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Asia trails in promoting digital-savvy directors

Published on Friday, 14 Jun 2013
Tuck Rickards
Rhys Grossman

Even though it is nearly impossible to find an Asian company these days that doesn’t have a digital strategy of some kind in place, publicly listed Asian organisations are noticeably lagging behind their US and European counterparts when it comes to appointing digital-savvy directors to the boardroom.

A survey of 300 companies from the Fortune 100 and Global Fortune 500, assessed by executive search firm Russell Reynolds Associates, revealed that 18 had highly digital boards – i.e. three or more members with a strong digital background – and 69 had some digital representation, while 210 had no board members with digital experience. The survey examined the digital experiences and knowledge of 3,307 directors in the three regions.

By far, the largest number of highly digital boards – 88 per cent – is found in the US. In Asia, none of the 100 largest companies were found to have a highly digital board, and only eight companies had at least one digital board member.

Rhys Grossman, a London-based leader in Russell Reynolds’ digital transformation practice, says defining a digital-savvy board member is based on either holding a senior digital role or having significant operating or board experience at a digital company.

“There is no shortage of suitable tech-savvy board talent in Asia. It is more a case of how boards are structured,” Grossman says. For example, he adds, many Asian companies are family-owned and tend to appoint family members and friends to the boardroom. In many parts of Asia, companies are still addressing the role of the independent director.

“Independent directors are a prerequisite for being able to think about board composition in a strategic way. In the US or Europe, appointing an independent, tech-savvy board member is a relatively small incremental development, but in Asia, appointing such a board member – especially a tech-savvy person – could be a big incremental change,” he says.

The Russell Reynolds survey says that in Europe last year, the percentage of new board members with digital backgrounds more than doubled to 5 per cent, and is slated to rise to 8 per cent in 2013. In the US, such appointments are projected to rise to nearly 20 per cent this year, from a base of 15 per cent.

Despite the lack of tech-savvy board members in Asia, Grossman stresses that the issue is far from being black and white. “The situation should not be misread. Many Asia companies are being led by executives with a greater understanding of technology within the senior ranks,” he says.

He explains that compared to some Western companies, in Asia there is often a higher level of both digitalisation and receptiveness to digitalisation. “In some cases, executives in Asia are closer to the digitalisation processes,” he says.

As Asian companies ramp up their digital strategies and tactics, Grossman believes they will increasingly appreciate the value of recruiting tech-savvy board members.

“While recruiting a director with digital acumen will not necessarily transform a company’s digital capabilities, they can ask key questions and provide advice to help steer the processes in the right direction,” he says. He adds that he believes Asian boards will eventually follow the US and Europe, although not in the short term.

Tuck Rickards, partner at Russell Reynolds and another leader in the firms’ digital transformation practice, says that as executives focus on the task of building digital capabilities, scrutiny and support from the boardroom can help them implement a workable digital future.

“The question should be, why wouldn’t you want digital-savvy directors on your board to strengthen your digital capabilities?” he says.

He also advises companies looking to add directors with digital expertise to their boards to consider executives who have successfully implemented digital strategies in non-digital firms, or who have accelerated digital transformation in a non-traditional niche.

Companies that are proactive and serious about their digital commitments soon understand the need to extend their digital commitments to all levels of management, including the boardroom, Rickards continues.

As non-core digital Asian companies, including retailers, finance firms and service companies, explore ways to exploit digital possibilities, Rickards believes they can also benefit from the addition of tech-savvy board directors. “These people can bring a wider corporate perspective to the board for companies looking at their marketing activities and adding digital processes into traditional functions,” he says.

In the US, he says there are several examples of companies who have recruited tech-savvy directors even though their core operations are non-digital. These include Wal-Mart, Berkshire Hathaway, Procter & Gamble, FedEx, Coca-Cola, Allstate, and American Express.

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