Board Monitor Hong Kong 2021
Hong Kong boards were clearly seeking prior board experience: more than two-thirds, 69%, of the incoming directors had such experience, compared with 51% the prior year. And a quarter of the new directors were women, a notable increase from only 6% the previous year.
New directors to help navigate disruption
Board fundamentals—financial oversight and good governance—were crucial in 2020 as companies navigated through a global pandemic, geopolitical uncertainties, and economic recovery. Many directors found themselves working more closely than ever with executive teams to keep their companies afloat, and working at a faster pace than ever before. And boards were increasingly expected to not only address topics as wide-ranging as community responsibility, sustainability, and diversity in their own composition, but to do so publicly. Furthermore, the necessary remote working and crisis management forced boards to operate differently—often outside their traditional schedule and agenda.
All of this, of course, affected how boards thought about the new members they added in 2020. In Hong Kong, the top 50 Hang Seng–listed companies added 42 new directors, 20% more than the prior year; companies in Singapore added an even greater share of new directors, with a 50% rise from 2019. The share of incoming Hong Kong directors who were current or former CEOs or CFOs was 38%, down a bit from 43% in 2019, though equal to 2018. Hong Kong boards were, however, clearly seeking prior board experience: more than two-thirds, 69%, of the incoming directors had such experience, compared with 51% the prior year. And a quarter of the new directors were women, a notable increase from only 6% the previous year and closer to parity with Singapore, where a third of 2020’s new directors were women.
New directors found themselves joining boards dealing with myriad, unprecedented challenges, which led to many boards reassessing how they worked, as entire organizations were also doing. Although Hong Kong’s companies were faced with macro issues outside their direct control, pandemic safety measures, including working from home and lockdowns, caused many businesses to reevaluate how they could and should operate going forward. Many boards were faced with game-changing decisions. Some boards stepped even further back, to analyze what they—and only they—could do to support their companies, with a focus on ensuring board members can support sound and swift, decision making. In addition, many boards took a hard look at their cadence of refreshment, with an eye toward changing the process to ensure they will be able to add the new directors they need, when they need them. (For more on new approaches to board refreshment, see “Building the foundation for better board refreshment.”)
For a snapshot of our 2020 data, see the full report.
Industry insights
Looking ahead
Boards’ commitment to their own effectiveness is lasting. We expect boards to intensify their focus on their role in supporting their organization’s purpose, including continued commitment to having the right people on the board. We see boards innovating their refreshment processes, particularly, in many countries, with even stronger focus on expanding gender and racial and ethnic representation. We also expect boards to expand their lens on diversity itself, to include nontraditional industry, functional, or regional experience in order to bring in new perspectives that will help companies maintain agility.
We expect the directors added this year, all in all, to be part of boards that are more diverse, more committed, and more agile than ever.
Acknowledgments
Thanks to the following Heidrick & Struggles colleagues for their contributions to this report: David Hui and Rodney Ng.