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Asia's leading companies need to take a leap of faith when appointing non-executive directors

Samantha Chiew
Samantha Chiew12/19/2018 02:34 PM GMT+08  • 3 min read
Asia's leading companies need to take a leap of faith when appointing non-executive directors
SINGAPORE (Dec 19): Many leading Asian companies’ boards are still reluctant to move out of their comfort zone when appointing non-executive directors, according to Heidrick & Struggles’ latest Board Monitor Asia Pacific report.
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SINGAPORE (Dec 19): Many leading Asian companies’ boards are still reluctant to move out of their comfort zone when appointing non-executive directors, according to Heidrick & Struggles’ latest Board Monitor Asia Pacific report.

Although there have been recent news that more women have been appointed to boardroom positions, but drawing on data collected from companies listed on the ASX 200, Hang Seng Index (HSI), NZX 50 and Straits Times Index (STI), the report suggests that there is still some way to go to achieving boardroom diversity.

According to the report, boards still give priorities to CEOS, as 56% of the new non-executive directors (NEDs) appointed to these listed boards were current of former CEOs. New Zealand ranked highest with 67% followed by 63% in Singapore, 56% in Australia, and 46% in Hong Kong. This compares with 47% in US Fortune 500 companies.

Moreover, boards tend to prefer those with experience in a publicly listed board. In Singapore, 88% of newly appointed NEDs had experience on at least one listed board.

Encouragingly, the research has shown an improved progress in gender diversity.

Of the 263 directors appointed across all four indexes, 83 were women, representing 31% of all new director appointments.

In terms of the new director seats filled by women, Australia led the way at 39%, followed by New Zealand (27%), Singapore (24%) and Hong Kong (20%). This points towards an upward trend across the region as, for each index, the percentage of new female appointments is higher than the average percentage of women already serving on boards.

In Singapore, the Diversity Action Committee (DAC) has set a target of 20% female representation on boards by 2020, rising to 25% by 2025.

Nonetheless, those with international experience continues to be a key focus area when hiring new NEDs.

Some 61% of New Zealand’s newly appointed NEDs had international experience, followed by Australia (52%), Hong Kong (43%) and Singapore (39%). Roughly a third of the appointees were non-national – 36% in Australia, 30% in Hong Kong and New Zealand, and 29% in Singapore.

Guy Farrow, managing partner of Heidrick & Struggles Australia says, “Boards whose directors bring diversity of experience, ways of thinking and perspectives as well as gender diversity to the table are best placed for the robust discussions that support effective decision making.”

“It is encouraging to see that 24% of the NED appointments went to women executives,” says Alain Deniau, partner, CEO and board practice for Singapore. “But I do think it’s important for Singapore boards to look outside the current NED talent pool to ensure a broad range of capable and aspiring executives have an opportunity to shine.”

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