The board has an important task as the year draws to a close: anticipating next year’s trends and ensuring the company’s executives are on track to profit from opportunities and mitigate risks.
With the rise of remote work, increased automation, and further integration with virtual interfaces like the Metaverse, 2022 has been a year of change for many companies. It is likely that 2023 will be a year of tremendous growth if you have a solid strategy.
COVID-19 and the continued supply chain shortages that persist in several industries have shown that the best way for a board to serve its stakeholders and develop a strategy is by ensuring it fully understands the stumbling blocks its company may face in the future. A frank discussion with the organization’s executives or executive committee is the best way to achieve this.
Boards should ask their executives these seven questions in preparation for 2023:
1. What Lessons Did You Learn in 2022?
There was a lot to learn from 2022, but none of it matters if your organization does not implement what it learns. Taking note of these lessons allows executives a unique chance to report back on what to do differently moving forward to avoid the School of Hard Knocks.
These are some of the lessons 2022 dished up for other companies:
- The importance of company culture (as highlighted by The Great Resignation)
- The necessity of proper, honest, and transparent ESG reporting (as demonstrated by Deutsche Bank’s $1 trillion greenwashing scandal)
- The value of properly preparing your talent pipeline for CEO succession (exemplified by Bob Iger’s return to Disney)
- The importance of empathic leadership (as demonstrated by Better.com’s Zoom layoffs)
- The relevance of leadership agility and flexibility (as shown by numerous companies that have lost valuable employees because of strict return-to-work policies)
2. What Is Always Discussed but Never Resolved?
Many of the challenges companies face are not unique to 2022 and may have occurred in the past. In most cases, however, if these challenges are not life-or-death situations for the organization, they get put off until later, but often later never comes.
With the new year just around the corner, it is time to dust off those shelved discussions and prepare to address them head-on.
Some of the issues that companies regularly shelve are skills shortages, employee retention issues, and leadership development concerns.
Setting aside time at the end of the year to address recurring challenges can prevent them from snowballing in 2023.
3. How Can We Improve the Management of Our Human Capital?
2022 helped many companies realize that their most valuable asset is their human capital. The problem is that many organizations only realized this after people started leaving.
During the last few months of the year, the board should have discussions with its executives about talent retention and acquisition.
The board needs to ask its executives what measures are being taken to make the organization more attractive to potential employees, from the benefits implemented to the portrayal of the company’s culture, and what strategies are in place to retain current employees through mechanisms like opportunities for upskilling, leadership development pipelines, and career progression.
4. How Are We Structured and Staffed to Support the Achievement of Our Plan?
The board should ask executives to provide an overview of the organization’s current workforce needs and whether these needs are being met. They should also report on the current skills and capabilities of the company’s human capital, as well as any skills shortages affecting productivity. Finally, the board should inquire about the company’s retention rate and the effects that this will have on hiring in 2023.
The board should also ask its executives for their opinion on the company’s leadership structure. For many years, hierarchical structures were the norm, but many companies are transitioning to more unilateral structures. Executives may be able to shed light on the current structure’s strengths and weaknesses, allowing the board to decide whether any changes are needed.
5. How Can We Turn Current Risks into Opportunities for Improvement?
Supply chain disruptions and staffing shortages are some of the common challenges businesses faced in 2022. Adaptive organizations saw these challenges as opportunities to innovate. To deal with supply chain disruptions, many companies stocked up on larger backup inventories, diversified their suppliers, and employed alternative logistics strategies. Similarly, staffing and skills shortages forced many companies to innovate through further automation and digitalization, with some designing automated systems that could perform complex tasks.
You can transform the challenges your company faced in 2022 into inspiration for innovation in 2023. All you need to do is allow yourself to see them as an opportunity for growth.
6. What Can We Do to Make the Company Fireproof Next Year?
Businesses should strive to be resilient rather than rely on strategic thinking alone.
As the year winds down, the board should ask executives about the organization’s weak points. By answering this question, it is easy to determine how to increase the company’s resilience. For example, if an executive states that they believe the company’s digital resources may be at risk, it may be time to invest in better cyber security. Equally, if executives tell the board that your company’s main source of income is in danger of falling out of popularity (a la physical game stores in the age of Xbox Game Pass, Steam, and PlayStation Plus), then it is a sign that the company needs to diversify its cashflow to improve its resilience.
Mastering strategy will not be enough for the future giants of the corporate world. They must be resilient and adaptable too.
7. In What Ways Can the Board and Its Members Support the Company’s Financial and Strategic Success?
There is no doubt that this is the most important question. As the end of the year approaches, the board should ask executives what it can do to better serve the company in achieving its goals in 2023.
Happy (Almost) New Year to You and the Board on Which You Serve
We here at Stanton Chase hope that 2023 is a year of prosperity and growth for your organization, the board on which you serve, and your career. We also hope that the seven questions listed above help you to lead your company more effectively in the coming year.
New challenges and opportunities await you in 2023, but remember that you are not in it alone. You can count on our consultants for everything from CEO and board succession planning to executive search and leadership assessment. To contact your nearest Stanton Chase office, click here.