BrazilStudy: Saudi management boards increasingly diverse in their make-up
Board members of Saudi companies are spending significantly more time on innovation, including emerging technologies like AI, according to a survey of board members in Saudi Arabia from Heidrick & Struggles. Boards are also becoming increasingly diverse in their make-up.
Board members in Saudi Arabia are aligned with their global peers on spending more time on emerging technologies, including artificial intelligence (AI) and its little brother, generative AI.
This comes as no surprise, following the explosive trend of adopting AI that is being seen in a wide range of industries. In fact, a previous study found that generative AI technologies could add up to $24 billion to Saudi Arabia’s GDP by the year 2030.
Geopolitical volatility and sustainability are also key issues of concern for board members in Saudi Arabia and the broader GCC region, with a larger percentage of executives reporting that they today spend more time on areas like operational and other risks, geopolitical volatility, and sustainability than they did one year ago. Saudi leader also spend more time on these topics than their global counterparts.
The findings come at a time when conflict in the Middle East is rapidly unfolding and has already seriously disrupted supply chains for companies in GCC countries. Meanwhile, climate change is having a serious impact on the region, including in areas such as land degradation.
More diversity in boards
In terms of board composition, the Heidrick & Struggles report found that diversity in boards is increasing. For example, 8% of board members in the KSA are women, a new reality that would not have been possible without the significant reforms Saudi leadership kicked off starting over a decade ago.
What’s more, 8% of board appointments are non-nationals, with Saudi Arabia being home to a relatively large expat community of people from all over Asia and the MENA region, among other regions.
“Boards in the KSA must look at diversity holistically and strive to achieve the right balance of demographics and expertise, which includes gender, age, nationality, as well as industry and geographical experiences,” said Maliha Jilani, partner Heidrick & Struggles in Dubai.
“This will require a continued focus and investment in improving board diversity – starting with a proactive and ongoing succession planning process. Boards would also do well to regularly examine director alignment and expertise with the evolving needs of the business,” she added.
Greater board involvement
The role of board members in GCC companies is also expanding, the report shows. A total of 47% of the respondents in the KSA and the UAE reported that operational involvement happens frequently, the highest figure of all countries.
Part of the reason for this higher-than-average involvement is because board members are keen on learning more about company operations, with regular reporting not providing enough information. Many board members also reported having specialized knowledge that the C-suite lacked.
Globally, a majority of respondents report that board members are more operationally involved; 25% say it happens frequently; 45% occasionally; 4% that it has happened once. Only a quarter report that they have not crossed that line. Notably, CEOs more often than directors report operational involvement from the board
In Saudi Arabia, a high level of board involvement in data-to-day management has long been more common than in other countries. There is, however, also a fair amount of variation, with some boards being actually too hands off rather than overly involved.
A previous report from Heidrick & Struggles on boardrooms in the UAE found that there too diversity has been on the rise. Around one third of new board appointments over the past year were female leaders, the study found.
