Nearly three out of five (59%) Indian companies that participated in a survey said they are undergoing a board refresh or hiring a new director in the next 12-18 months.
In India, the 10-year Companies Act, 2013 era for hiring and integrating new directors is nearing its end. Come March 2024, Indian companies will experience “The Board Refresh” for the first time since 2013. In fact, companies have already started looking for directors to fill positions and elevate the skill sets of their boards.
As organisations grapple with this boardroom refresh mandate, 74% of companies that participated in the ‘2024 Heidrick & Struggles India CEO and Board Survey’ cited the retirement of a director as a reason for the planned boardroom refresh, while 48% said they aim to infuse new skillsets in their boards.
The survey examined responses from 150 managing directors, board chairs, and subcommittee chairs in India to understand their business priorities for 2024 and their perspectives on the upcoming board refresh.
“Indian companies are gearing up for a significant change in anticipation of the board refresh,” said Puneet Pratap Singh, partner-in-charge at Heidrick & Struggles India. “We will witness a notable shift in the role of the board where navigating disruption effectively and infusing new perspectives are critical,” he added.
About 50% of those surveyed indicated that getting the right talent is the top challenge they anticipate when undertaking the refresh.
Further, he said that “board composition is one of the key areas that board chairs should focus on to be fit for the future and the refresh brings about the opportunity to do so–it is a strategic process, one that must be forward-looking and closely align with the company’s overall strategy as they think about their skills matrix”.
In addition, two out of five (41%) respondents emphasised prioritising executive experience when appointing new directors. Despite senior leaders taking the initiative to obtain additional certifications and training to bolster their credentials, many large companies still have a strong preference for hiring leaders with prior board experience.
“Companies should look beyond the traditional approach when hiring new board members,” said Suresh Raina, partner in Heidrick & Struggles India. “To build future-ready leadership, companies are encouraged to look at implementing robust succession planning for a dynamic and inclusive boardroom. Whether a board ultimately appoints an internal or external successor, companies must start long-term succession planning sooner.”
There is also a move towards finding talent with deep expertise to fill in gaps in the boards where traditionally directors are more generalists.
The survey, however, suggested that organisations must adopt a long-term approach to director hiring by starting succession planning sooner. This begins with identifying the organisation’s strategic objectives and purpose, evaluating the board’s current capabilities against said goals, and filling the gaps in skills or backgrounds.