Date: 29 June 2018
Venue: The Carlton Hotel
Empress Ballroom 5
76, Bras Basah Road
Singapore 1896558


Opening Address:

Prof Robert Kennedy
Nanyang Business School


Corporate Culture and Governance of Japanese Companies
Mr Kazuhiko Toyama, Managing Partner, Industrial Growth Platform Inc.

Governance and High Performance Culture in Financial Services
Ms Arundhati Bhattacharya, former Chairman, State Bank of India

Governing and High Performance Culture in Energy Services
Dr Arup Roy Choudhury, former Chairman and MD, NTPC Limited

Corporate Culture and Governance: The Role of Leadership
Mr Philip Forrest, Council Member, Singapore Institute of Directors

Corporate Culture and Governance: The Role of Stewardship
Mr Ong Boon Hwee, CEO, Stewardship Asia Centre

Panel Discussion: Cultural Norms and Governance Code in Explaining Organisational Performance

Moderator: Professor Lawrence Loh, Director, CGIO, NUS Business School

Discussants: Ms Arundahati Bhattacharya, Dr Arup Roy Choudhury, Mr Philip Forrest, Mr Ong Boon Hwee

Event Summary

We are very privileged to have a distinguished panel of speakers at the conference and have provided a snapshot of the various presentation given at the conference. We would like to add that the event summary could not substitute for the rich content, knowledge and meaningful engagements at the conference.

Mr Kazuhiko Toyama: Corporate Culture and Governance of Japanese Companies

According to Mr Toyama, the number of Japanese companies among Fortune Global 500 has been declining steadily from 148 since 1995 to 54 in 2015 due to several factors. Firstly, Japanese companies are unable to innovate at a pace that matches the speed of globalisation. The problem is compounded by the strong emphasis on hierarchy leading to biased selections of male Japanese CEOs who tend to be above 60 years old.

Additionally, family businesses which account for more than half of the businesses in Japan are facing major issues due to their less than ideal governance systems. These businesses tend to lack board diversity where most of the board members come from similar socio-economic background. Favouritism towards family members may also cause poor decisions to be made, resulting in potential huge damage for the businesses. All these cultural, homogeneity and governance issues gets in the way of innovation and sustainable growth. It also means there is a lack of insights to new markets.

Mr Toyama sees the exercise of robust and critical corporate governance as key to transformation within companies. He recommended the separation of management oversight and business execution, and appointment of non-family member to key executive positions within family businesses. The talent pool should also be cast wider to include younger talents and foreigners during the selection of CEOs.

Ms Arundhati Bhattacharya: Governance and High Performance Culture in Financial Services

Ms Bhattacharya was the first female Chairman of the State Bank of India in. During her speech, Ms Bhattacharya shared her experience of working in the Public Sector Banks (PSB) industry, and there are several key points that were noted from her presentation.

Firstly, commercial institutions cannot be treated as part of the government. There should be a clear distinction between the government and these institutions. Thus, instead of interfering directly with the PSB, the government should put a structure around it.

Next, Ms Bhattacharya recommended that more power should be conferred to the board of the PSB. After the nationalization of the PSB, the board lost its power in management selection and goal-setting. Hence, there needs to be solutions such that the government can keep a controlling stake to drive their social agenda while giving more power to the board.

In addition, it was noted that risk management is not a dynamic process in the PSB. Instead, it is merely a box-ticking process which results in the failure of governance since most people look at the literal meaning of the law but not its spirit.

To conclude the presentation, Ms Bhattacharya emphasised that the management who succeeds in building a culture that respects risks and rewards innovation is most likely to exhibit high and sustainable performance.

Dr Arup Roy Choudhury: Government and High Performance Culture in Energy Services

Energy has always a part of the global agenda, and increasingly so. With issues on sustainable governance of all kinds of industry being continuously raised, corporate culture and governance has been a progressive point of differentiation for companies. In his hour- long session, Dr Arup Roy Choudhury, the former chairman and managing director of NTPC Ltd, unravelled frameworks of corporate culture and governance that deliver sustainable results.

Dr Choudhury elaborated on the stakeholder problems present in public sector companies with real life examples. He stated that the core to ensure high-performing operation is a clear separation of ownership and management. He then explored the framework of corporate culture that encompasses the various stakeholders; suppliers, employees, community and customers. For example, suppliers have payment and order expectations, employees have needs like security and motivation while customers anticipate excellent delivery from the company.

