Directing vs Managing: What is the ultimate role of directors?

My interests in corporate governance started way back in 2003. I still remember the first day when I arrived at the University of Exeter, UK,to start my postgraduate program in Corporate Governance.

'You know what is corporate Governance?....You are taking a corporate governance course....You must know the art and complexities of corporate governance on your fingertips....Corporate governance is the lifeblood of corporations....Malaysia is a developing country....to be a developed country... corporate governance should be properly addressed.'

That's the first welcoming remarks from my supervisor, Prof. Dr . Paul Collier. Looking back, yes,...what he said is definitely true. Good practices of corporate governance is vital in enhancing shareholders' wealth, in building investors' trusts and confidence and attracting foreign investments. These practices should come from the top management and trickles down to the bottom. The chairman and CEO must ensure that they know their roles and responsibilities as Board of Directors.

But why board of directors of corporations, including GLCs are not practicing good governance? Is is difficult to adhere to the principles or they don't want to rock the boat? I believe that the shortcomings in poor governed corporations arise because of the overemphasis on managing( as they are professionals) and the consequent underemphasis on directing. A corporation needs effective management to keep its day to day operations running, but to ensure that it sustains itself in its long-term strategy, it needs effective directing too. Directing is essentially an intellectual activity. It is about showing the way ahead, giving leadership.It is thoughtful and reflective and requires completely different set of thinking skills.

Ask ourselves, how many of our board members, have had any training for their direction giving role, rather than their management role? In a survey conducted by the institute of Directors,ninety-two percent of board of directors in giant corporations ..said they had had no training or induction into their directoral role. As such, it is no surprise that most boards cannot spell out their main roles or tasks.

The key to good practices of corporate governance is a thoughtful and committed board of directors, not managers. The board must give a clear direction to the business and create the right climate in which its people can align and attune to that direction. It is the board's job to ensure that members are committed to a common purpose, with similar values and behaviours, so that the organization can function effectively and efficiently. Those who have the full understanding of a director's role are able to not only enhanced their shareholders' value, but also sustains it on a longer period of time.