What It Means to Be on the Board in Singapore

by Knowledge@SMU, 29 June 2012

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Management

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Board of Directors gender equality

Also, while it may seem like gender quotas have improved board compositions in some European countries, Gan noted that such policies are quite recent. So the jury is still out on whether or not increased female representation as such will translate to a more effective board.

Be that as it may, should regulatory bodies assume some responsibility in helping to bring more minority groups into boardrooms?

Gan is of the view that an effective board serves both majority and minority interests. “I think it is better that we do not go with a trend of being too prescriptive,” he said.

“At the end of the day, there is a business to be run and you’ve got to allow some latitude for that… I think a board member’s obligation is to the company and to shareholders in general – not particular shareholders. If a board director does his job well, he will be taking care of both the majority and the minority shareholders.”

In the absence of quotas, the chairman’s has an important role to play when it comes to diversifying the board, Choo and Wong said – and one thing that chairmen of boards can do is to actively seek the participation of women.

“I like the idea of active seeking and active engagement – where the board goes out and makes extra effort to achieve (diversity),” said Buerger. However, ‘diversity’ should not be limited to gender, but also different competencies, professional experience, race and age. “The spectrum can be much wider,” he reminded the group.

Governance – more than just rules

Companies like Enron and Lehman Brothers have catapulted buzz words like ‘governance’ and ‘risk management’ to the forefront of public consciousness – and these words are, as such, talked about in board rooms – or are they?

“I wonder if boards are spending enough time on risk management,” Gan asked, noting that while existing policies ensure that SGX-listed companies have audit, remuneration and nominating committees, ‘governance’ also has much to do with studying the broader economic climate and wide market changes.

Gan believes that rules and regulations have a role to play, of course, but that these mechanisms do not ultimately determine effective ‘governance’. Rather, it is the alignment between the board and management, together with board diversity, commitment, time, and passion that determines the extent of ‘governance’.

From her own experience, Wong feels there is too much emphasis on directors’ professional qualification. “A lot people look to fill functional gaps – the lawyer, the auditor, the C-suite leader”, as opposed to looking at personality-fit and critical-thinking skills, i.e. people who are courageous enough to challenge and speak up, and those who have the humility to accept contradictory viewpoints.

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