Saudi boards show preference for experienced directors with prior CEO roles
With Vision 2030 driving accelerated growth for companies in Saudi Arabia, the composition of company boards in the country is evolving to meet the demands of this era of innovation, diversification, and growth.
This is borne out in second Board Monitor report released by Heidrick & Struggles on Wednesday. The report also points out that boards seek out those who can devote more time to their roles and the diversification of those picked with regard to nationality, gender in order to avoid groupthink.
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According to the report, 50 new board appointments were made in 2022, a slight dip from 53 in 2021.
Overall, there is a growing preference for members with previous board experience with the number of first-time board members dropping from 43 percent in 2021 to 36 percent in 2022.
Meanwhile, CEOs continue to dominate boards in the Kingdom with almost half (48 percent) of the new board members in 2022 having prior CEO experience. In comparison, former or active Chief Human Resources Officers, Chief Financial Officers, and Chief Operating Officers contributed to 4 percent of the appointments each; and Chief Information Officers, Chief Marketing Officers, and Chief Technology Officers each secured only 2 percent of the seats filled.
While companies in the Kingdom have shown a preference for board members who are active in executive positions rather than retired appointees over the past two years, there was a notable decline in active board appointees last year, from 90 percent in 2021 to 72 percent in 2022. This points to a beginning trend of companies appointing directors who can dedicate more time to their board responsibilities.
“As Saudi Arabia is experiencing rapid diversification and growth, publicly listed companies require experienced and dedicated board members who are strategic, forward-looking, and can align with industry needs. It is also heartening to note that there is a trend towards diversification in board appointments with regard to nationality, gender, and cross-industry experience. Embracing different perspectives will be critical to set companies up for success, prevent groupthink, and ensure the organization is ready to scale not just within the region but also internationally,” said Maliha Jilani, partner in Heidrick & Struggles’ Dubai office and Social Impact Practice lead in the Middle East and North Africa region.
The number of Saudi nationals appointed to boards dipped from 90 percent to 84 percent, and female appointees saw a slight increase from 8 percent to 10 percent.
“Even as boards continue the process of rapid professionalization, each company must evaluate its stage of maturity and strategic goals to shape its ideal board. Saudi companies must continue to review their boards’ performance regularly and avoid over boarding to ensure directors are able to dedicate the time and energy to be truly dialed into the business. Key to ensuring board effectiveness is putting in place a formal succession-planning process to ensure a steady supply of capable leaders — ready to take on new challenges as we work towards Vision 2030,” said Richard Guest, partner in charge of Heidrick & Struggles’ Middle East and North Africa based in the Dubai office and the regional managing partner of the global Technology & Services Practice for Asia Pacific and the Middle East.
