Need to improve board practices, including director sourcing, report says
The Star article, "Need to improve board practices, including director sourcing, report says," quoted Russell Reynolds Associates Consultant Stephen Langton and featured our joint report with ICDM, "Malaysian Board Practices Review 2020." The article is excerpted below.
The inaugural Malaysian Board Practices Review 2020 launched on Thursday reveals a greater need to improve board practices including director sourcing, skills and competencies, board evaluation and training.
The thrust of the review is to improve board practices in line with the Malaysian Code of Corporate Governance (MCCG), the Institute of Corporate Directors Malaysia (ICDM) said in a statement.
ICDM said the review is to strengthen best practices of the boards, in tandem with the Securities Commission’s (SC) recent update on the MCCG to enhance the corporate governance culture.
The review, which was in collaboration with Russell Reynolds Associates (RRA) and Bursa Malaysia Bhd, is to establish paradigms and standards for Malaysian boards through a deeper overall understanding of prevailing industry culture, practices and processes relating to board nomination, selection, appointment and evaluation.
Some key observations from the review revealed a greater need to improve board practices in line with the MCCG:
i. Director sourcing – personal network referrals (74%) remain the most common director sourcing method, following by nominations by major shareholders or parent companies (14%), and only 8% of companies used independent, third-party search institutions, which is the best practice recommended in the MCCG.
ii. Skills and competencies – gaps in board skills and knowledge call for greater and more effective adoption of skills such as digital, social media & technology and innovation, Environmental, Social & Governance (ESG), human resource, culture & succession, communications & public relations, marketing & sales, branding & reputation, business, e-commerce, treasury & actuarial sciences, etc.
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