boards therefore must now consider a longer-term focus on whether their businesses are enabling or facilitating workforce health, both physical and mental, since the start of the pandemic. This includes board oversight of company measurements illustrating both value creation and risk mitigation, such as the ROI from workplace mental health programs, and the financial impact of improved attrition rates.
Source: Deloitte
2.Four ways boards can oversee risk management beyond COVID-19
Acritical function of boards has always been to understand and mitigate business risk – but the pandemic has brought that responsibility into sharp focus. Its unprecedented impact has highlighted the interconnectedness of risks and the velocity at which the risk landscape can change. The EY Global Center for Board Matters interviewed leading board directors across the globe to understand if and how their attitudes to risk management have changed in light of the pandemic. Four insights emerged into how boards can change their approach to risk management to reframe the future of their organizations:
- Protect more than shareholder value Boards must now recognize that sustaining a business for the long term requires focusing on a broad set of stakeholders, with a distinct organizational “purpose” in mind.
- Enter the listening and learning mode Only by fully understanding major societal, technological and geopolitical changes can boards conduct the future-back planning necessary to mitigate risk.
- Make risk a mandatory agenda item at every board meeting
- Search for hidden customer & supplier concentration risk It is vital for the board to hold management to account on business continuity plans that take concentration risk into account.
Source: EY
3. NYC Comptroller engagement prompts more Board/Director skills disclosure
New York City Comptroller Scott Stringer and New York City Pension Funds’ Boardroom Accountability Project 2.0 pushed about 150 companies to increase disclosure of board members’ skills and experience. According to a new study by Argyle, which compared companies’ 2020 proxy statements with those they filed in 2018, the effort met with some success.
The study’s findings include:
The study’s findings include:
- Fifty-nine percent (59%) discussed the specific skills and experience sought by the board, an increase of 8 percentage points.
- Fifty-nine percent (59%) published skills matrices that linked individual director nominees to various kinds of professional experiences, an increase of 19 percentage points.
- Thirty-six percent (36%) offered an explanation of why the skills and experience sought by the board were valuable to the company, an increase of 13 percentage points.
The Boardroom Accountability Project 3.0 initiative was announced in October 2019 and called for companies to consider women and people of color when adding board members or hiring a CEO. According to an update in April, they have negotiated board and CEO diversity search policies with 13 companies under the initiative.
Source: PWC
4.SEC Enforcement Division reports massive increase in whistleblower complaints
The SEC’s Division of Enforcement’s Office of Market Intelligence triaged more than 16,000 tips, complaints, and referrals from mid-March to the end of June—up roughly 71% for the same time period in 2019, according to the Division’s 2020 Annual Report. Of the approximately 640 inquiries and investigations opened by the Division during that time, more than 150 were related to COVID-19 in some way. Additionally, the Whistleblower Program awarded a record-high $175 million to 39 individuals during the fiscal year ended June 30, 2020, an increase of 200% over the previous annual record in terms of number of individuals awarded and 37% of the total since the program was established in 2011.
Source: SEC
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