Corporate Governance in the New World – How can board directors in Singapore add value?
Critical board skills in the future will include an ability to solve problems in periods of great uncertainty on an urgent basis.
By Karen Loon, Non-Executive Director and Committee Member, BoardAgender
The past six months has been challenging for boards as they guide their organisations through the crisis. Boards have had to ensure that their companies are resilient in order to survive. At the same time, with executives being extremely busy managing various day to day challenges, boards also have a key responsibility to guide their organisations to be best positioned for the future.
In a recent BoardAgender survey conducted in June and July 2020, we asked female board directors of listed companies in Singapore what are the critical skills which board directors will need on the future, and how has COVID-19 have impacted board processes and dynamics? Three key themes emerged from directors:
- Directors need to be agile, but communicate with empathy
Directors shared that new skills that will be valued in the future will be critical leadership skills to deal with the next normal. These include the ability to lead in periods of great uncertainty and to think out of the box on an urgent basis, to have different problem solving skills, to be able to reset strategy and pivot physical businesses quickly, and to re-think the future of work. An ability to navigate or understand digital assets and scenario planning was also considered important.
Some highlighted that empathy and trust have been important qualities required of all directors during COVID-19 given the severe impact it has had on employees, customers, and suppliers. In these difficult times, directors need to be able to communicate difficult decisions honestly.
- Board governance practices will evolve
Approximately 2/3rds of the directors surveyed have spent some more time on their board duties, with some spending up 50% more time. The remaining directors have spent approximately the same amount of time on their director roles.
For some, meetings are now held more frequently (monthly compared to quarterly) given the need to respond quickly to change. Additional discussions held ranged from understanding business impacts, managing people, processes, business contingency arrangements through COVID-19, cyber and data security, as well as understanding financial impact including potential impairment issues under various scenarios.
Governance practices have been evolving with the need for directors to monitor strategic and operational issues more closely, and also consider the need to assess the adequacy of disclosures. Speed will also be of the essence. In the words of one director, “Governance practices will have to accommodate this need to be agile, dynamic and speedy without diminishing the corporate and social governance aspects of outcomes”.
Some directors expect that board governance will continue to strengthen in the future. Directors expect more meetings to be held more frequently and done virtually and online using IT/videoconferencing, that email approvals and digital signatures to become more widely accepted, and more tolerance and flexibility will be expected. Some expect more time to be spent on areas such as digitisation and business continuity plans. Others feel that directors will need to pay more attention to their fiduciary duties, given some of the issues with international and Singapore companies have faced during the pandemic.
3. Work from Home will continue for directors, but could impact networking opportunities
Work from Home (“WFH”) is likely to continue post COVID-19 for directors. With WFH, some directors expressed that it has led to their professional and private lives becoming intertwined.
Many directors feel that COVID-19 has led to an increased acceptance of remote and flexible working models by employers. However, on whether WFH will support increasing the number of women in leadership and board roles, the views of directors were mixed. Unfortunately, as highlighted by one director, the downside of this is that there could be less opportunities for face to face networking in the current situation, which could unfortunately impact getting more women on boards, as existing board members tend to raise the names of potential directors for consideration that they know and are familiar with.
Effective governance has never been more necessary in the face of major issues, such as COVID-19. Board directors will play a key role in shaping the future of their organisations. Their role will become increasingly more important in the future, as change becomes the new norm, and organisations will need to balance resilience with agility. It is important that board directors are open to embrace the new norm, and develop the skills required to allow them to add value most effectively to their organisations.
BoardAgender exists to promote greater diversity on boards and in senior management in Singapore, by engaging in innovative and impactful programmes, and education and advocacy to drive measurable change. Our Vision is a Singapore which has high performing boards resulting from diverse representation, including appropriate gender balance.