Media Clips

BusinessWorld 

(Manila, Philippines)
September 17, 2008 |
The fish rots from the head
By Mercedes B. Suleik
The title is borrowed from the title of a book, The Fish Rots from the Head — The Crisis in our Boardrooms: Developing the Crucial Skills of the Competent Director, by Bob Garrat. The book basically distinguishes between "directing" and "managing" and emphasizes the four basic functions of the board: policy formulation and foresight, strategic thinking, supervision of management, and accountability.
It discusses the development processes for boards and directors. It emphasizes the crucial role of the board and directors in the success or failure of their corporations, so that in the event the latter occurs, it is simply because "the fish" had begun to "rot from the head," as proven by the humungous failures in corporate America and elsewhere. These debacles sparked the crusade for reforms in governance.
In the Philippines, the Institute of Corporate Directors (ICD) is leading this crusade, and in its advocacy, has developed a program for instilling a basic understanding of the functions of a board and its directors, which may be considered in two aspects: their performance functions and their conformance functions. ICD has just conducted its 18th Professional Directors Program (PDP) with 19 participants completing the five-day intensive training course on corporate governance. ICD started as a project of the Foundation for Community Building in the Asia-Pacific region. It is now a separate, not-for-profit corporation working in close partnership and in sharing reform interest with the Securities and Exchange Commission (SEC), Philippine Stock Exchange (PSE), Bangko Sentral ng Pilipinas (BSP), Insurance Commission (IC), government-owned corporations and government financial institutions (GOCCs/GFIs), as well as family-owned companies and other business.
ICD is for corporate directors with professional needs and requirements related to their serving as members of a board of directors in corporations and other institutions vested with public interest. It is directed and governed by corporate directors acting in their individual capacity and serving to keep the institute open, autonomous, and independent of specific political, business, and other interests. It helps to promote corporate governance reforms in the Philippines.
ICD provides orientation and training in all aspects of the practice of corporate directorship. Its training program includes the knowledge, skills, and values demanded by modern corporate governance, extending to corporate ethics and an appropriate culture promoting responsible citizenship. Aside from the orientation program (as required by the country’s regulatory authorities), which comprises the introductory part of the PDP, there are four modules that cover Strategy, Policy, Monitoring, and Accountability. Lectures, workshops, and case studies are covered in the intensive training program, at the end of which the participants that have completed these, are given an examination and eventually subjected to an interview. Completion of the last two qualifies the participant, who is then inducted into the ICD as a fellow.
ICD also stages regular, institutional events that address the changing and dynamic needs of corporate directors, in many instances as partners of or cooperating with the Organization for Economic Cooperation and Development (OECD), the Global Corporate Governance Forum, and the International Corporate Governance Network on improving actual boardroom practices, also working closely with Yale University’s Ira Millstein Center for Good Governance. In April last year, ICD hosted the second Roundtable on Corporate Governance, the first having been held in Singapore where ICD presented its initiative on the Corporate Governance Scorecard of select state-owned enterprises (SOEs), or in our parlance, GOCCs/GFIs. In fact, prior to this initiative, the ICD had started the development of a Corporate Governance Scorecard for publicly listed companies (PLCs), and has already conducted three such surveys, projecting Philippine PLCs that observe good corporate governance. The third "honors list" released in January this year after a Working Session in Samal, an island off Davao, on November 2007, named 20 PLCs as the "top" corporations buying into the concept of good corporate governance.
ICD has entered into a formal agreement with the SEC, the PSE, and the Ateneo Law School, which together trained their sights on ICD’s main constituency, namely, the PLCs, and embarked on the Corporate Governance Scorecard which it launched in 2005 and 2006. In fact, the 2007 scorecard had the SEC and PSE whose jurisdiction and oversight relate to the PLCs — actively involved, thus strengthening and assuring a wider participation. The involvement of these two institutions in ICD’s Corporate Governance Scorecard initiative is a significant step from mere words and compliance into more actions and solid performance, i.e., "moving away from principles into actual practices."
ICD also has taken steps to also ensure the active involvement and leadership of ICD fellows through the creation of the Companies Circle and the Chairmen’s Circle. The first "circle" brings together the officers directly tasked to ensure that corporate governance practice in the companies they work in is fully aligned with best practice. They come together to compare notes, learn from one another, and agree on standards of professional practice, including ethical practice. The second "circle" brings together a few select chairmen/women of PLCs who are committed to raising the bar of actual observance of corporate governance principles in the boardrooms they preside over. A third "circle" is also being organized to institutionalize the important role of corporate secretaries and compliance officers who directly serve the board of directors.
These reinforcing steps are hand in glove with the Corporate Governance Scorecard, as the ICD, in its most recently released scorecard, emphasizes the importance of going beyond mere compliance into "performance." Properly performing boards will ensure that their companies will not be like the "fish [that] rots from the head."