Ever heard of a job description? To refresh your memory it consists of a piece of paper describing your job duties and responsibilities upon beginning employment. Job descriptions are generally used for every position, from entry-level to top managerial and board positions. In our ever-changing dynamic business landscape, however, job descriptions are becoming somewhat obsolete due to the constantly shifting environment where challenges and opportunities arise daily.
I have worked and continue to work with many Directors in Kuwait and across the region, interacting with them on different levels, and addressing their concerns as either board of directors, board committee members or both, and it is clear that the outcomes and messages tend to be consistent and in line with the results of the Director 360 survey.
Allow me to share with you the results of the “Director 360: Degrees of Progress” survey conducted by Deloitte. An analysis of the changing duties of a company’s Board of Directors and hence its directors was carried out, with the purpose of highlighting the effect of change on the roles and responsibilities assumed by board members. Nearly 300 decision makers were surveyed across 19 countries globally, and topics such as board effectiveness, as well as the issues, challenges and opportunities that boards face were covered, soliciting views from non-executive directors on a variety of corporate governance matters from board composition, regulation, risk oversight, and directors’ role in strategy, among other variables.
The results of the survey show on-going and substantial changes in both the global business environment and the roles and responsibilities assumed by board directors. It is more and more apparent that boards are not immune to shifts in their operating environments, and their roles continue to evolve in line with these changes. With change, however, often come challenges, and the importance of this year’s survey is that it brings the local and regional angle into perspective. Based on the interviews and interactions with the selected directors, it is clearer than ever that many Middle East companies are keen to follow leading practices in relation to key governance areas such as Risk Oversight and Remuneration.
Risk oversight was ranked a top priority for nearly every respondent and as a result, directors are placing significant focus on organizational strategies and business operations. Statistically, risk oversight considerations remain at the forefront of business decisions with 67 percent of survey respondents indicating they don’t expect the time devoted to risk oversight to decrease over the next couple of years. Instead, they are concerned that new regulations -adopted or planned – to protect investors’ interests may distract them from their current boardroom agenda. Interestingly, the use of the word “risk” in the UAE, Saudi Arabia, and Kuwait leading corporate governance codes has increased tremendously.
In line with the above, certain countries in the Middle East are promoting the concept of linking Remuneration to risk whereas prior remuneration strategies consisted of linking the former to performance; however, this policy is still in the infancy stage and its successful implementation remains to be seen.
Sustainability and corporate responsibility are becoming more important for boards with the growing pressure from both investors and stakeholders, and best corporate governance practices have become critical and indispensable to any company’s long-term success. It is only a matter of time before board directors find themselves spending more effort considering the wider impact of their business and reworking their job descriptions.
To read more please visit ‘Director 360: Degrees of Progress’.
By Rami Wadie, partner, Corporate Governance Leader at Deloitte Middle East