The Importance of Board Meeting & Participation
After having served on boards now since 1987 when I completed my ‘Company Directors’ course. I know all too well that running and contributing to board meetings is something that requires considerable thought and input.
In an endeavour to project the importance of board outcomes, I thought it prudent that I highlight some points to get current boards to think about. Not only about corporate governance, but about a simple focus of not losing sight of what the real purpose of the board is.
I have heard people say, yes we have a board which meets monthly, however we are different. Why, I say? Their answer is, because we are a NFP organisation or a voluntary organisation. My answer to all of these excuses is simple. If you have a registered business name you are bound by the corporations act. Apart from any of this you have a moral and ethical obligation to comply with business principles.
The primary purpose of any board is to create wealth. Be it financially and/or human resource wise.
At this juncture I would suggest each board looks at the skills you have on the team giving consideration to the ever changing and dynamic demands of the market you are serving. There will no doubt be a few gaps and overlaps which is acceptable providing each of these form a cohesive ability to bounce off each other and reach the most productive outcomes.
It is no good to pick board members in isolation. You need complimentary skills and people who can work together. The mix of characters on the board must clearly have a big and influence on its effectiveness.
The most effective boards that I have had the pleasure of serving with are creative in their own rights and set themselves up with the following performance criteria:
- Establish a business strategy which is assessed regularly against all objectives
- This strategy must maintain a clear policy on relevant operational issues
- Establish a clear succession plan throughout the organisation
- Establish an exit plan for the organisation
- Establish KPI’s and measurement for all executive decisions
- Ensure the organisation meets all relevant compliance issues in every operational aspect/department
It is so important to be aware that even if you are fortunate enough to have a board of hugely shrewd members, it is still imperative to get and maintain the true perspective, and work to the ‘Strategic Business Plan’
Another critical area relates to the decisions made on major capital investments. There must be an appropriate best practice ROI including a risk assessment which justifies the expense followed by a post investment audit.
Another important aspect of a successful board is to ensure you engender an atmosphere of energy, purpose, seriousness and trust. This would usually be precipitated by the chairperson. Board meetings must be serious but enjoyable. It must also be remembered that every decision made must also be viewed through a prism of potential litigation. This is where an effective risk assessment analysis is essential on major decisions.
Increasing globalisation also creates a need for boards to update working practices so that the decision making processes remain cost competitive where the financial reporting picks up moving trends in wages, overtime, overhead costs, sales and even absenteeism. All of these areas, plus others will affect the true cost of the business.
A well-oiled board will also give all people involved in the preparation a true sense of accomplishment through structured communication. Appropriate consultation is critical. The more people you listen to who have useful knowledge on the subject the more likely your success as a board. You will also gain more commitment and cooperation for your plans if people have been involved in helping to form it.
There will be occasions that arise when you need to seek outside advice from experienced consultants who have no pre-conceived ideas, but more so can address a situation through a fresh pair of eyes.