The board of directors occupies a curious place in a company's hierarchy. As office holders appointed by the shareholders, directors make decisions for the company and take accountability for business outcomes, but they aren't subject to the same talent management processes as employees who - like the C-suite - also make decisions and hold accountability for the results.

What that means is, organisations can't necessarily ensure that their board of directors is consistently future-ready. And in times of accelerated change, this poses a challenge.

"Think about how the world is evolving. You can't say that the way that you think about directorships is the same today as compared to 25 years ago," says Terence Quek, CEO of the Singapore Institute of Directors (SID).

"Directors need to constantly upgrade themselves in terms of skills and knowledge. There are so many competing demands. Ultimately, you need to make the best decision at that point in time, given all the information that you have, to ensure that your organisation's value is preserved. But not only that, you need to enhance that value."

A competency index for directors?

With Budget 2025 coming up, SID and KPMG in Singapore jointly released a set of recommendations including the creation of a National Leadership Competency Index aimed at tracking leadership performance - specifically directors' performance - across industries. The point, said SID and KPMG spokespersons, is to create a consistent approach towards leadership selection, development, and evaluation.

"The challenges that businesses are facing today are very multi dimensional, very complex, very cross border, and it is clear that businesses need stronger leadership to be able to navigate the environments in which they're operating," said Ajay Kumar Sanganeria, partner and head of tax for KPMG in Singapore. "If there's one benchmark available that everybody could refer to, it brings more consistency."

This particular proposal follows SID's 2024 launch of a director accreditation programme, which introduced a formal model for upskilling directors based on eight domains of knowledge that the institute believes directors should have.

However, SID's accreditation programme is not mandatory, although the Securities Investors Association (Singapore) has called for it to be made compulsory for all first-time directors. Tracking directors' performance via a national index may be an alternative path to help companies navigate what competencies their board of directors is missing, said Quek.

Is directorship becoming more of a profession?

Whether or not being a director is the same as being in a profession - accountant, lawyer, or doctor for example - is an ongoing conversation, said Quek. But it is something that holders of the office need to take very seriously, he pointed out.

"If directors don't do the right thing, lives and livelihoods are impacted, not just the organisation," he said. "And even if directors have been practicing their responsibilities, I think it's important to articulate key areas so that we can then zoom in and identify some of the verticals where directors need to constantly polish their skills."

Plenty of directors do take the office as seriously as they would a certified profession, he added:

"We do have directors who feel that being a director is important enough for them to be professional in their craft, and therefore they voluntarily step forward to take exams, to put themselves through rigorous evaluation, and subject themselves to continuous professional development hours."

SID has accredited over 1,200 directors since the launch of its programme, and more than 100 of all directors appointed to Singapore-listed companies in the last year hold its accreditation.

And can we motivate more directors to be more professional?

Currently in Singapore, board performance and quality of corporate governance are benchmarked mainly through awards. The most prominent is the Singapore Corporate Awards, which SID organises together with the Institute of Singapore Chartered Accountants and the Business Times.

The performance of CEOs and other individual executives is also benchmarked in multiple ways, ranging from business performance to share price to awards to cross-industry performance assessment tools.

But when it comes to directorships, the recently launched accreditation is currently the only formal mechanism to benchmark the performance of individual directors. The alternative, of course, happens when that performance is poor enough to result in a high-profile business failure - by which time it is too late to discover that one or more directors lack the competencies needed to do their job.

One thing that a national competency index could provide, therefore, would be the option for a board of directors to look at their collective skill sets, hold it up to a nationally endorsed set of recommendations - or even a 'best-in-class' model profile - and identify what gaps exist.

And, as would otherwise be done for employees or executives, the board could then send sitting directors for upskilling or otherwise find ways of augmenting its composition, with an objective basis for its actions.

"From our institute's point of view, being a director means having to be professional," said SID's Terence Quek. "And being professional means, at the end of the day, you have to be a champion of knowledge. You have to have the skill sets and you have to discharge your responsibilities in the right way."