Snippets
KPMG uses "BEE" for board evaluation in M'sia
Focus Malaysia 11 Sep 2019 14:59

In an effort to revitalize the board evaluation process and elevate good corporate governance, KPMG in Malaysia has developed a Digital Board Effectiveness Evaluation (“BEE”) Tool, featuring configured questionnaires, automated reporting and built-in checks customized to each company.

Now, more than ever, board members are compelled to reflect on the way they govern, thus bringing to attention the manifold benefits that a robust board evaluation exercise can bring to bear.

“The development of the Digital BEE Tool stems from KPMG’s explorations in leveraging technology to improve efficiency in conventional practices,” said Kasturi Nathan, KPMG’s Head of Governance & Sustainability in Malaysia. “We recognize that the proliferation of technology still offers plenty of opportunities to streamline and inject novelty to the board evaluation process. It is with that reasoning that we have taken the initiative to provide companies with a methodical and user-friendly platform to enrich the board evaluation exercise.”

Driven by the growing appreciation amongst boards on the need to recalibrate their focus in light of the fast changing marketplace, companies have made tremendous effort in recent years to enhance their board evaluation exercises.

In the ‘Board Evaluation – Mutual Admiration or Thoughtful Reflection?’ report released in March 2019, KPMG noted that over 80 percent of Large Companies in Malaysia have conducted externally facilitated board evaluations or have put in place crystallized plans to undertake one in the forthcoming years. This is further demonstrated by the Corporate Governance Monitor by Securities Commission which reports that 81 Large Companies have applied Practice 5.1 of the Malaysian Code on Corporate Governance which calls for boards of Large Companies to engage independent experts periodically to facilitate board evaluations.

Kasturi notes that notwithstanding how the simple act of putting board evaluation on the horizon can create a ripple of change, the revitalization of the board evaluation process still hinges on synergy with other attendant governance procedures such as orientation and education programs, director nomination process, succession planning, and stakeholder engagement.

“All too often, the performance evaluation of directors is limited to judgments regarding a company’s financial achievements, or disappointments if any, of the previous year. Although important, such a limited view tends to dwell too much on the past, where little can be done to change the status quo. Boards should instead consider a balance of result-based and behavior-focused metrics in their assessment of directors. This provides a clearer picture when it comes to the board’s performance,” she added.

Companies that have optimized the board evaluation process are often well-placed to bring about systemic changes, leading to tangible governance and organizational outcomes. It’s to this end that KPMG’s Digital BEE Tool aims to bring.

To empower boards to govern effectively, this tool incorporates the following value-added features:

  • Data analytics – Score dashboard, trend analysis and repository benchmarking
  • Built-in checks – Detection of anomalies, mandatory fields and minimum response time
  • Customized questionnaires – Tailored questions based on first-hand boardroom and industry insights
  • Automated reporting – Thematic write-ups based on responses gathered
  • User-friendly interface – Personalized features, status progress indicator and export functionalities

Ultimately, the tool aims to iron out wrinkles that may be present in a conventional board evaluation exercise such as laborious manual tasks and elongated completion time, propensity of human errors as well as lack of insights generated. It can also serve to seamlessly tabulate results, surface insights from the responses gathered as well as generate visual aids and customized reports to help boards analyze and interpret the findings. The tool can be deployed for an in-house board evaluation or augmented with advisory services by KPMG practices to facilitate an external evaluation.

To learn more about how KPMG’s Digital BEE Tool enriches the board evaluation process, visit www.kpmg.com.my/BEE



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