Nearly one in five board members in Finnish listed companies now foreign nationals

Still a severe shortage of boardroom know-how on China and Russia

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By Elina Kervinen
     
      Sooner or later, the subject of sauna is bound to come up.
      And it did so on this occasion, discussing Finnish corporate culture with a foreigner.
      "I didn't think it could possibly be true", says Lien Siaou-Sze, the director of a Singapore consultancy firm and a former senior exceutive with Hewlett-Packard.
     
On agreeing to take up a seat on the board of a Finnish listed company, she heard that up here in the north, board meetings often take place in the sauna suite at the company's headquarters.
      There would be tables, chairs, towels, and refreshments to hand, everything possible that might be needed.
      "Do you know if it's true? Do they really do that? It would be quite an interesting situation if I had to take part in that sort of meeting", says an incredulous Lien.
      Lien Siaou-Sze, who is on the board of directors of packaging firm Huhtamäki, is one of those 111 foreign nationals who this year occupy a boardroom seat and exercise power in large Finnish listed companies.
     
The share of foreigners in Finnish boardrooms rose at the spring's AGMs from 17.2% to 18.4%. The 111 foreigners compares with 491 board-members who are Finnish.
      The information comes from Helsingin Sanomat's annual survey that measures how the power is divided out in large listed corporations, and who wields the greatest influence around the nation's mahogany tables.
      Despite the increase, when one looks at the 30 most powerful boardroom mavens, it is nevertheless true that there is still only one foreigner to be found, the Nokia Vice-Chairman Marjorie Scardino, from the United States, who comes in at #27.
     
Lien Siaou-Sze found herself on the Huhtamäki board after having served on the board of directors of another Finnish firm, the metals and component manufacturing group Luvata.
      At that time she was the Asia-Pacific SVP for Hewlett-Packard Services, and shuttled between China, Malaysia, and the Indian sub-continent in her work. The news of Lien's broad expertise in the asian market spread, and the Huhtamäki Chairman Mikael Lilius invited her to Helsinki last spring.
      The eight-member Huhtamäki Board of Directors now includes one Singaporean director, two directors from the United States, and one each from Sweden and Belgium.
     
The first foreign board-member arrived in the early 1990s, and now they represent a majority around the table.
      Mikael Lilius makes no bones about the situation: it is natural, he says, since particularly the United States but also Asia represent important and growing market-areas for the company.
      A quarter of Huhtamäki's sales are from the U.S.
      Foreigners know the local business culture and the competition in their respective areas, which are often largely unfamiliar to the Finns themselves. This is important when one is for instance planning new strategies or considering acquisitions.
     
On the boards of the large Finnish concerns, there can currently be found representatives of 24 nationalities wielding power.
      The largest single delegation - accounting for 37% of the total and 41 individuals in all - comes from Sweden.
      The large share occupied by board-members hailing from our western neighbour is explained by the fact that the make-up of boards often refelcts the company's ownership. Swedes are well represented in firms jointly-owned between Sweden and Finland, for instance the telecoms operator TeliaSonera.
      Britons and Americans are also well to the fore. Both have ten seats on Finnish boards or around 9% of the total foreign complement.
      The large Finnish export market that is Germany means there are also six German board-members in the list.
     
On the other hand, the fast-growing emerging economies such as China and India are seriously underrepresented, with just one board-member each, and the same is true of Russia nationals.
      Russian Aleksey Vlasov sits on the board of Nokian Tyres, a company that does a good deal of business across the Russian border.
      The Board of Directors of Rapala, a global manufacturer of fishing lures, includes King Ming (William) Ng, the head of Rapala's Chinese manufacturing operations and Hong Kong office. Rapala manufactures lures in China.
     
Construction firm SRV is another that does a good deal of business in Russia and the Baltic States.
      According to the SRV Chairman Ilpo Kokkila, the company has nevertheless hitherto not sought board-members from these countries, even though they might be of real use to them.
      "If we were to do so it would certainly require a manifest change in board meeting practices", says Kokkila.
      Juhani Erma, the CEO of Hallitusammatilaiset, the Finnish Association of Professional Board Members, observes that getting a top-class professional to Finland is still difficult for some companies, in particular if they are seeking someone from far afield.
      "We are a bit out of the way here, which limits the growth in numbers", says Erma.
     
The logistics speak for themselves: Lien Siaou-Sze's trip from Singapore to Helsinki weighs in at around 14 to 15 hours. The visits always include an informal dinner on the previous evening, in addition to the board meeting itself.
      With return trips added in, a trip up here comfortably runs to three days, which is easily felt to be a bit much for a busy businessman or woman.
      "It doesn't bother me that much personally. I have been travelling around the place for twenty years in my work", says Lien.
      "Travelling is in any case often a welcome break from the hectic daily rhythm. I get the chance to catch up on things I've put to one side, to rest a bit, and even watch a movie. For me, this is a bit of a luxury, actually."
     
According to Mikael Lilius, Huhtamäki only resorts to telephone- and videoconferencing as a very last resort, if foreign board-members cannot make it.
      "The small talk and the discussions outside the boardroom itself are a significant part of the whole", he argues.
     
One way of snaring additional experience from growth markets is hard cash.
      The desire to expand operations internationally and globally has ben one reason for the sharp rise in companies' payments to board-members in the early years of the new century.
      Lien earns EUR 45,000 annually for her contributions to the Huhtamäki board, and in addition receives a fee of EUR 500 for each of the six meetings a year.
      This is appreciably more than the median figure for rank and file board members in Finnish listed companies, which is in the region of EUR 35,000.
      "If we want foreign members on our board, it is important to take account of the fact that they must be paid a suitable compsensation for their work", says Mikael Lilius.
      He stresses that it is possible to find international expertise easily enough, especially if the company has contacts. The present foreign members of the Huhtamäki board were tracked down through the company's own networks, and without recourse to the services of headhunters.
     
     
Helsingin Sanomat's survey of board-members indicates that little has changed at the top in terms of those who exercise most power. The Sampo Board Chairman Björn Wahlroos, who is also Chairman of UPM-Kymmene and Vice-Chairman of Nordea, once again collected the greatest number of "power points", ahead of the F-Secure founder and Chairman Risto Siilasmaa, who also chairs the board of Elisa and is a Nokia board-member.
      The top woman in the list is Maija Liisa Friman, Vice-Chairman of the Board at Metso and a member of the boards of TeliaSonera and Neste Oil.
      The scoring methods were based on whether the individual was a chairman, vice-chairman or member of the boards, and on the size of the companies' market valuation (see picture for details).
     
     
Helsingin Sanomat / First published in print 16.5.2010
     
     


Previously in HS International Edition:
  Sampo Chairman Björn Wahlroos is most influential figure on Finnish boards (11.5.2009)

ELINA KERVINEN / Helsingin Sanomat
elina.kervinen@hs.fi