The Evolution of the C-Suite and Its Impact on Board Dynamics

An evolving business landscape is driving changes in C-suite composition and boardroom dynamics. Here is what boards should know.

Organizations operate in an increasingly complex business environment. External pressures—expectations for short-term results, increased investor activism, economic uncertainty, and advances in artificial intelligence—are prompting many organizations to consider adjustments to leadership models.

Boards and management teams are responding to these dynamics and evolving their C-suite composition, expanding beyond traditional role definitions and reconsidering how senior leaders work together. These shifts present both a challenge and opportunity for boards: How can directors adapt to support and oversee management teams that are fundamentally different?

What’s Trending?

Below are four recent shifts in the evolution of companies’ leadership models directors should know and how they impact the boardroom.

1. Expanding C-Suite Roles

Executive roles are no longer defined by functional boundaries; companies are creating hybrid positions and adding senior-level roles to support emerging strategic needs. Examples include hybrid roles, such as a dual chief financial officer (CFO) and chief operating officer (COO), instances where the COO role is replaced with an operationally focused CFO, and the creation of specialized positions focused on strategic priorities, including chief transformation officers, chief experience officers, and chief AI officers.

For instance, Microsoft Corp. recently created a CEO of commercial business role that integrates sales, marketing, operations, and engineering functions to allow the CEO to concentrate on AI-related initiatives.

These evolving roles reflect the fact that modern business challenges often extend beyond traditional organizational structure. Leaders are expected to demonstrate broader skill sets and greater cross-functional depth. Today’s C-suite must combine financial acumen with operational expertise, advanced technology knowledge with growth strategy, and people leadership with transformation.

These shifts also require organizations to operate cross-functionally, driving initiatives across teams as opposed to operating in historically siloed approaches.

Boards should consider how they evaluate and support executives whose roles align with traditional leadership structures. This may require adjustments to compensation benchmarks, success metrics, and committee oversight to reflect evolving executive roles and responsibilities.

Additionally, directors should understand the responsibilities of these hybrid roles, how they interact with other executives, and what skills drive success. Boards may also need to expand their own expertise with targeted training and coaching or by adding board members with technical expertise to effectively oversee the leaders who are developing strategies and capabilities less familiar to them.

Directors should consider how the executive team functions collectively, not just how each executive performs individually. Boards may increasingly evaluate collective leadership effectiveness alongside individual contributions.

2. A Shortened CEO Tenure

CEO tenures have shortened as boards respond more quickly to underperformance and evolving leadership requirements. As of the first half of 2025, the average tenure for outgoing CEOs was 6.8 years, down from 7.7 years for the same period in 2024.

This shift reflects increased investor activism, heightened CEO scrutiny, and the reality that the skills required to lead a company have changed dramatically. The rapid pace of AI and digital transformation, polarized stakeholder expectations, and continuous disruption mean CEOs who can't adapt quickly find their tenure cut short.

Boards must treat succession planning as an ongoing process, not an occasional event. Directors benefit from maintaining refreshed leadership pipelines with multiple internal and external qualified candidates identified. Boards play a central role in CEO selection and onboarding, recognizing that new CEOs have less time to demonstrate impact and benefit from faster integration with clear expectations.

While short-term performance remains important, boards should ensure that new CEOs have sufficient time to acclimate and establish a viable longer-term trajectory. CEO incentive plans should also be adjusted; plans designed for longer tenures do not align with today's expectations.

As such, boards should balance short-term and long-term expectations for new CEOs through their incentive plans. It’s not enough to “copy and paste” a peer’s executive compensation structure. A company’s pay levels should be grounded in its strategy, risk profile, and business lifecycle. The incentive plans and vesting periods should also balance time and performance over an adequate period. While the period should be company-specific, three to five years is a generally accepted timeframe.   

Additionally, boards should implement strategic and nonfinancial scorecard metrics, such as strategy execution, net promoter scores, and employee satisfaction, alongside financial metrics to encourage early momentum and long-term progress.

3. Technology as a Change Catalyst

In 2024, global corporate AI investment grew to $252 billion, an increase of 26 percent from 2023, and this transformation is reshaping how executives work. Nearly 26 percent of companies have a chief AI officer in 2025, up from 11 percent in 2023. Additionally, most CFOs now use data analytics to support decision-making, and COOs increasingly rely on AI to enhance operational efficiency. Advanced technology is no longer just a tool; it is a strategic asset reshaping competitive dynamics.

Boards should enhance their own digital and AI literacy to effectively oversee management. This often means adding board members with technology expertise or providing existing directors with education on AI and digital trends, which can be accomplished through external education courses or bespoke training by third parties.

Boards should also ensure management has adequate resources and capabilities to execute digital strategies, understand the risks AI introduces, and help set ethical boundaries for technology use within the organization. Directors should work with leadership to establish governance frameworks that identify AI-specific risks and guidelines for technology deployment across the organization, and partner with credible third parties to accelerate capabilities so as not to lose competitive advantage.

4. Greater Emotional Intelligence in the C-Suite

Operational expertise alone no longer defines executive success. To achieve results in a complex business environment, companies increasingly require a C-suite with strong emotional intelligence. The ability to lead through change, build trust, communicate transparently, and maintain focus and momentum during periods of uncertainty is no longer optional.  

The rise of hybrid work, an increased focus on employee and customer experience, and the need for organizational transformation require leaders who can connect with people and inspire action, not just manage profit and loss.

Boards should evaluate executives on leadership skills that are harder to measure but increasingly critical to sustained performance. This involves going beyond financial results to assess how leaders build culture, foster alignment, develop talent, and guide teams through periods of change.

Board conversations with management should explore how executives handle stress, communicate during crises and setbacks, and how they motivate and develop their talent. Succession planning should prioritize emotional intelligence alongside business results.

Boards often sponsor initiatives designed to accelerate leadership development to ensure succession readiness. For example, boards can partner with leadership development experts to assess leadership effectiveness and leverage trusted psychometrics and 360-style input, relying on evidence instead of board impressions and “gut feelings” when assessing executives.

Boards should also take an active role in observing leaders during high-stakes situations and debrief afterwards to provide deliberate and tangible feedback on critical areas of development. They should intentionally develop management in ways that set them up for success in addressing all the nuances of the role.

The Bottom Line

The C-suite is being reinvented, and boards can't afford to govern using yesterday's playbook. The most effective boards will be those that embrace this evolution by updating their own skills, refining how they evaluate leadership, and working collaboratively with management to navigate ongoing change.

The views expressed in this article are the author’s own and do not represent the perspective of NACD.

Alvarez & Marsal is a NACD partner, providing directors with critical and timely information, and perspectives. Alvarez & Marsal is a financial supporter of the NACD.