Interview with Simon Israel

Mr Simon Israel is the Chairman of Singapore Telecommunications Limited, Singapore Post Limited and a Director of CapitaLand Limited, Fonterra Co-operative Group Limited and Stewardship Asia Centre Pte. Ltd. Simon is also a member of the Governing Board of Lee Kuan Yew School of Public Policy and Westpac’s Asia Advisory Board.

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WHAT IS YOUR VIEW OF THE CURRENT LEVEL OF GENDER DIVERSITY ON THE BOARDS OF SINGAPORE-LISTED COMPANIES?

It’s shocking. It’s an embarrassment. It’s quite challenging that we want to hold ourselves up as a financial centre and yet on gender diversity we are so far behind our neighbours. For me, it’s a black eye, not a black mark. It’s something that needs to be addressed.

WHY IS THIS ISSUE SO IMPORTANT TO YOU?

I always worry that people think I’m trying to prove a point. I’m not. I’m just very cognisant that half the world is female and there’s a lot of talent. So how do you tap that to build a better board? That’s my only objective.

The starting point is where can we find talent? Where is that talent in management? Where is that talent in society? Where can you draw from to have a bigger gene pool for potential directors?

WHERE CAN COMPANIES SOURCE FOR A LARGER POOL OF TALENT TO SIT ON THEIR BOARDS?

If you are prepared to have a much wider profile of what could bring diversity to your board, the gene pool is much bigger than boards probably think it is.

One issue I see, and it’s a personal view, is that too many boards still have a stereotyped image of a company director – that they must have been a partner at a law firm, an accounting firm, a very senior person in finance, must be an ex-CEO.

Those are great people to have and we have our share of those. But why don’t you go a bit broader? Why don’t you start thinking about the fact that 50 per cent of your customers are women? They fill many roles beyond being housewives.

We have people in academia, science, technology and public service. If you’re prepared to look at a much broader profile of what talent could be – and this equally applies to men – you’ll find that the gene pool is much larger than you think. That’s been our experience.

WHAT BENEFIT DOES GENDER DIVERSITY ON BOARDS BRING?

If you take the broader principle about diversity, you’re trying to avoid ‘group think’. You want to approach issues and opportunities with very different perspectives. In my experience, the discussion is always richer as a result of that and that is very valuable.

SO GENDER DIVERSITY IS A NATURAL OUTCOME OF A STRATEGIC BOARD?

Absolutely. If you are a more progressive board, you are probably exploring the world more openmindedly. You are probably better at dealing with innovation and disruption and are more progressive in your policies and practices – and that should benefit a company overall. And those boards tend to have more women than the average.

“So I would like to see boards encouraged on diversity and gender diversity specifically. As a first step, let’s require boards to articulate their policy towards this and as a second step, set their own objectives. If we can’t get traction then perhaps it will require further regulatory intervention.”

IN WHAT WAYS DO WOMEN DIRECTORS CONTRIBUTE A UNIQUE VIEW?

I would rather not be accused of making clichéd statements, but women just approach things differently. Generally speaking – of course there are always exceptions – my observations are women who make it onto boards probably have better EQ [emotional intelligence] than men. Not only do they approach issues differently but they also manage the conversation in such a way that is probably less confrontational – very firm but less confrontational and quite persuasive. Men tend to be a little more blunt, more direct and they want things done their way without necessarily seeing buy-in as being as important as getting the message across.

In board conversations, women place more emphasis on values and how you’re arriving at certain decisions. They probably ask questions from time to time that men would consider but would probably give a different priority in the discussion. It’s a very different balance.

Having said that, I’m not suggesting women should be the conscience of the board. I’m just saying that those attributes come through based on my observation with the women I’ve worked with on boards.

IN WHAT WAY IS DIVERSITY GENERALLY – NOT JUST GENDER DIVERSITY – IMPORTANT?

