INTHEBLACK December 2020 - Magazine - Page 48
F E AT U R E
// D I V E R S I T Y O N B O A R D S
“When you come across a board containing 10 people who all
look the same, it tells you that something is fundamentally
wrong with the way they go about searching for directors.”
PROFESSOR YUEN TEEN MAK, NUS BUSINESS SCHOOL
management positions had risen from 17 per cent in 2009
to 35 per cent in 2020. At executive vice-president level,
47 per cent are now women, when in 2009, that number
stood at 33 per cent. At board level, women make up about
40 per cent of members.
“You can’t really get into a board role if you haven’t been in
top management,” Naziree says. “So, as the diversity figures
across the organisation are trending upwards, I am confident
the diversity at board level will also continue to rise.”
Of course, Naziree says, diversity is about a lot more than
gender – the number of women on Maybank’s management
team and board is simply one measure of success among many.
Another important take-away from Maybank’s path
towards greater diversity is that it is an outcome of the
processes put in place to achieve wider success.
BOARD DIVERSITY ACROSS APAC
A recent report on corporate governance from CPA Australia,
Banking on Governance, Insuring Sustainability, authored
by Associate Professor Yuen Teen Mak and Associate
Professor Richard Tan, both from the NUS Business
School in Singapore, delves deep into board structure
“Board diversity is important to prevent ‘group think’ and
encourage constructive debate,” the report says, singling out
age and gender diversity as two important aspects for boards
The study of the 50 largest listed banks and 50 largest
listed insurance companies headquartered in the Asia-Pacific
(APAC) region found that, in 2018 and 2019, Australian
bank boards had the least age diversity, while Thailand
and the Philippines both had wide age spreads. Less than
7 per cent of independent bank directors were younger than
50 years old, the researchers found, potentially leading to
a lack of knowledge in particular areas in which younger
professionals are known to excel.
“One of the areas we looked at was technology, and
today, on bank boards, it’s very important to have strong
cybersecurity knowledge,” Tan says. “But we found that
generally lacking across the APAC region.”
In fact, the report says cybersecurity experience is “almost
non-existent” on the boards researched – a serious concern
for banks in the APAC region, as well as their customers,
shareholders and other stakeholders.
The picture is different when it comes to gender. Australia’s
four largest banks have at least 30 per cent female directorship,
while the median percentage of female directors across all
50 banks in the study was just over 15 per cent.
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Far more important than the measure of diversity, though,
is the purpose or the cause of that diversity, Mak says.
“When you come across a board containing 10 people
who all look the same, it tells you that something is
fundamentally wrong with the way they go about searching
for directors,” he says.
“If you have actually gone through a proper, thoughtful
process that is driven by the organisation’s strategy, and
you’ve made a comprehensive list of the skills, knowledge,
experience and perspectives the board will need to help reach
a strategic goal, what is the likelihood that you will end up
with 10 people who look the same? If that’s the result, I
would immediately suspect their process is very flawed.”
Diversity, Tan and Mak agree, is not something a business
goes out to create. It is the result of strong process and good
governance, and it creates more of the same.
Diversity, in fact, often comes about as a result of the
problems caused by a lack of diversity.
A bank board filled with banking executives is going to
develop serious issues, as will a medical company board
filled with doctors. Those problems, then, create the need
for new actions and plans to achieve a specific strategic goal.
When carried out properly, that plan of action naturally
leads to diversity.
DIRECTORS MUST DIRECT
Phil Ruthven, founder and director of IBISWorld and
founder and CEO of the think tank Ruthven Institute,
says that during the board diversity discussion, people often
forget that the first and greatest responsibility of the board
is to direct.
“I’ve often said, running a company is a bit like a wagon
train in the wild west of America,” Ruthven says. “Your
wagon master was pretty important, but your scout was
even more so. The scout had to go out and find where the
dangers were – was there a flooding river, was there a blind
canyon, etc.? They’d come back and tell the wagon master
which direction they needed to travel in to get to where they
wanted to go. The wagon master is the CEO, and the scout
is a director.
“We’ve got to know where we’re going, why we’re going
that way and how we’ll get to our destination. That seems
to have been totally and utterly lost on some boards in
Australia, and that’s where a crisis comes in.”
Does diversity help identify direction and ultimate success?
The answer is yes, Ruthven says. However, diversity should
be separated into two categories. One is about where you’re
going, and the other is about fairness.
There are five drivers when it
comes to the best fit for a board
appointment, says David Schwarz,
founder and CEO of Board Direction.
“The single most important thing, which is totally irrelevant
to gender, age, ethnicity, etc., is, ‘Do I know where I’m going,
and can I help this business get there? Can I be a director, not
just a passenger?’,” he says.
“First and foremost, a director must know where they’re
going. After that, there should be diversity in knowledge and
experience, including finance, because without that you could
go broke; and marketing, because you have to know how to
sell your services; and someone who can help direct in terms
of the industry-specific systems and technologies; and HR,
because our workers in the Western world are becoming much
freer than they’ve ever been.”
Diversity of skills, Ruthven says, is the most important
type of diversity on a board. After that, the “fair” distribution
of other forms of diversity – gender, age, ethnicity, etc. –
“A lot of companies would do well to have at least one
director under the age of 30. In other words, somebody who
has come through the digital era,” Ruthven says. “But gender
is the most important of these types of diversity. It goes
beyond fairness and becomes about relevance. Let’s get real –
50 per cent of the population is female. Fifty per cent of the
market is female. When you’ve got all men on the board, and
they claim they understand what a female customer or client
wants, they’re drawing a pretty long bow.”
Those drivers are:
• Prior governance experience
• An executive skillset that is valuable
at board level
• Networks and relationships that can
be leveraged by the organisation
• Cultural fit with the current board
• Demonstrable passion for what the
Then, there are three “nice-to-haves”. They
are industry experience, governance training
and diversity. Like Ruthven, Schwarz believes
that, while diversity is absolutely a positive, it
should not be a number one priority for board
“From a board appointment perspective,
diversity is important, but it’s not always
the most important driver,” Schwarz says.
“Having said that, there have been studies
that suggested having a female on a board
produces a 7 per cent better output.
“However, other studies have indicated
that such improvements are in businesses
that had something to sell into a diverse
What is important, Schwarz says, is
recognising how diversity can add value to
a board, rather than making an appointment
that is driven, for the most part, by a need
“If you are a white male of a certain age –
some call it ‘male, pale and stale’ – and are
seeking a board appointment, then you need
to figure out your pitch,” he says. “Just like
everybody else, you need to work out what
makes you compelling, what your point of
diversity is, and what your unique selling point
is. That’s because everybody appointed to a
board should bring something that is
absolutely valuable and unique.”
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