Board Monitor Singapore 2020

Boards today are expected to possess significant expertise in areas as specialized and diverse as digital transformation, cybersecurity, corporate reputation management, sustainability, and social media, to name just a few, along with more robust soft skills and knowledge of human capital—all this while also increasing diversity in terms of gender and racial, ethnic, or social background, among other characteristics. This is all to improve decision making: combining board members with specific expertise with the benefits of diverse teams is widely seen to produce better decisions. For boards in Singapore, all these factors are important as they continue to modernize and help their organizations grow.

Most corporate boards in the 15 countries we study¹ made some progress in adding new members with diverse backgrounds and skills in 2019. Many boards around the world also continued to add more traditional directors. This includes people with prior board experience—almost all, 95%, of appointments in Singapore, for example—or prior experience as a CEO or CFO. Though such directors don’t as often add diversity in other areas, their experience is particularly valued by nominating committees when companies face significant enterprise risk.

Among the characteristics of new directors we have been tracking, we note a few trends among new directors globally, which are somewhat at odds with each other.

Some progress on diversity

• Women continue to make significant gains among newly added directors compared to previous years.
• Progress on racial or ethnic, nationality, and age diversity has been disappointing, with little progress to report anywhere in the world.
• The range of functional experience on boards has increased, with a corresponding decrease in CEO experience. In particular, digital expertise, now essentially a given on boards, trended highest. With sustainability and cybersecurity rising as central concerns for companies, boards also focused on adding experience in these areas.

A continuing preference for traditional experience

• First-time directors are still not as common as experienced ones, despite boards’ stated focus on increasing diversity.
• Financial expertise and experience in financial services sectors remained highly sought-after backgrounds.
• Though the proportion of directors with CEO experience has continued to decline annually, it remains the most common type of prior expertise, followed by CFO experience.

Simply ensuring a board has an appropriate mix of perspectives is just the start. To be highly effective, a board must be clear on its purpose: what it stands for as an entity and whom it represents in a global society. Boards must also align on how they will work with management to serve as an underpinning for a purpose-driven, socially responsible organization that delivers value to a wide range of stakeholders. Finally, boards must have a culture and processes that ensure directors can work well together.

In 2020, with added pressure from economic and societal volatility, fractured or dysfunctional boards present more risk than ever before. The solution is inclusion broadly defined. Many boards think of inclusion particularly in relation to their significant efforts to add diversity, but as they seek to oversee responses to a fast-moving crisis and meet the calls for greater racial representation and equality, boards will benefit most from moving beyond diversity to ensuring that every member is able to contribute fully, regardless of the board’s traditional norms or habits, varying personalities, inherent biases, or for any other reason. (For more on Heidrick & Struggles’ thinking on board dynamics, see Future-Proofing Your Board).

In this report, you’ll find the data and our observations on the 2019 class of directors for the 30 companies in the Straits Times Index and some expectations for 2020.

Acknowledgments

Thanks to the following Heidrick & Struggles colleagues for their contributions to this report: Alain Deniau and Rachel Gan.

In addition, Heidrick & Struggles wishes to thank Junie Foo, president of the Singapore Council of Women’s Organizations; John Lim, chairman of InCorp Global; and Swee Yeok Chu, CEO and president of EDBI, for sharing their insights. Their views are personal and do not necessarily represent the views of the companies they are affiliated with.

References

¹ Australia, Belgium, Brazil, Canada, France, Germany, Hong Kong, Ireland, Netherlands, New Zealand, Portugal, Singapore, Spain, United Kingdom, and United States are included in our studies of boards.