CREATING FUTURE-FLUENT BOARD LEADERSHIP IN ASIA
Asia undoubtedly is the “new” center of the world. Economic rise in the region has accelerated growth in goods, products and services consumption, making the region a lucrative market for global enterprises. Even as Asia has been on a sharp economic growth trajectory for the last few decades, the region has also witnessed several big and small corporate governance failures.
Asian organisations need to take a much closer look at the human elements of governance — the makeup of the leadership in the boardroom. Leaders who spoke to us are convinced that Asian boards are increasingly expected to move beyond their traditional stewardship and trusteeship responsibilities on behalf of shareholders, to provide overall leadership to the organisation.
There are six broad factors that hinder the growth of effective leadership on Asian boards. These range from a lack of governance maturity in most of developing Asia, to concentrated shareholding, to capacity and skills gaps. Respondents likened some boards to “old boys’ clubs”, and 56% suggested that one or more board Directors be replaced.
“Boards have a tremendous opportunity to function more effectively and accelerate their impact”, said John Ryan, CCL President and CEO. “Leadership development is the thread that can weave these principles together, by making individual board members more self-aware and strategic, and by fostering a collective sense of teamwork and shared mission for the board as a whole.”
The rise of BOLD 3.0 in Asian boards
In response to corporate governance breakdowns over the past decade, many Asian governments have led multiple efforts to strengthen regulations and governance codes. However, this focus has not solved sporadic corporate governance issues, leading to a realization that organizations also need to take a closer look at their board leaders. As such, Asian board leadership – which has grown from promoters, families, and other closely-knit shareholders, to the tightening of governance codes – has now entered its third phase, BOLD 3.0, with a renewed focus on collective leadership.
“It’s clear that it’s a pivotal moment in the evolution of Asian boards,” said Elisa Mallis, CCL Managing Director and Vice President, Asia-Pacific. “Most boards are lacking in areas that will be critical moving forward, such as digital skills and global leadership development capabilities. We also see a need for increased representation of female leaders and leaders across generations on Asian boards to provide diverse and inclusive perspectives for market success.”
Key focus areas for Asian boards
Boards need a strong foundation of corporate governance processes, ownership structure, country jurisdiction, and national culture. This must be supported by resilient pillars: individual drive and motivation of board leaders; functional, technical, and leadership expertise; clarity of roles; and board composition. As a cornerstone, board culture separates boards with individual brilliance from brilliant boards.
BOLD 3.0 identifies the traits of the best Asia boards, and the current and future priorities for Asian board directors:
- Four behaviours often displayed by outstanding board directors in Asia: asking questions; speaking their mind; evaluating decisions critically and displaying good judgment; and developing meaningful relationships.
- Top five qualities board leaders in Asia must have for sustained impact include: trust and credibility; sound judgment; strategic intent; having a long-term view; and ability to do strategic planning.
- Supplementing core capabilities: A ‘rock star’ board leader can no longer just have technical and functional skills, they must also have skills in strategic and individual leadership. For example, 55% of respondents were satisfied with their boards industry and financial expertise, but only 18% reported being satisfied with their board’s sustainability expertise and technology savviness.
- People development: a key emerging leadership role is to help develop first-rate talent, ensuring CEO succession but also ensuring adequate development across the enterprise. 41% of respondents said their board rarely discusses the talent agenda and spends little to no time with top talent each month.
“While the traditional approaches of Asian boards have succeeded in building Asian companies’ market share to this point, we are seeing that natural limit of how far these approaches can carry companies,” said Sunil Puri, Senior Director of Research, Innovation and Product Development, Asia, CCL, who led this research. “What will distinguish the next generation of Asian board leaders is their ability to develop others’ leadership skills and capabilities, creating a culture that can be quickly scaled.”
A four-step process below is suggested for Asian Boards to continue to be effective:
- Evaluate existing governance maturity, to ensure they are operating on a strong foundation;
- Re§ect on leader intent and capability, with regular dialogue;
- Assemble a compelling team and establish a clear mandate, including diversity, clear roles, set KPIs and board reviews;
- Curate a culture based on trust and commitment. Trust—whether among board directors, between board and management, or between board and CEO—is often the most critical element of board culture.
“A board’s culture has a direct infuence on company culture. Understanding the current state of Asian boards, as well as their strengths and weaknesses, is a key step towards identifying organizational strengths and a beginning step towards preparing organizations for the future to compete at the global level” said Grace Kerrison, VP and Managing Director APAC at Pymetrics.
“Future-fluency at the board-level takes time and requires a mind-set change. It has to be deliberate and an ongoing process that requires preparation and an ongoing commitment to realize results, but we believe that the tools provided by this report will go a long way towards creating future-fluent Asian board leaders.”
BOLD 3.0: Future-Fluent Board Leadership in Asia
This research study — a culmination of over a year of research led by the Center for Creative Leadership (CCL), in partnership with the Confederation of Indian Industry (CII), Institute of Corporate Directors Malaysia (ICDM), Institute of Corporate Directors (ICD), Philippines, Singapore Institute of Directors (SID), The Sri Lanka Institute of Directors (SLID), Vietnam Institute of Directors (VIOD), and supported by pymetrics, aims to further the Asian leadership development agenda, examining the current state of the Asian boards and board leaders’ collective leadership, and also enable them to look into the horizon and align their capabilities accordingly.
A total of 350 board leaders, directors, and CEOs across six countries—India, Malaysia, Philippines, Singapore, Sri Lanka, and Vietnam—were surveyed as part of this report. 26% of the total survey respondents were women board leaders. 91% of the interviewees were of Asian origin. Quantitative data was supplemented by 109 detailed interviews of senior board and C-suite leaders across Asia
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