The role of the board in defining the purpose of the organisation | Gill Meller, Legal & Governance Director MTR Corporation

The Better Boards Podcast Series

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Organisations face ever-increasing scrutiny, and their purpose beyond making monies for their shareholders matters more than ever. In a previous podcast, we discussed Generation Z. For this younger generation, corporate purpose matters even more. So in this podcast, we explore the role of the board in defining the purpose of the organisation, and the importance of aligning purpose with the strategy and culture.

Dr Sabine Dembkowski, Founder and Managing Partner of Better Boards, discusses the role of the board in defining the purpose of the organisation with Gill Meller. Gill is the Legal & Governance Director of MTR Corporation, a company headquartered and listed in Hong Kong, responsible for the construction and operation of the Hong Kong metro system and the development of transit-oriented communities.

"Profits are simply the result of the activities that you carry out"
Gill believes that corporate purpose is incredibly important because understanding your purpose means understanding why the organisation exists and was established. Corporates have to be financially sustainable, but she argues that profits are simply the result of the activities you carry out, and they are not in themselves a purpose. Gill feels that knowing and understanding corporate purpose is important for two main reasons. Firstly, a corporate purpose gives people, something to "get behind." In particular, Gen Z employees tend to want to work for a company whose purpose they feel makes a positive contribution to the world. Secondly, she explains that purpose gives you a "guiding star" when trying to make difficult decisions.

"What sort of problem were we designed to try and address or help solve?
Gill believes the role of the board is critical. Following changes in Hong Kong's stock exchange corporate governance code last year, the board's role was enhanced, explicitly saying that a company's purpose, values and strategy should be established by the board and aligned with the culture.

"Culture is incredibly important, as is aligning your culture with your strategy"
Gill believes it is important to try to establish alignment between purpose, strategy and culture. She sees culture as a crucial part of corporate governance. She feels that in today's world, where compliance is no longer enough, companies are now expected by a broad group of stakeholders to be doing the 'right thing.' Unfortunately, stakeholder perceptions of what the 'right thing' is can change very quickly. The culture needs to be agile enough to respond to those changes.

"Sometimes people are uncomfortable with raising bad news"
Gill feels certain aspects of culture probably benefit every company, such as a 'speak up' culture or an agile culture that can respond to changes in the external environment. However, she notes that creating a 'speak up' culture is a challenge, especially within the Asian culture, where organisations are predominantly hierarchical. People can feel uncomfortable raising bad news up the chain of the organisation, so she advocates repeating the message from a cultural perspective that this is what is needed.

The three top takeaways:

1. Ask questions about the purpose of the organisation and seek to understand it to really get to the why of the organisation.
2. Challenge yourself, and ask yourself whether strategy and culture are aligned with purpose, and if not, what you can do to try and seek that alignment.
3. Do not underestimate the role of the Company Secretary or the governance professional in addressing some of these challenges.
4. To add a fourth takeaway, getting these things right takes time and investment, but if you can get it right, it c