In the world of corporate governance, boardroom diversity is a topic that receives considerable attention.
A diverse boardroom helps businesses stay relevant with customers in an increasingly global and complex environment. Having a rich melting pot of talent and perspectives in the boardroom also leads to better decision making.
But while much has been made of gender diversity in recent times, age diversity is something that has escaped much of the spotlight.
Michele Kythe Lim, President and CEO of the Institute of Corporate Directors Malaysia (ICDM), hopes to see a change in that. “There’s a lot of work and conversation on gender diversity. I personally feel that diversity in age, perhaps, has not been done enough.”
You need diversity in age to give balance to the boardroom and part of that is through building a pipeline of new and young directors
Generally, the structure of corporate boardrooms tend to be dominated by older men. Despite conversations on diversity getting more attention, boardrooms have failed to get any younger.
“You need diversity in age to give balance to the boardroom and part of that is through building a pipeline of new and young directors,” says Lim, who has had over two decades of experience heading governance and compliance in corporate Malaysia.
Age diversity, she adds, not only enhances representation, it offers mentoring opportunities where older board members can mentor younger ones in areas where they have less exposure, such as governance, regulations and risks.
By developing the younger members, it also allows for continuity - a boardroom pipeline - when more experienced members step down.
“This is where ICDM play a role, to help nurture the right mindset and help them develop through the entire (board) cycle.
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Just over a month old, ICDM is a dedicated body established by the Securities Commission Malaysia to enhance professionalism and effectiveness of corporate directors through providing training and development programs, research and industry reports and networking engagements.
Age and gender diversities, says Lim, are not the only aspects that need improvement; enhancing the overall diversity in the Malaysian corporate boardroom - from experience, industry, background, geography, personality - is exactly what ICDM hopes to achieve.
“We are a one-stop centre for all board and directors,” says Lim.
We are the first in the country in facilitating the complete life cycle of a directorship journey
“We are the first in the country in facilitating the complete life cycle of a directorship journey. I strongly believe that development for directors needs to be targeted. So, you need to target aspiring directors, you need to target mid-level ones and to the very mature directors."
“What’s the buy-in for mature directors? You are looking at networking. You are looking at leadership. You are looking at research. Again, this is where we come in.”
Breaking barriers in the boardroom should not be considered solely for the sake of checking a box. A varied set of skills and perspectives can bring about a more responsive and effective board in managing disruption, arising from non-traditional sectors.
For instance, fintech and e-payments players like Alibaba’s Alipay or Tencent’s WeChat Pay have brought unprecedented disruption to the big banks.
“Disruption can come from a completely different sector. So, if you are running a bank, don’t just look at getting experienced directors from financial, accounting or law industries. That’s very typical. Get someone from, for example, consumer goods, because they see things differently,” says Lim.
Again, she emphasises ICDM is positioned to work with companies to evaluate and fill in the competency gaps in the boardroom.
“We want to work with companies to see what kind of programs would benefit them,” says Lim. “We offer director sourcing solutions. This is where we can help and place directors to fill in the gaps, in terms of gender, age or others.”
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ICDM, launched in October, is currently working on building its programs and memberships, divided into corporate and individual categories. Lim’s target is to get at least half of the 800 companies listed on the main board of Bursa Malaysia to sign on as ICDM members in the coming years.
Malaysia is a latecomer in setting up a professional institution dedicated to enhancing corporate directorship; Singapore, Indonesia and the Philippines have established institutes for corporate directors for many years now.
“We are one of the last few but better now than never,” says Lim, adding that ICDM will also gearing up to do more collaborations with regional counterparts to boost affiliation, knowledge sharing and networking.
This will also allow for wider directorship sourcing.
“What’s interesting is the United Kingdom has looked into us. They are very interested in putting their directors into our registry. That opens up avenues because we are not limited to Malaysia. We work across borders.”
“So, when we get them on our registry, we get two fold (benefits) - a bigger pool of independent directors for Malaysian or regional companies. Our directors also get an opportunity to go overseas and to be recognised in the United Kingdom.”