Making sense of business
STARTING POINT: YOU NEED TO HAVE A VISION
To create an effective board you must have robust, well-articulated policies and structures.
Organisations try to navigate the complex business environment of the 21st century. Even small businesses in many parts of the world are following this trend, with entrepreneurs in South Africa also warming up to creating an advisory board that would help them build a sustainable business.
Creating an effective advisory board for your organisation isn’t as simple as choosing a group of people to sit and serve as advisors. An effective board must be tailor-made to suit your business objectives.
And therein lays the first prerequisite of setting up an effective board.
You need to have a vision and a goal for your organisation and only thereafter can you create a board that will help you accomplish your vision.
A board must be set up in line with your strategy which subsequently dictates the personnel you choose to serve on your board.
For example, if your strategy is to expand into Nigeria, your board composition must possess individuals that have the skills to assist you with your expansion plan. You will probably need an individual who has the first-hand experience of the business environment in that region.
Or you may need an investment expert who could help you raise and structure investment or debt capital for your expansion plan. Your board composition must also be diversely balanced especially in gender, age and race.
An effective board stems from a difference of opinions which can only come from different people. Board diversity speaks to diverse skills, qualifications, experience and industry experts.
Thereafter, you must determine whether your potential board members will have the time to serve on your board.
It would be pointless if your board members are preoccupied with their occupations so much so that they cannot devote adequate time, effort and subsequent assistance to your business.
Remuneration is also a key item to consider. Board members are usually paid per meeting attended with each commanding a different premium. You must calculate whether the business has enough cash to sustain director remuneration.
Alternatively, you could look for volunteer directors, and there are many in the market.
Finally, to create an effective board you must have robust, well-articulated policies and structures.
Governance policies are critical because they set the tone for ethical culture, transparency, accountability and competency. All are critical in building a profitable and sustainable business.
Munya Duvera is the chief executive officer at Duvera Elgroup
A board must be set up in line with your strategy which dictates the personnel you choose to serve.
Munya Duvera
Explaining how to structure your advisory board