Board chair of the future

At the Global Governance Summit held Sept. 19 at the Marriott Hotel, Kirsten Patterson, chair of the Global Network of Directors, made a comprehensive and insightful presentation about the evolving role of the board chair of the future. The role of “the first amongst equals,” she said, is now more complex and demanding amid the rapid global landscape changes, digital transformation, cybersecurity risks, climate issues, and geopolitical uncertainties.

She also presented some current top issues for directors in New Zealand, which are similar challenges faced in the Philippines, such as climate change. It is a reality as we can now feel the extreme heat and heavy flooding, with the Philippines being a disaster-prone country. Another issue is future-ready succession and leadership transition, as every company should be ready for this. Harnessing artificial intelligence (AI) was also cited as a top challenge, as there is a need to understand AI risks and opportunities and to ensure an AI governance framework is in place and one’s board is AI literate. Lastly, enabling productivity is also a challenge for directors. They must focus on strategies that improve operational efficiency and workforce productivity.

So, what is the chair’s role? Ms. Kirsten said he or she must be a:

1. Strategic leader – The chair must push the board to think long term, and not just reactionary or transactional. He or she must anticipate and plan and balance short-term pressures with the need for sustainable growth.

2. Culture builder – The chair should encourage diverse perspectives and create challenging conversations that are constructive and respectful. Ms. Kirsten presented gender diversity as a critical driver for better decision-making, improved governance and performance, and gave a 30-50% target ratio to accelerate progress.

I agree with Ms. Kirsten, as there are various studies showing the benefits of gender diversity and having women directors in boards. How is gender diversity in the Philippines? The good news is that from having just 17% women directors in publicly listed companies (PLC) pre-pandemic, this has grown to 21% in 2022, based on the latest survey by the Philippine Business Coalition for Women Empowerment and the Philippine Women’s Economic Network. While still far from Ms. Kirsten’s target, we are moving in the right direction. This didn’t happen by chance — it is thanks to the advocacy and support by the Institute of Corporate Directors (ICD), as well as other organizations with a gender lens. These include the NextGen Organization of Women Corporate Directors formed in 2021, which targets to increase competent women representation in company boards to 23% by 2025; the Filipina CEO Circle formed in 2015 by lady CEOs with the mission to help other women reach the top and have more capable women available to be board directors; and the Women’s Business Council Philippines, Inc., which is composed mostly of women entrepreneurs and a good source of women directors.

Philippine firms also currently have the unique situation of having a mix of four to five generations in the workforce today. Let’s look at this generational diversity as something that has great potential.

3. Performance monitor – The chair must oversee the performance of directors and ensure continuous development and training.

4. Change agent – The chair must lead boards through periods of changes and ensure change is managed in a way that mitigates risk and preserves long-term viability.

It was a privilege to be a panelist at Ms. Kirsten’s session along with former Bangko Sentral ng Pilipinas governors, namely Ambassador Joey Cuisia, who reacted on cybersecurity, and First Independent Director Chairman of the Board of SM Investments Corp. Amando “Say” M. Tetangco, who talked about the economic environment and other issues. Senen Matoto acted as moderator.

The views and opinions expressed above are those of the author and do not necessarily represent the views of FINEX.

The board chairs of the future face growing demands, and they should be strong physically, mentally, emotionally, and spiritually. The board chair should also be firmly grounded in terms of values, principles, and ethics. He or she must be someone who will try to do the right things right all the time. This should also be the same for the chairs of today.

The Philippines has gone a long way since the ICD’s formation 25 years ago. During the Asian financial crisis, Dr. Jesus “Jess” Estanislao saw to it that corporate governance reforms were implemented. There was a gap between Asian cultural values and universal ethical principles, and he wanted the Philippines to be part of the global financial system to prosper and corporate governance is key to be connected.

A testament to the Philippines’ success is the more than 100 PLCs and 25 insurance companies that were recognized as Golden Arrow awardees during the ASEAN Corporate Governance Scorecard (ACGS) Awards night. ICD Chairman Emeritus Jess said: “it is now time to go beyond the ACGS and start to be maka-Diyos (love of God), makatao (love of fellowmen), makakalikasan, (love of environment), and makabayan (love of country).”

Thank you, Dr. Jess, for initiating and leading the way to building boards with good governance so that the Philippines will not be left behind! More power to you!

Flor G. Tarriela is PNB board advisor, Independent Director of LTG and Nickel Asia. The first Filipina vice-president of Citibank N.A, she was former undersecretary of Finance. An environmentalist, she founded Flor’s Garden in Antipolo, an events destination.