A good set of governance is also paramount to monitor the implementation of company policies. Since companies that don’t adapt to changes will become obsolete, regular review for adaptation is imperative. In India, the 5 Cs of Governance framework can be a good check for every company to have. The 5 Cs include Indian Parliament Consultative Committee, Comptroller and Auditor General of India, Information Commission of India, Central Bureau of Investigation and the Central Vigilance Commission. These organizations help to ensure sufficient transparency and opportunities within the company and that misconducts are avoided since they are governed by independent regulators.

Mr Philip Forrest: Corporate Culture and Governance - The Role of Leadership

Mr Philip Forrest provided insights on how board of directors (BOD) might influence a corporate culture through its leadership. By asking five powerful yet interesting questions, Mr Forrest outlined the possible approaches that BOD could take to cultivate a transparent, energetic and effective corporate culture.

To foster better corporate governance, the board could embrace openness to bad news and allow it to travel upwards. In other words, the board could establish an encouraging atmosphere which allows a more open discussion on any issue of concern. The board could also separate the line between performance and conformance to corporate governance. He also suggested BOD to consider holding management accountable to both. He added there is also a need to have the right balance between line and function.

Mr Forrest also highlighted that remuneration policies shall be aligned with the cultural aims. For instance, in a performance-driven culture, the link between performance and remuneration shall also be well defined. Lastly, it is important for the board to dovetail the corporate culture with stakeholders’ expectation and explore avenues to shape the corporate culture.

Mr Ong Boon Hwee: Corporate Culture and Governance - The Role of Stewardship

Mr Ong Boon Hwee led our final presentation of the day on the role of stewardship in culture and governance. He began with the importance of stewardship and its whys, whats and hows. Why does stewardship matter? Mr Ong gave six trends which point to its importance, as the notion of stewardship has never been more relevant to businesses than today.

  1. As ownership becomes more diluted, an ownership mentality becomes more critical.
  2. Complex investment value chains need responsible and engaged owners.
  3. A long-term perspective on the business is needed.
  4. Businesses require a purpose beyond earning profit.
  5. Governance has to be values-based and not about conformance.
  6. Businesses are not just about maximizing shareholders’ value.

Stewardship matters more than it ever has to businesses, particularly as businesses are facing increasing disruptive forces and challenges. Essentially, stewardship is a mindset and approach towards building a valuable business that lasts and having an inclusive approach towards this value creation. The view of business being a part of society and not apart from society was also espoused.

Mr Ong provided examples of stewardship in action, such as Mr Warren Buffett and the late Chinese leader Mr Deng Xiaoping. Mr Ong further introduced Stewardship Principles especially in the context of family businesses, where the founders have vested and long term interest in its sustainability.

In short, stewardship could be the central driving force for better corporate governance, cutting through cultural barriers. And stewardship should be the core behind every successful business and organization.

Panel Discussion: Cultural Norms and Governance Code in Explaining Organisational Performance

Moderator: Professor Lawrence Loh, Director, CGIO, NUS Business School

Discussants: Ms Arundahati Bhattacharya, Dr Arup Roy Choudhury, Mr Philip Forrest, Mr Ong Boon Hwee

Some key takeaways from the panel discussion:

  • The presence of stringent regulations and harsher penalties for lapses in governance will continue to pressure directors to ensure that information disclosed remains authentic. Such measure will also enhance risk management policies to comprehensively tackle risks.
  • Directors have to commit to act in the best interest of shareholders. This is important in light of the many scandals and fraud cases that are shaking up the business environment.
  • This is where stewardship comes into play. It is important to develop a responsive board and management team that is able to set direction in building a healthy company culture from ground up. As directors are held accountable to lapses in governance at all levels throughout the organisation, doing so would ensure good governance practices are applied throughout the organisation.
  • It is therefore imperative that top management implement systems that have quantifiable targets and realistic measures to better encourage participation from staff across the organisation. Indeed, some form of formalization in governance is necessary for the purpose of accountability; hence companies should not shy away from establishing incentivising governance policies to ensure that policies remain relevant and effective in tackling lapses.
  • Call to action: Directors must go beyond discussing about corporate governance best practices to implementing them. Taking action is crucial to ensure that the correct mindset is percolated down the organisation chain, to serve as a role model for the mid to lower management.