Corporate governance can be improved if boards align with global best practices and focus more on diversity, independence, strategy and risk management, as well as digital transformation, said the GCC BDI in a new report.

Corporate governance can be improved if boards align with global best practices and focus more on diversity, independence, strategy and risk management, as well as digital transformation, said not-for-profit organisation GCC Board Directors Institute (GCC BDI) in a new report.

The GCC BDI’s 7th Board Effectiveness Report produced this year in collaboration with Heidrick & Struggles, surveyed board directors and C suite executives on corporate governance trends with a focus on the Covid effect.

The survey polled 113 board members from Bahrain, Kuwait, Oman, Saudi Arabia and UAE to identify the latest trends in board effectiveness, any underlying gaps and recommendations to effectively address any shortcomings to make private and public sector companies more competitive.

The findings indicate that family-owned firms and listed company boards need fresh perspectives. They need to bring in highly skilled people in strategy, digital technology, risk management and sustainability. The report also highlights the need to develop effective strategy, with 18 percent of respondents believing boards fail to devote enough time for strategic planning. Diversity, independence and a limited pool of suitable directors are also areas that lag behind other markets.

Jane Valls, Executive Director at GCC BDI, said: “We continue to provide support to GCC boards as Gulf countries share a growing awareness of the need to implement best practices that promote greater transparency, independence, diversity and oversight. At GCC BDI, we aim to work hand-in-hand with all boards – whether family-owned businesses, large private companies, listed companies or government entities - to provide the knowledge, skills and tools to reach and sustain effective corporate governance.

“This report signifies our commitment to provide practical and pragmatic solutions for the future. We are confident that the coming years will bring about positive change as board directors adapt to a competitive, dynamic and ever-evolving business landscape with new opportunities.”

The report also details lessons learned by boards which operated through the Covid pandemic: 61 percent of the survey’s respondents thought their board navigated the pandemic successfully, while 22 percent said they failed to manage it well but learned valuable lessons. Environmental and social issues will become a bigger priority moving forwards, with 88 percent agreeing that sustainability will help their board create long-term value. It comes after one in five respondents claimed environmental, social and corporate governance (ESG) is not usually discussed in board meetings.

To help board directors build and sustain effective governance, GCC BDI has recommended several ways to improve standards: hire more diverse board members, make strategy a board priority, set up regular board and CEO evaluations, and remain agile when it comes to sustainability and ESG policies.

Richard Guest, Partner-in-Charge of Heidrick & Struggles’ Mena, said: “As one of the founding organisations of GCC BDI, and as a premier provider of global board, leadership and organizational advisory insights, we are delighted to have partnered with GCC BDI on their 2021 Board Effectiveness Report. The region is going through an enormous amount of change and this is likely to accelerate. Boards therefore need to be ready and fit for purpose, and good corporate governance is the foundation stone.”

“The GCC BDI report sheds insightful findings on the progress of boards in the region”, said Markus Wiesner, Regional Managing Partner, Heidrick Consulting for Asia Pacific, Middle East, and Emerging Markets, at Heidrick & Struggles.

“Almost three-quarters of respondents shared that they do not have a formal succession planning process in place. Apart from grooming the incumbents, succession planning for boards will provide the opportunity to address diversity concerns, not just in terms of gender and ethnicity but in terms of experience as well. Bringing in new directors with different backgrounds will enhance board discussions and problem-solving by adding fresh perspectives, thereby improving their effectiveness.” – TradeArabia News Service