“Will good governance lead to greater profitability and business sustainability?” This was the question that framed the lively panel discussion that involved talk on a broad range of issues, from gender diversity to boardroom theatrics.
The panel, comprising Choo Chiau Beng
, chief executive at Keppel Corporation Limited; Jeanette Wong
, group executive at DBS Bank’s Institutional Banking Group; Gan Seow Ann, former president at Singapore Exchange Limited, and Peter Buerger
, senior advisor at M&A specialist firm Pickering Pacific, spoke at a recent graduation ceremony of the Singapore Management University’s Executive Diploma in Directorship
Opening the dialogue, Annie Koh
, dean of SMU’s Office of Executive and Professional Education
and an associate professor of finance, noted that a recurring ‘theme’ she had been hearing over the past few years is the criticality of a “good” board. A mounting public interest in such matters is hardly surprising, given the 2008 global financial crisis and recent episodes at HP, Olympus and MF Global.
It would thus seem that organisations with the “right” board members would stand better chances of survival and success, or at least, avoid unwanted public drama. But what makes a “right” or “good” board is a perennial question with no clear answers.
Get involved – but not too involved
To what extent should board members involve themselves within the organisation? “It’s a delicate balance,” answered Choo, a seasoned member of several boards and board committees, including the Energy Studies Institute, American Bureau of Shipping, Det Norske Veritas South East Asia, and a host of Keppel Corporation subsidiaries.
“The board must be clear about what it means to be a director at the board-level, and what it means to be a manager… The board looks at the big things, like strategy and risks. Day-to-day business should be left to the management,” he said.
Concurring, Wong added, “You cannot execute on behalf of management; it would be impossible. But you need to ask enough questions… from all angles. And you need to do your own homework.” Wong, who sits on boards like Neptune Orient Lines, DBS China, DBS Taiwan, the University of Chicago’s Booth School of Business, is also chair of SMU’s Lee Kong Chian School of Business
Spending time at the company or giving it “mindshare” must be part and parcel of a director’s job, she said. Before accepting directorships, Wong makes it a point to assess if she can afford the time and commitment required. For her, it is the responsibility of directors to probe, examine strategies, and not simply endorse whatever management proposes.
“Your role on the board is to ensure that the company survives long term; that it is sustainable and profitable. A lot of this has to do with market positioning and corporate leadership in the light of industry changes. The worst thing you can do is to go to a board meeting without reading any of the papers and have not thought through the issues and questions,” she added.
Buerger, an alumnus of the SMU Directorship programme, took it one step further and proposed that directors should spend time at the company – at least a day per month – in order to understand what the organisation is doing and not doing.