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Understanding the Findings of the 2025 Governance Best Practices Survey

Overview

Bank Director has released its annual Governance Best Practices Survey for 2025, offering a comprehensive look into how boards of financial institutions manage discussions and decision-making, particularly in strategic planning. The survey, sponsored by the law firm Bradley Arant Boult Cummings LLP, highlights varying degrees of board involvement in shaping strategies that guide their organizations.

Key Insights

The survey reveals that 80% of directors and CEOs confirm that they engage in an annual review of the strategic plan. However, the depth of participation varies significantly among different boards. Approximately 17% are actively involved, while a mere 3% take a passive stance. Interestingly, a majority (59%) assert that boards are responsible for determining their banks' risk appetites but choose to delegate the elaboration of strategic plans to the executive teams.

The Importance of Active Engagement

The responses indicate a pressing need for more intense board engagement in strategic processes, as 39% of participants believe that directors could enhance their influence on the strategic direction of their institutions. Robert Maddox, a partner at Bradley, emphasizes the necessity for directors to ask probing questions, particularly when executives advocate for easing risk limits in pursuit of growth: "Understanding our risk tolerances is vital in today's environment."

Skills and Expertise in Boardrooms

The survey reveals not just statistical insights but also outlines the diverse backgrounds and expertise present among board members. Emily McCormick, VP of editorial and research at Bank Director, suggests that boards and their governance committees should routinely evaluate the required skills and backgrounds essential for steering the future direction of the bank. Having a well-rounded team is vital for effective governance.

Setting Expectations

Among the findings, it's noteworthy that while board members typically have expectations set for meeting attendance, training, and respectful interaction (95%, 85%, and 81% respectively), fewer boards establish standards for interaction with regulators (36%), shareholders (35%), employees (27%), or clients (20%). This disparity could indicate areas where improvement is necessary to enhance board performance further.

Virtual Meetings and Meeting Efficiency

Interestingly, nearly 75% of respondents reported that their boards convene for full meetings on a monthly basis, with 85% allowing virtual attendance, emphasizing flexibility in participation. Meetings generally last about four hours, reflecting a commitment to thorough discussions.

Lengthy Board Packets

Moreover, a substantial 61% of boards receive meeting materials more than four days in advance, spending an average of four hours reviewing them. These board packets, which vary in size from 75 to 400 pages based on institution size, suggest a dedicated effort to prepare adequately for discussions.

Governance Leadership

In terms of leadership, 60% of boards are presided over by an independent chair. However, many of these leaders (37%) are deemed "somewhat effective" in facilitating discussions, while 8% do not meet effectiveness standards. This raises questions about the quality of leadership in guiding board agendas and ensuring productive meetings.

Fresh Perspectives

A notable 57% of surveyed boards deliberate on board refreshment at least annually. Over 80% of respondents have welcomed new directors starting from January 2022, which could inject fresh ideas and perspectives into board discussions, although 18% have not made any new additions.

Conclusion

Bank Director's 2025 Governance Best Practices Survey offers a wealth of information regarding board performance, encouraging deeper discussions around benchmarks, strategic planning involvement, and the necessity for diverse expert backgrounds. For financial institutions aiming for effective governance, these insights can help shape their approach to board engagement, risk management, and overall strategy. To explore the full report and discover additional findings, visit BankDirector.com.