ICDM Survey Reveals Imperative for Boards in ASEAN to Realign Priorities Towards More Effective and Sustainable Governance
February 23 2024 - 3:00AM
JCN Newswire
The Institute of Corporate Directors Malaysia (?ICDM?) recently
concluded a comprehensive survey across Southeast Asia in
collaboration with its eight (8) partners under the ASEAN IOD
Network that highlights the imperative for boards to sharpen their
foresight to assess and steer their organisation?s business model,
governance, talent, dynamics, and culture as they position their
boards for the future.
The survey of 335 respondents comprising boards and C-Suites
management from across the region reiterates the urgency for boards
to evaluate their effectiveness and shift their current strategic
board priorities to ensure they address the key threats that they
expect to be more prominent over the next two (2) years. The four
(4) key threats include:
(i) Having the right talent and leadership;
(ii) Diplomacy in managing macro and geopolitical
uncertainties;
(iii) Sustainable and effective operational strategy;
(iv) Board-management relationship and dynamics.
Michele Kythe Lim, President and Chief Executive Officer (?CEO?) of
ICDM emphasised, ?Amidst the ongoing economic challenges, we remain
steadfast in our commitment to navigating leadership in the dynamic
landscape of Southeast Asia. Governance is coming into focus on a
more profound level in the wake of heightened stakeholders?
expectations, as evidenced by the many changes taking place on
boards around us recently. As leaders, we recognise the pivotal
role of talent, the power of effective leadership and the
imperative of sustainability in our current environment and that a
paradigm shift at the board level is necessary to confront the
reality and barriers in their pursuit for growth. This regional
survey is part of our hope to collectively transform leadership and
drive businesses to greater heights by encouraging them to launch
into action and openly address the critical areas in board and
corporate governance that will nurture deeper cohesion in
organisations.?
Urging boards to cultivate a forward-looking mindset and ingrain a
more robust culture to turn risks into growth opportunity, ICDM?s
2024 ASEAN Board Trends Survey identified five (5) critical areas
in board governance that require immediate intervention to
reinforce board effectiveness and ensure companies are equipped for
the challenges of the future. These include:
(i) To Realign Board Agenda and Set Priorities Right: Boards often
cling to outdated approaches, looking at things through yesterday?s
lens and failing to adapt to changing circumstances. As a result,
corporate priorities overlook the key threats and changing
environments. Boards must stay informed about current and future
business trends while adapting to new threats, risks and
opportunities that build their path to the future.
(ii) To Improve Board-Management Relationship and Dynamics:
Misaligned priorities between boards and their management were
noted throughout the survey, with differing ideas on key
organisational priorities and areas that require more attention
from the board. While boards place greater importance on business
model agility, diversification and transformation, management
believe human capital strategy and development should be a
priority. Boards and management must conduct more meaningful
discussions, realign and agree on priorities as well as
expectations of both parties to enhance the working relationship
dynamics for increased effectiveness.
(iii) Progressive and Forward-looking Board Architecture and
Culture: Management express reservations about the board?s current
ability and skillset to steer the company strategically. The
existing blend of knowledge, experience, and qualities fall short
of supporting evolving business needs in the coming years. Boards
must begin cultivating a culture of open dialogue, courage, and
candour amongst each other. Nomination and Remuneration Committees
(NRC) play a vital role in ensuring the right mix of board members,
led by the chairman who plays a pivotal role in fostering a
progressive board culture and managing board-management
dynamics.
(iv) Board Effectiveness at Taking Stock: While boards may perceive
their performance positively, management highlight a lack of
diverse perspectives which hinders insightful discussions and
creates blind spots to critical issues. Some respondents felt that
their board deliberations do not bring value or enhance
decision-making quality, with over half stating that board members
rarely express conflicting views. Boards must look internally to
assess their value proposition, skills, governance and mindset to
effectively catalyse their growth.
(v) Navigating Board Sustainability Challenges: While many
acknowledge that sustainability goes beyond mere reporting and some
boards are already embracing or planning to adopt sustainable
strategies, management remain sceptical about the board?s current
knowledge and ability to fulfill its oversight role. While boards
recognise that their challenge lies in setting up the right
governance with clear performance target measurement, they must
also acknowledge the important need to support the human capital
function and concerns through talent governance. Health, safety and
wellbeing, talent management and succession planning are among top
sustainability matters for boards? attention.
As boards begin to address these critical areas in governance, the
key actions they need to take begin with undertaking a formal board
effectiveness evaluation encompassing candid, 360-degree
assessment. Boards must obtain holistic perspectives to better
understand their current landscape, working dynamics amongst
themselves and between their management, as well as identify
development needs. It is vital that boards reevaluate their
composition and remuneration packages at regular intervals and
proactively foster strong board-management relationships and
dynamics. In realigning organisational priorities through joint
strategic planning sessions, boards must practice the art of asking
challenging questions for more robust discussions. Organisations
must prioritise talent governance and organisational culture to
ensure a conducive environment for innovation and productivity,
while embracing sustainability agendas authentically, avoiding
greenwashing, and embodying authenticity and purpose as leaders are
essential for driving organisational success.
In addition to the 2024 ASEAN Board Trends report, ICDM also
announced the formation of an ASEAN Directors Registry under the
ASEAN IOD Network initiative. Aiming to go fully operational in
July, the registry marks a significant stride in fostering global
recognition for ASEAN board talent. Recognising the needs of boards
with regional perspectives, this initiative aims to actively
advocate for enhanced ASEAN representation on the boards of
businesses with a presence in the region. With this registry, it
seeks to elevate the value proposition for members of ASEAN
Institutes of Directors by expanding their access to a broader
spectrum of directorship opportunities and give organisations a
wider selection of board-ready candidates with international or
regional experience.
The survey was conducted in collaboration with partners under the
ASEAN IOD Network, which was initiated in 2020 to better serve the
board community in the region and beyond. These partners include
the Institute of Directors Thailand (IoD Thai), Institute of
Corporate Directors, Philippines (ICDPh), Vietnam Institute of
Directors (VIOD), Myanmar Institute of Directors (MIoD), Singapore
Institute of Directors (SID), Indonesian Institute of Corporate
Directors (IICD), Darussalam Assets Sdn Bhd and the International
Business Chamber of Cambodia (IBC). The survey can be accessed on
ICDM?s website here.
About the Institute of Corporate Directors Malaysia (ICDM):
The Institute of Corporate Directors Malaysia (ICDM) is a
membership-based organisation whose mandate is to professionalise
directorship in Malaysia. As the national institute of directors
(IoD), ICDM is committed to providing continuous professional
development - empowering boards and directors with forward-thinking
mindsets, practical knowledge and essential competencies.
Established by the Securities Commission Malaysia (SC) and
supported by Bank Negara Malaysia, Bursa Malaysia and the Capital
Market Development Fund (CMDF), ICDM's goal is to be the leading
influence of excellence in governance and to build a robust
corporate governance culture in Malaysia. For more information on
ICDM, please visit our website at www.icdm.com.my
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