Unfortunately, every June at AGMs in Japan most investors approve the vast majority of director candidates –even first-time director candidates — without confirming whether they have ever received any form of director training to prepare them, or a “refresher” course on emerging issues and new best practices. Because of this, an increasingly large percent of directors in Japan have served less than three years (at least 30% in the case of outside directors!) in their very first director position, but have never even received basic training. METI and the FSA are starting to consider this as a major problem.
Serving as a director on a public company board is not the same job as serving as a lawyer, academic, or the head of global sales. It requires different knowledge, mindset and preparation. Raising PBRs, improving sustainability, DEI, and optimizing the business portfolio are not going to “happen” by themselves just because those topics appear in pronouncements and the press. They will only take root and consistently improve if the quality of Japanese boards increases. But right now, the average quality of boards is quite low, as can be seen from these excerpts of data from various surveys by METI… and this is in a market where outside directors (who on average, do not spend much time working at their job), are in the minority. (You may also be interested in the same document’s suggestions about the type of concrete questions investors should ask when engaging with Japanese firms.)
Investors: now is the best time to remind your portfolio companies that they should fill in gaps in director preparedness by getting all new or inexperienced directors trained using any of BDTI’s four courses and e-learning, and having their more experienced directors take one of our advanced courses, … especially, our new “Case Study and Role Play” course on July 24th.
Don’t let companies think that they can talk about developing “human capital”, but get away with not only appointing unprepared directors, but also not upgrading and training them… and that you will still vote for them again next year. Now is the time to tell them to focus on training the most valuable and potentially effective human resources they have.