It’s quite amazing that the average age of a board is likely to be between 58 and 65. So we have people who are grandparents making decisions about the future of the company. While they have experience and wisdom, are they able to grasp the way in which the world is changing and being disrupted by the digital age and the millennial generation – I am not sure boards get that.

Can you imagine if you presented Mark Zuckerberg [as a board candidate] before he created Facebook – he probably would have been tossed [out]. Today, he can go talk to presidents and prime ministers and he’s very welcome. So I think there’s a real danger that boards are getting too old relative to the pace which the world is changing.

THE COUNTER ARGUMENT IS THAT THESE PEOPLE AGED 58 TO 65 HAVE THE EXPERIENCE.

Yes, so it’s about diversity, it’s not about being one or the other. I think it’s important that alongside gender you also look at age, and get some younger people onto boards.

That has challenges. Most of them have careers. But there will always be some outstanding individuals who would be quite prepared to sit on maybe one board, alongside their career. There are some quite progressive companies that encourage that for people development as well. They see it as a key development tool. Go on the board of another company; see that the world is different. That’s quite often something that’s offered, if you will, to people identified as high-potential, possible CEO-type successors. They encourage these people at 40 as opposed to 60. And if you talk about the digital, well, anyone could be any age.

So, I flag age because if you’re looking for a richer gene pool, you need to consider this as well as broadening candidate profiles.

HOW IMPORTANT IS IT FOR CANDIDATES TO HAVE PRIOR BOARD EXPERIENCE?

Everybody wants very experienced company directors, so not only are they capable, you know they have sat on a number of boards and have governance experience. But if you’re not prepared to bring in people who have the skill sets, capabilities and right character but who have not sat on boards – if you’re not prepared to bring in one or two of those – how are you going to grow the universe?

We’ve happily taken on people at Singtel who have not sat on a listed board before. And yes, they’re smart people; they’ll get it in five minutes. That’s the least of your worries.

“We make a point of having one female director on our Nominations Committee. Search firms who conduct our global search are required to present female candidates alongside males. Don’t come back to tell us ‘there’s no women out there’.”

WHAT PRACTICAL STEPS DO YOU TAKE AS CHAIRMAN OF SINGTEL TO ENSURE YOU HAVE A DIVERSE BOARD?

The starting point is that we build a board’s needs matrix – which most boards do – skill sets and capabilities change over time as your strategy changes.

Then we do a global search for directors. We make a point of having one female director on our Nominations Committee. Search firms who conduct our global search are required to present female candidates alongside males. Don’t come back to tell us “there’s no women out there”.

The nominations committee is required to consider the female candidates along all the others. We rank potential directors based on what they bring to the table, vis-à-vis our needs. We often find many women in the top 10. So the talent is out there if you are prepared to look for it.

HOW SHOULD COMPANIES GO ABOUT BUILDING A STRATEGIC BOARD?

When you build a strategic board, you need to cover the critical functional skill sets that you should have on a board. So, accountants and lawyers provide valuable perspectives around big decisions. Then you need to have a few people with what I would call domain expertise, and preferably domain expertise around where you’re going as opposed to where you came from. Is this board fit for purpose, and is this board built to really support the strategy of the company?

At Singtel, each year we have a strategic retreat with management. From this, we align on a strategic mandate for management to take the company forward.

So from this clarity of strategy, we ask ourselves, is our Board capable of supporting the strategy? Do we need to add different skill sets?

They are not just doing a job, they are highly engaged. They see that the company’s success is their success.

APART FROM LOOKING FOR DIRECTORS WITH THOSE SKILL SETS, WHAT OTHER QUALITIES SHOULD THEY HAVE?

You need people who bring a high degree of intelligence and curiosity, are interested in the industry you’re involving them in, and are quite passionate about it. They’re not just doing a job – they’re interested, they want to learn, they want to grow and they want to engage with people. They see that the company’s success is their success.

