by ASILA JALIL / pic by MUHD AMIN NAHARUL
COMPANIES should break away from the use of board leadership positions as a means to reward retired individuals for their past services and instead look at director roles as a career option to increase women’s share in top board leadership.
Institute of Corporate Directors Malaysia (ICDM) president and CEO Michele Kythe Lim (picture) said there needs to be awareness and education to raise directors’ competency levels to build a more robust and diverse pipeline in a company.
Citing figures from the Securities Commission Malaysia, she highlighted that women participation on boards for the top 100 listed companies has increased to 25.3% as of April 28, marking an increase of 0.48% from 2020 (24.28%) and a 1.62% increase from 2018 (23.68%).
She said the continued reinforcement of diversity principles is necessary to offer guidelines on what is required for local corporates to actively adopt into their respective governance and implementation strategies.
“While corporate Malaysia has seen improvement in women representation on boards, gender is part of the bigger ambit of the conversation on board diversity.
“Awareness and education are key. Raising the competency levels of directors will help build a more robust, diverse pipeline, which in turn will encourage a bigger pool of women directors.
“It is also important that we change the perception of directorship, especially towards women directors, as directorship should be seen as a career aspiration or goal, not a ‘retirement option’,” she told The Malaysian Reserve recently.
Lim urged companies to conduct internal and independent board evaluations and assessments to ensure that their board composition is balanced with the right people and aligned to the company’s goals and direction.
As an institution, Lim said ICDM has been working to reposition directorship as the next step in a person’s professional career development to make it accessible as long as the individual has the intent and qualification to pursue the goal.
She added that ICDM’s competency and behavioural-based director sourcing and placement services also play an integral role to help Malaysian boards achieve diversity as the services offer independent validation, multi-dimensional search and access to fresh director talents to propel a company’s growth.
“We are also currently working with our institute of directors colleagues in the Asean region to set up an Asean pool of directors to widen the network of board candidates to serve the growing needs of the markets and to offer Asean board candidates to the rest of the world,” said Lim.
ICDM’s Malaysia Board Diversity Study revealed that there is a stronger correlation between diversity attributes and company financial performance.
Specifically for gender, the study, which looked at 312 Bursa-listed companies from 2017 to 2019, showed that greater gender diversity correlated to stronger return on equity (RoE).
The study suggests that companies that appoint one-third women on board displayed 38% higher median RoE compared to corporate boards that lack female members.
“In addition, the Covid-19 pandemic has demonstrated the intrinsic abilities of women to lead with sensitivity, adaptability and empathy.
“It is evident that women leaders are more stakeholder-oriented and more sensitive to social, environmental and human capital issues, which are highly essential attributes to have in the boardroom especially during these turbulent times,” Lim added.