After serving on various boards as an executive for over 40 years now, I am fully aware that the management and contribution made by each respective member is critically important. Not just in terms of the decision making process, but in ensuring all decisions are compliant with the respective corporations laws and add sustainable value to all operational aspects of the company.
I have heard on so many occasions, ‘but we are different, we are not like your normal business’ – How sad is this to have someone with a skewed perspective to even be on a board.
Members must never lose sight of what the real purpose of of their individual and collective purpose is on the board. The primary purpose of any business is to create sustainable wealth for the company which ultimately flows to all key stakeholders.
Although the environment in which a board operates may differ, but what does not change are the principles of corporate governance for getting the most out of the board.
Any organisation which is planning or in fact experiencing growth and are on the edge of something big must collectively understand the issues facing growth and more importantly the right people who can support the board in addressing these issues.
In saying all of this the most important challenge for a board is to have the right people who can contribute through personal achievement and success. People who have worked at the coal face, know that re-inventing the wheel must never be a part of the agenda and appreciate that business is not all about accountants controlling outcomes apart from financial matters.
Boards must know how to manage financials and in adverse results don’t knee-jerk recommendations to slash overheads if the P&L is not where it should be. Boards must know what goes into the bottom line and ensure they don’t operate in line with the ‘Quick Overhead Fix’ mentality.
Good Chairpersons will look at the skills they have in the present boardroom team and if the business is in rapid change will no doubt identify gaps which do not add value to the enterprise.
It’s certainly no good selecting people as board members in isolation. You must always select members with skills that complement each other and most importantly people who can work cohesively together.
The mix of people on a board will clearly have a huge influence on its effectiveness and understand what their individual and collective KPI’s should be:
- Have a supportive strategic plan and regularly assess its effectiveness
- Have and maintain clear policy on all operational issues
- Always have a succession plan in the organisation
- Arrange independent expert oversight for critical executive decisions
- Ensure the business is totally compliant in all statutory requirements and relevant corporation law