Why good boards fail: part 3

Each month, Jan Bladen takes us through one of the top 10 rea­sons good boards fail and how to im­prove your chances of sur­vival

Gulf Business - - CONTENTS -

MANY BOARD MEM­BERS have dis­creetly told me over the last few months that they are dis­grun­tled with cor­po­rate gov­er­nance speeches, events, elec­tive codes, new rules and the con­stant com­plex­i­ties of en­sur­ing their boards and or­gan­i­sa­tions com­ply.

A board chair­man told me re­cently: “It’s too much, too fast, and I spend too much time wor­ry­ing about these com­plex cor­po­rate gov­er­nance is­sues.” He added: “Can’t this be boiled down into some sim­ple prac­ti­cal prac­tices and prin­ci­ples that could be eas­ily im­ple­mented by our board as a first step?”

This was the driv­ing force be­hind com­pil­ing this series of rea­sons why good boards fail – a prag­matic at­tempt to an­swer the board chair­man’s re­quest by dis­till­ing 10 sim­ple board­room prin­ci­ples for easy im­ple­men­ta­tion.

Based on per­sonal board­room and client ex­pe­ri­ences over the years, the fail­ure to im­ple­ment these prin­ci­ples is the main cause as to why good boards fail.

We have pre­vi­ously ex­am­ined the im­por­tance of hav­ing a ‘ board mix’ with an ap­pro­pri­ate va­ri­ety of skills, com­pe­ten­cies and char­ac­ter­is­tics; and why board mem­bers need to have ac­cess to the right in­for­ma­tion, at the right time, and at the right level of de­tail.

This month, we look at another key as­pect: un­der­stand­ing the nu­ances of your or­gan­i­sa­tion.

Prin­ci­ple 3: Not know­ing ‘the rules’

Ev­ery cor­po­ra­tion is unique. Un­der­stand­ing the cor­po­ra­tion’s con­sti­tu­tion, the ‘for­mal’ and ‘in­for­mal’ rules and the board and or­gan­i­sa­tional poli­cies, pro­ce­dures and pro­to­cols takes time.

I have yet to serve on two boards that are sim­i­lar – ev­ery board and ev­ery cor­po­ra­tion is sub­stan­tially unique.

At­tempt­ing to fol­low prac­tices and pro­ce­dures you know from pre­vi­ous board ex­pe­ri­ences may not fit the cul­ture and en­vi­ron­ment of the next board you sit on.

In a one-on-one in­ter­view with a new board direc­tor of an in­dus­trial/con­struc­tion cor­po­ra­tion, the leader de­scribed how he had his­tor­i­cally taken the habit of walk­ing around prior to board meet­ings; in­for­mal chats, a quick cof­fee with the CFO, a cou­ple of phrases ex­changed with the COO, a brief con­ver­sa­tion with re­cep­tion­ists. When he attempted this in a new, cul­tur­ally dif­fer­ent or­gan­i­sa­tion, he was fi­nally taken aside by a fel­low board mem­ber who ex­plained the cul­tural im­pli­ca­tions and the neg­a­tive per­cep­tion that his ‘con­stant spy­ing’ was hav­ing on the ex­ec­u­tive.

This was re­solved by sched­ul­ing for­mal ap­point­ments over cof­fee, and once the trust had been es­tab­lished, he re­ceived com­plaints from the in­di­vid­u­als who he may have missed hav­ing cof­fee with at sub­se­quent board meet­ings. He did, how­ever, learn a sub­stan­tial amount about the or­gan­i­sa­tion and its in­ter­nal ‘rules’ and work­ings, which hope­fully made him a bet­ter board mem­ber. Jan B laden is manag­ing part­ner of Gov­er­nance Creed, and qual­i­fied as the first ac­cred­ited board direc­tor of the Mud ar a In­sti­tute of Direc­tors( I oD) in Dubai. An in­de­pen­dent board mem­ber on sev­eral boards, B laden was for­merly the lead and se­nior ex­ec­u­tive ad­vi­sor to the board at A bu D ha bi Global Mar­ket( AD GM ), and the found­ing chief op­er­at­ing of­fi­cer of the Dubai Fi­nan­cial Ser­vices Au th or ity(DF SA ). Gov­er­nance Creed is a niche ad­vi­sory firm spe­cial sing in gov­er­nance frame­work de­sign, board per­for­mance, strat­egy de­vel­op­ment pro­cesses and cor­po­rate risk op timi sat ion.

At­tempt­ing to fol­low prac­tices and pro­ce­dures you know from pre­vi­ous board ex­pe­ri­ences may not fit the cul­ture and en­vi­ron­ment of the next board you sit on

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