NACD Board Confidence Index Also Shows One-Quarter of Companies Expect to Expand Their Workforce
WASHINGTON, April 13, 2012 /PRNewswire/ -- For the second straight quarter, corporate directors have higher expectations for economic performance, according to the first quarter 2012 National Association of Corporate Directors' Board Confidence Index. This marks the first time since Q2 2011 that directors participating in the quarterly survey have expressed moderate confidence in the economy, with overall business confidence rising to a solid 61.
Directors' view of general economic conditions compared to one year ago leaped nearly 21 percent, up 11 points, to an encouraging 64, and in a telling indication for the future, directors' expectations for the next year rose 8 percent, up 5 points, to 64 during Q1 2012. According to the survey methodology, scores from 21-40 represent a moderately negative outlook, 41-60 represents a neutral view, and 61-80 represents a moderately positive outlook.
Meanwhile, all directors who completed the survey continue to view their industry sectors in a slightly more positive light relative to the general economy.
"I am encouraged by directors' cautious optimism, and the NACD Board Confidence Index provides a unique vantage point to the health of the economy. Our global economy requires healthy companies to create and sustain jobs, and this quarter's BCI provides great news for investors and business leaders," said Ken Daly, president and CEO of NACD. "It's important that NACD continues to track and benchmark these data points to get a better understanding of how directors interpret our economic environment."
Regarding job growth and hiring practices:
- Nearly half of the respondents indicated that their company's hiring remained the same during the fourth quarter of 2011;
- Nearly 60 percent of respondents indicated that their companies plan to retain their workforce over the coming quarter; and
- More than 25 percent of respondents indicated that their companies plan to expand their workforce.
In another finding, 60 percent of respondents said they are "confident" or "very confident" that their CEO will meet incentive plan performance objectives for this fiscal year. "However, the true test will be whether year-end executive payouts ultimately are aligned with shareholders' perspective on performance," said David N. Swinford, president and CEO of Pearl Meyer & Partners.
NACD's quarterly BCI, based on a survey of corporate directors conducted by NACD in collaboration with compensation consultancy Pearl Meyer & Partners, assesses confidence in the overall economy's progress based on directors' responses to five key indicators. The responses are combined to provide a snapshot of the state of the economy from the perspective of the boardroom. For each question, there are five reply options: substantially better, moderately better, same, moderately worse and substantially worse. Each option is assigned a point value: 100, 75, 50, 25 and 0, respectively. The point values are averaged for each question.
To view the latest BCI data, please visit www.NACDonline.org/BCI.
The National Association of Corporate Directors (NACD) is the only membership organization dedicated to director education, director training, and board research. NACD promotes director professionalism by providing the information, insights, and boardroom resources that corporate board members need to confront complex business challenges. In addition to ongoing director education programs, NACD conducts board evaluations and provides strategic advice on improving board performance. To prospective board members, NACD provides a variety of information, including director research and education programs on how to become a director. Through all of their board education and board training programs, NACD's overarching mission is to help build better boards. To learn more about NACD, visit NACDonline.org. To join, please contact Kelly Dodd at kkdodd@NACDonline.org or 202-380-1891.