Strong corporate board governance has never been more important as we head into a new year. It is the linchpin to building high performing organizations and helping organizations stay nimble as they face economic headwinds. Agility is key when news travels at lightning speed.  From the Twitter buy-out and firings to the FTX bankruptcy, the stakes for companies and their boards have been raised to new levels in this increasingly volatile, uncertain and complex world.

Besides the macro headwinds that everyone has to contend with, stakeholders and shareholders have high social and moral expectations, and if they aren't met quickly and appropriately, it can have a damaging effect on the reputation of companies and organizations. As a result, boards are having to change their old ways of working to keep up with the pace of the change, but they're also having to take public stances, in many cases, to address issues head-on like they never have before. 

What can directors expect in 2023? Here are the top trends on my radar. 

Boards Will Retool to Adapt to the Slowdown  

How resilient is your company and its leadership? That's a big question boards will need to address in 2023, amid some of the economic uncertainty.  Just because the company had the right leadership to handle supply chain issues and inflation, doesn't mean it's the right leadership to move a company through a possible recession. Boards have spent the past two years adapting to changes, coming off a decade of economic expansion and easy liquidity. Boards will need to re-evaluate their strategic plan and leadership suitability around their new goals and objectives at multiple levels.   

They'll need to develop and implement a clear and well-communicated strategy for dealing with the economic challenges. For example, does it make sense for the company to seek out new markets or customers segments in this downturn?  Once a clear-cut strategy is identified, it's important to provide oversight and guidance to management regarding the new strategy. It's a critical time to monitor the company's financial performance, manage risks associated with the economic downturn, and explore opportunities for expense management to ensure the company has sufficient liquidity to weather the economic conditions. It's essential to have a leadership team in place that has the skills, experience, and stamina to steer the company through. 

Boards will benefit from engaging with shareholders and stakeholders to understand their concerns and perspectives as well as most organizations switch from "growth at all costs" to "measured growth."

High performing boards aren't just assessing the right leadership team, but also the right culture at the board level. Different skills here may also be required to see through the next couple of years.  Evaluating the skill sets of board members to see where you may need more, or less expertise, will need to be reviewed thoroughly, keeping in mind the next 18 to 24 months.

Boards Will Make Implementing a Digitization Strategy a High Priority 

As the world becomes more technologically advanced, the prudent path for organizations is to stay with the push to digitization.  Boards are responsible for overseeing risks and opportunities, so therefore need to embrace and drive a digitalization strategy as we move into a digital world. 

The digital change is powerful and it's coming fast. Everything we used to do is now being done with technology. Artificial intelligence (AI) has become increasingly important in recent years because of its ability to analyze large amounts of data quickly and make predictions and decisions based on that data. While AI may be complex and have some unintended consequences, businesses will have to address these developments and create a strategy to successfully work with AI and robots in the changing times or risk getting left behind.  

AI can help corporate boards make more informed decisions and improve the overall efficiency and performance of their organizations.  It can be used to analyze market trends and sector specific consumer behavior, identify potential risks and opportunities, and help managers make better decisions about how to allocate resources. It also helps automate routine tasks and processes, freeing up time and resources for more strategic activities.

Overall, the use of AI can help corporate boards better understand their markets and customers, make better decisions, and drive business growth. 

Boards Will Need to Make Sure Their Records Are in Order  

If you serve on a board, you know that nearly every board meeting has now operated in a primarily digital setting since the pandemic. This digital and virtual shift unlocked an entirely new world of increased effectiveness, collaboration, and agility especially when it comes to record keeping.

In fact, according to a recent survey conducted on behalf of my company,  74% of board directors and executives said they increased their board's effectiveness in the last 12 months using board management software.

This is especially a powerful tool for one of the most important tasks boards needs to address in tough economic times: getting their corporate records in good shape. Part of solid board governance is compliant and defensible record-keeping — especially if your company is seeking investment. 

Accessing capital could be significantly different this year versus past years. When interest rates rise, and inflation is high, this typically will compound the probability to access more capital. You may have to refinance, or existing investors may pull out and companies may need to find new investor partners. Through all this, your corporate records will need to be ready in the event that an unexpected situation arises. 

On the flip side, mergers and acquisitions (M&A) activity invariably increases through any downturn. Being setup to evaluate unexpected propositions and being "deal ready" should be a top priority for the next few months. 

Board management software platforms securely hold communications and documents of all the board materials, but especially when it comes to keeping financial records organized. Using a platform to hold that data will make auditing or providing financial documentation to investors a much less tedious process. 

Be Prepared for More Activism 

Social activism was a key theme we saw in 2022. This trend is expected to continue well into 2023 and beyond. From the downfall of Ye, the artist formally known as Kanye West, after his series of antisemitic remarks to the 'open letter' published by a Meta stakeholder in response to Facebook founder Mark Zuckerberg's priorities - stakeholders are driving change and making their voices be heard. Public companies must be prepared for this kind of activism. 

On the consumer level, there's been an uptick in boycotts. On the shareholder level, activists are using their ownership stakes to influence company decisions and policies. 

In the coming year, we expect to see more boards get ahead of social activism by regularly engaging with stakeholders and listening to their concerns. By doing this, boards can identify potential issues before they become major problems and take proactive steps to address them. 

Another way for boards to get ahead of social activism is to incorporate sustainability and social responsibility into their decision-making processes. This can involve setting clear goals and objectives for the company in these areas, and tracking progress towards achieving them. It can also involve incorporating sustainability and social responsibility considerations into the company's strategic planning and risk management processes.

Being transparent and open about the company's practices and policies is critical to activism preparedness. It involves regularly communicating with stakeholders about the company's actions and plans, including the challenges or issues that the company is facing.   

Resilience is Key 

Resilience is the essential theme boards must embrace as they focus on 2023.  Being diligent in their approach to retooling their governance structure and leadership, proactive in their economic strategy, and planning for potential problems will be key.  

As the board climate changes, directors may need to meet more often. Being thorough in their agenda planning will also be a key factor in their success. The companies that are organized with a clear strategy, strong leadership team in place, and have assessed their risks on a variety of levels will be opportunistically positioned to adapt to changing times, coming out ahead. 

Paroon Chadha co-founded Passageways, the parent company of OnBoard, in 2003 and continues to lead its business strategy, as CEO. He serves on Boards at Passageways, Big Brother Big Sister of Greater Lafayette, Indiana University Simon Cancer Center, and TechPoint. He was a founding member of Youwecan.org, and is an angel investor in several technology companies. More can be found at www.onboardmeetings.com.