Saudi Boards Embrace Diversity Amid Rising Operational Involvement, According to Heidrick & Struggles

Heidrick & Struggles (NASDAQ: HSII), a global leader in executive search and leadership advisory services, has released its third annual Board Monitor Report for the Kingdom of Saudi Arabia (KSA). The report underscores global trends showing that board responsibilities are expanding in complexity and scope, with higher stakes, growing uncertainties, and greater expectations placed on directors.

In Saudi Arabia, the report highlights a notable shift in board composition. In 2023, there was a marked rise in the appointment of directors with prior CFO experience—double the figure from the previous year. Meanwhile, the proportion of directors with CEO experience declined to 42%, down from 48% in 2022. First-time board members made up 33% of new appointments, while women accounted for 8%. Additionally, 8% of new directors were non-nationals, reflecting limited but notable international representation.

Cross-industry expertise also emerged as a significant trend, with 33% of new board members bringing experience across diverse sectors. This, according to the report, represents an opportunity for Saudi boards to enhance both demographic and professional diversity in their leadership teams.

The findings emphasize that achieving a balanced mix of demographics and expertise is critical for boards navigating the evolving business landscape. According to Maliha Jilani, a partner at Heidrick & Struggles and Social Impact Practice lead for the Middle East and North Africa, boards must adopt a holistic approach to diversity, considering factors like gender, age, nationality, and industry experience. She stressed the importance of proactive succession planning and periodic evaluations to align board expertise with organizational needs. Jilani noted that such measures are essential for introducing directors with the skills and perspectives needed to drive organizations forward.

The report also revealed that boards in the Gulf Cooperation Council (GCC) region, including KSA, are more operationally involved than their global counterparts. Approximately 47% of respondents from Saudi Arabia and the United Arab Emirates (UAE) reported frequent board involvement in day-to-day operations, nearly double the global average of 25%. However, this heightened involvement presents challenges, with some boards being overly engaged in daily management while others remain too hands-off, potentially missing strategic opportunities.

Over-boarding—where directors sit on too many boards—was identified as a unique challenge for Saudi boards. Increased operational involvement often stretches directors thin, reducing their capacity to contribute meaningfully, particularly in areas like growth and internationalization.

Shaloo Kulkarni, a partner at Heidrick & Struggles and leader in Heidrick Consulting for APAC and EMEA, emphasized the need for Saudi boards to strike a balance between operational involvement and long-term strategic guidance. She advised that boards regularly evaluate their engagement levels, maintain open communication with management, and implement clear frameworks to ensure accountability and effective governance. Addressing over-boarding, Kulkarni added, would allow directors to focus more effectively on forward-looking priorities such as sustainability and innovation.

Key Takeaways from the Board Monitor Saudi Arabia 2024 Report

• Diversity Trends:
  • 33% of new board members were first-time appointees.
  • Women accounted for 8% of appointments, while 8% of directors were non-nationals.
  • 33% of new members brought cross-industry expertise.
• Shifts in Experience:
  • The proportion of directors with CFO experience doubled compared to 2022.
  • Directors with CEO experience fell to 42%, down from 48% the previous year.
• Board Priorities:
  • Saudi boards are dedicating more time to emerging technologies, particularly artificial intelligence (AI).
  • They also focus heavily on operational risks, geopolitical volatility, and sustainability, surpassing their global peers in these areas.

The findings reflect a broader transformation in board dynamics across Saudi Arabia as directors work to adapt to the region’s evolving business landscape and deliver more effective governance.

Have you read?
Best countries for hiring freelancers.
Highest Paid Big Pharma CEOs And Top Executives.
Best Websites For CEOs, business leaders, and high-net-worth individuals.
Best Executive Search Firms And Consultants in America.
Revealed: Most Powerful Women In The World.