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The Straits Times – January 13, 2014
Opinion – How To Win In The Boardroom
Much has been said and written about the dearth of women board members here in Singapore last year. However, I believe it is important to look at the bigger picture, and take a holistic view of the way the boards of local corporations function.
The fact that an independent board of directors is a necessity for good governance is clear. I would like to focus on the manner by which potential candidates are admitted to the board, and what constitutes a good and effective board.
First, some thoughts on the issue of board member qualification. The general rule of thumb is to look at the composition of the board. Ideally, a board should consist of directors that bring with them a portfolio of expertise. The common ones are industry knowledge, legal, audit and compliance, and human resources. Having extensive experience, unfortunately, does not automatically qualify a candidate to be an effective board member. This experience must be relevant to the organization and add value to the execution of the board’s responsibilities.
Equally important is the incumbent. He or she must be articulate and matured enough to be an effective contributor. An experienced operationally focused human resources director, for example, may not necessarily make a good choice. This is simply because he or she is not experienced in business strategy, and may not be able to relate his or her human resources expertise to the context of managing a business.
Board candidates
What commonly happens is that friends or acquaintances are introduced by existing directors as potential candidates, and the existing members deliberate and take a decision. The problem here is that most of these recommendations are passed – some for the wrong reasons. The more common one being the ‘face’ issue. Not wanting to offend a fellow director, the others may just ‘go along’ with the recommendation.
This should be avoided at all costs, particularly in the case of a not-for-profit board. In these organisations, volunteer directors sometimes double up as check signatories. A totally untenable scenario is where these cheque signatories are buddies.
It may be far-fetched to even imagine that the incumbents can do damage to the organization. The issue really is that such situations must never happen – it is not about the people, it is always about the arrangement, and the need for crystal clear governance.
The practice of introducing a friend to the board should not be permitted. Instead, there should be an independent committee set up – ideally with a combination of existing directors, and at least one external party, who might just carry the “veto” vote. This committee should deliberate on two key issues. The first issue concerns the “ideal” composition of the board, both in terms of its diversity and the appropriateness of professional backgrounds of board members. The second issue is whether a proposed board candidate is “qualified” to be put to the board for an acceptance vote.
Some international headhunters are equipped with both the expertise and the tools to play a key role in board candidate search. By virtue of what they do as a profession, they have the industry knowledge and the necessary expertise. The use of personality profiling tools and professional interviewing techniques can add value here to uncover such characteristics as innate motivation and personality type.
Board effectiveness
There are at least two ways to define a board – a good board, and an effective board. The former is relatively easier to attain. If there is a diversified representation of professionally qualified and mature individuals, then that constitutes a good board.
Creating an effective board, however, is more challenging. Here are some key considerations:
- Most directors are motivated by two things. The first is their desire to contribute to the continued success of the organization (for profit, or otherwise). The second is their remuneration as directors. I honestly do not think Singapore is at the stage where there are people queuing up to demonstrate their altruism in the board room – there are just too many other competing priorities.
There are some that aspire to be directors just for the money – and some that just want the bio-data on their curriculum vitae to look better. We are all human, after-all. But a serious effort must be made to uncover a candidate’s ‘true’ motivations before an invitation (to join the board) is issued.
- Every director must carry an equal voice. This is often assumed, but is not always the reality. Some directors may have a stronger personality, and a natural tendency to exert influence.
- The board’s chairman needs to play an effective role. He should be strong enough in character to rein in the ones that cross the line, and to cajole the quieter ones to speak up more. A chairman that aims only to preserve harmony and keep the peace amongst directors will not be effective. He or she must have the moral courage to take tough decisions, including initiating the action of removing a director who is unable to work well with the majority of the others, and who is more a hindrance, or worse a nuisance rather than an asset.
As Singapore continues its efforts to stay relevant and progressive, there are, and will always be challenges. As business forms one of the core pillars of our society, it is imperative that we continuously examine the way business is being conducted here. Re-visiting board effectiveness is just one of them.
stopinion@sph.com.sg
The writer is Founder/Managing Director and an Executive Coach of the NeXT Career Consulting Group. He works with corporate leaders, many of whom are board members of companies.
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