They are the kind of people who are very good at managing interpersonal relationships, have good EQ, and are able to build chemistry, but they’ve got intellectual honesty and integrity and they’ll ask the difficult questions when the need arises – and they’re willing to have a robust debate. That’s the kind of board you’re trying to build.

So character and personality weigh very, very heavily, as does the motivation of someone to become involved in the board.

WHAT IS THE IDEAL NUMBER OF WOMEN ON A BOARD?

Being the only woman on a board is a lonely role; two is helpful and three changes the dynamic for the better. But I want to be clear that it’s not about women per se. To me the starting point – and I think any woman would agree if they’re invited to join a board – would be merit. Gender is a secondary issue. But having said that, I think there is a lot of female talent out there that isn’t being tapped because of conventional beliefs, which in my view are somewhat flawed.

“One issue I see, and it’s a personal view, is that too many boards still have a stereotyped image of a company director … If you’re prepared to look at a much broader profile of what talent could be – and this equally applies to men – you’ll find that the gene pool is much larger than you think. That’s been our experience.”

ARE THOSE CONVENTIONAL BELIEFS STOPPING CHAIRMEN FROM LOOKING FOR MORE DIVERSE CANDIDATES TO BUILD THEIR BOARDS?

It’s dangerous to generalise. There are very progressive boards, and there are other boards that are very set in their ways – they have their own comfort zone and are not prepared to budge. But you could have progressive boards which are looking for talent say they can’t find the right people because their profiles, just maybe, are too narrowly defined. If you’re prepared to have a much wider profile of what could bring diversity to the board, the gene pool is much bigger than boards probably think it is.

EXECUTIVE SEARCH FIRMS COST MONEY. WHAT DO YOU SAY TO COMPANIES THAT AVOID SPENDING MONEY ON SEARCHING FOR DIRECTORS?

Well, that’s kind of ‘penny wise, pound foolish’. Personal networks can obviously deliver recommendations and they should be included. I’m not against that. But the trouble with this kind of personal network approach is that you end up with a whole bunch of very like-minded people who are very comfortable with each other, and there’s a risk that they’ve got personal relationships outside the company. Are they really prepared to rock the boat? Are they really going to disturb all their friends?

I’m not so sure. But that again is a dynamics issue. To me the whole idea around search is, how do you know what’s out there if you don’t look?

WHAT ROLE SHOULD INVESTORS PLAY IN PROMOTING DIVERSITY ON BOARDS?

Institutional investors are big on this in Europe, and to some extent in the US. But they don’t seem to be big on it in Asia. It’s hard to make progress on this if you don’t have the investor base pushing for it.

SHOULD THERE BE QUOTAS?

I’m personally not in favour of quotas. I think you run the risk that people fill up seats to meet quotas – and you really risk undermining the intention of the outcome you’re trying to achieve.

From a woman’s standpoint, you don’t want to feel that you got a seat at the table because someone has to fill a quota. And you always have that deep suspicion that you’ve been invited because there is a quota to be filled.

So I would like to see boards encouraged on diversity and gender diversity specifically. As a first step, let’s require boards to articulate their policy towards this and as a second step, set their own objectives.

If we can’t get traction, then perhaps it will require further regulatory intervention.

SOME SAY PROGRESS IS SLOW IN SINGAPORE. HOW MANY WOMEN DIRECTORS ARE ENOUGH AND WHAT TIME FRAME IS FAST ENOUGH?

Boards need to accept for themselves that women directors strengthen boards and governance.

It should be a regulatory requirement for boards to set out their policies and objectives around this. This will build the commitment and momentum needed to get to say, around 15 per cent female representation within 5 years, a number which is realistic. My preference would be a more ambitious target of 20 per cent and this is something we can reset as we progress. I am not in favour of quotas, which I view as a last resort.

For more interviews with board chairmen and directors, please see DAC’s report ‘Speaking with the Boards‘.

Speaking with the Boards‘ is a supplement to DAC’s report ‘Women on Boards: Tackling the Issue‘ launched in October 2016.