Swiss boards of directors need more diversity and more digital know-how

When it comes to new appointments to the board of directors, increasing overall diversity is a very high priority. This is the result of the semi-annual survey conducted by swissVR in cooperation with the consulting firm Deloitte and the Lucerne University of Applied Sciences and Arts. Last November, 448 people from listed companies and SMEs were surveyed. More than three quarters (78%) of the respondents attach high or medium importance to the goal of greater diversity and support the future inclusion of members with new skills and experience or different personality traits on the board of directors. Just under one-fifth of the boards surveyed (19%) already see themselves as well positioned in this respect, and only a very small minority (3%) consider an increase in general diversity when making new appointments to be unimportant.

The second most important priority for new staff appointments cited by 71% of respondents is increasing expertise in digitization and IT. 29% assign a high and 42% a medium importance to this goal. Other target criteria, such as rejuvenating the board of directors or increasing the proportion of women, are considered less important.

Gender distribution vs. diversity

Only a small proportion of respondents sit on boards that already meet the benchmark of 30 percent women for listed companies proposed by the Federal Council and the National Council Commission. According to the survey, the gender distribution is somewhat more balanced in larger boards: on average, 21 percent of board members with six or more members are women, compared with only 10 percent in smaller boards with three to five members. Around two-thirds (64%) of the board members surveyed welcome an increase in the proportion of women on boards in Switzerland, but 91 percent reject a gender quota imposed by law or the articles of association.

Reto Savoia, Deputy CEO of Deloitte Switzerland, interprets the results as follows: "Diversity and gender equity are clearly differentiated by Swiss board members. They have learned that diversity on the steering committee has a positive impact on business success. Equal representation of women on boards, on the other hand, is not a priority. Although the federal government's rather tame quota proposal could probably be implemented without major effort, quotas of any kind continue to meet with fundamental rejection."

HR topics gain in importance

In the third swissVR Monitor, the top issues for boards of directors are once again efficiency enhancement and process optimization (40%). They are also concerned with digitization (38%) and revising corporate strategy (35%). In fourth place, personnel challenges at management level were named. Behind them is the topic of talent management and recruitment, which climbed up from seventh place in August 2017. A year ago, the topic ranked a distant 11th. Also moving up are risk management (25%) and compliance (24%). Participants were able to select the five most important VR topics of the past twelve months from among several dozen.

Time expenditure increased

According to the assessment of many survey participants, the environment for their work has changed relatively significantly within a year. The time required for board activities has increased for more than half of all board members surveyed (56%) in the last twelve months. Even a year ago, a majority of respondents reported an increase in time spent. Exchanges with management have also intensified for more than half of the respondents. Almost one-third also perceive an increase in reputational pressure and shareholder influence over the past year.

Prof. Dr. Christoph Lengwiler, lecturer at the Institute of Financial Services Zug IFZ of the Lucerne University of Applied Sciences and Arts and Vice President of swissVR explains: "The work on the board of directors is becoming more demanding and more time-consuming, as the variety of topics and the formalism are also increasing. The tasks have long since ceased to be limited to defining strategy and appointing management. This is also reflected in the large number of topics named as top issues by respondents to the swissVR Monitor I/2018. Even if the boards of directors respond to this expansion of topics with more diversity on the board, each individual member still has to cope with the broad spectrum of topics if they want to perform their duties seriously."

Boards of Directors assess economic outlook as positive

Most of the board members surveyed (67%) expect the Swiss economy to develop positively over the next twelve months and are more optimistic than they were six months or a year ago. The overall economic outlook is now viewed slightly more positively than the business outlook for their own company (64%). Board members from the information and communications sector are particularly positive about the future of their company (86%). The assessments for manufacturing and life sciences (66%) are also above average.

The members of the Board of Directors further assessed the current and future importance of external factors for their company on a scale of 1 to 5. The highest current importance is assigned to economic development in Switzerland (4.0) and economic development abroad (3.5). Both factors are also forecast to improve in the future (43% and 41% of respondents, respectively).

Using earnings sustainably

Board members also attach relatively high importance (3.4) to the exchange rate of the Swiss franc against the euro and the US dollar. Just under a third of respondents also expect the Swiss franc to strengthen, while just under a third anticipate a weaker Swiss currency. Interest rates (3.2) and inflation (3.0) are considered to be of medium importance. A majority of respondents expect both variables to rise.

Prof. Dr. Dr. Christian Wunderlin, President swissVR, on the outlook and general conditions: "While many companies consider themselves more successful than the industry average, they do not believe that they will grow much faster than the general economy in the process. All in all, the outlook is very positive and the general conditions for companies are better than they have been for a long time. The task now is to use the earnings generated to actively strengthen our sustainable positioning. Investing in people and their education is a key pillar of this."

Source: swissVR Monitor