In Singapore’s dynamic business landscape, the role of corporate boards is undergoing a critical evolution. As companies face unprecedented challenges, from geopolitical tensions to technological disruptions, while ensuring ESG compliance, boards must transition from passive oversight bodies to strategic assets that drive organisational success.
In the Singapore corporate landscape, only 15% of board directors are appointed through professional executive search firms, with the remaining 85% selected through personal networks.
The challenge isn’t just about skills; it’s also about board dynamics.
Market participants and anecdotal evidence suggest that Singapore boards often prioritise candidates who are “agreeable” and unlikely to challenge the status quo.
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Ravi Menon, the former Monetary Authority of Singapore managing director, noted that 50% of listed companies in Singapore are still providing boilerplate disclosures and are unwilling to disclose any objective performance criteria, with board members’ contributions often limited to their rate of attendance at meetings, he said. He added that corporate boards should also be more diverse in skills and expertise.
This contrasts sharply with global trends. Between 2020 and 2024, the S&P500 and Russell 3000 companies showed increasing commitment to comprehensive board evaluations, rising from 43% to 55% and from 24% to 38%, respectively.
Such practices potentially limit the effectiveness of Singapore boards. Studies show a positive correlation between corporate performance and higher board independence and corporate governance standards.
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On one dimension of board diversity, at least, Singapore continues to improve the percentage of women’s representation on boards of the top 100 Singapore Exchange -listed companies, rising to 25.3% as of June 2024. While still behind other countries, the direction of travel is promising, with increasing women’s representation on the top 100-listed Singapore boards, rising from 7.5% in 2013 to 23.7% in 2023.
First pillar of board excellence: active strategic engagement
The current quarterly board meeting model is inadequate for modern corporate challenges.
Only 30% of executives rate their board’s performance as good or excellent, with nearly half saying that their boards don’t challenge management constructively.
While executives hope that their boards can offer greater guidance and leadership, 40% report insufficient board participation in strategic dialogue. Many executives have little confidence in their board’s ability to pivot and adapt to fast-evolving strategic challenges and business risks.
High-performing boards focus on maintaining continuous strategic engagement with management. They do this by scanning the environment for disruptive trends and opportunities, setting comprehensive strategic frameworks and debating strategic alternatives within the board and with management.
For boards to meet the challenges and demands of the business environment and their own executives, a deeper and more meaningful engagement model, whether through a more in-depth or frequent pace of engagement, may be required.
This does not necessarily mean more frequent board meetings. Rather, it’s the quality rather than frequency of discussions which matters more.
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Meaningful, in-depth and frank discussions and the sharing of views over informal sessions are more beneficial than constrained discussions in formal sessions.
Second pillar: high-performance board composition and dynamics
Successful boards require complementary skill sets aligned with strategic goals, diverse perspectives in decision-making and a willingness to pose challenging questions.
However, according to PwC, many executives think their boards are ineffective because they lack engagement skills. They also feel that their boards have poor composition and diversity, with one or more board directors inadequate for the role.
Management executives and regulators clearly desire higher quality, effective and diverse boards. As Dr Tan See Leng, Minister for Manpower, aptly puts it: “Having robust corporate governance, which fosters an environment where decisions are made with accountability and responsibility, is a necessary condition for successful business performance and sustainable growth. A company which is seen to fare poorly in corporate governance will not be able to sustain stakeholders’ confidence.”
Third pillar: transformative risk management
Traditional risk management (TRM) approaches are inadequate to meet the demands of boardrooms in today’s complex environment. 88% of executives believe that their organisation’s risk management process does not add any strategic value or competitive advantage.
An increasingly popular approach, strategic risk management (SRM) prioritises strategic goals and proactively provides forward-looking, value-added insights to support board and leadership decision-making.
A well-designed SRM framework can help boards understand actual internal risk conditions within the organisation, i.e., feel the pulse of the organisation. They can also be aware of potential external risk events and trends through periodic over-the-horizon risk scanning, including quantifying the possible impact on strategic objectives.
The application of SRM approaches in Singapore companies has demonstrated success in identifying periods of elevated risk in financial markets and major market corrections. It has also helped boards make proactive strategic adjustments ahead of the rest of the market during periods of market volatility and corrections, such as during Covid-19, the Ukraine war and Middle East unrest.
Future outlook
As Singapore positions itself as a global business and financial hub, boards must evolve from passive oversight of compliance to strategic advisors who can catalyse organisational success. This transformation is not just desirable — it’s imperative for maintaining Singapore’s competitive edge in the global marketplace.
To achieve this, Singapore boards must:
Embrace continuous engagement with management, moving beyond quarterly meetings to regular strategic dialogues.
Adopt professional appointment processes to ensure diverse, skilled and independent board composition.
Implement modern risk management approaches like Strategic Risk Management (SRM).
Cultivate a culture of constructive challenge and diverse perspectives within the boardroom.
Prioritise ongoing board education and skill development to keep pace with rapidly evolving business landscapes.
Various bodies, such as the Singapore Institute of Directors (SID) and ISCA, actively provide ongoing board education in accordance with current business trends. Over time, SID’s accreditation process will also help improve the quality and knowledge of aspiring board directors.
The evidence is unambiguous: Successful boards elevate corporate performance and improve resilience through strategic foresight, proactive leadership and transformative governance.
For Singapore companies to remain competitive on the global stage, our boards must rise to this challenge and embrace a new era of performance-driven stewardship.
The stakes are high. The declining number of listings in the Singapore equity markets and the paucity of local-global champions is of great concern. Boards that fail to transform risk obsolescence in an increasingly complex and fast-paced business environment.
Conversely, boards that successfully transform and evolve into strategic assets will drive superior corporate performance, enhance stakeholder value and contribute to Singapore’s continued success as a leading business hub.
The time for change is now. Singapore boards must seize this opportunity to redefine their role, moving from oversight to insight, from compliance to strategy and from passive governance to active value creation. By doing so, they will not only secure the future of their organisations but also reinforce Singapore’s position as a leading financial hub and beacon of corporate excellence in the global economy.
Lee Ooi Keong is a former Temasek director and member of the Singapore Institute of Directors with 30 years of experience in investments, corporate performance and governance
