Board, management relationship

CHAPTER 3 of the ZimCode addresses the board of directors and directors, and section 57 to section 60 highlights the conduct and responsibilities of the board, and in particular section 60 (d) which highlights that the board should ensure that ‘the performance of the company’s management is monitored and evaluated against set targets, complimented by an appropriate reward system in order to attract and retain talent’.

Sections 121 to 131 highlights the duties and responsibilities of chief executive officer and other executive officers and in particular section 122 highlights that in practice the company is run by management, thus the collective responsibility of management vests in the chief executive officer who bears the ultimate responsibility for all decisions and management functions.

The above denotes a functional relationship in which the board and management have to work together for the success of the company.

This working relationship requires the existence of clearly defined roles as shown in the above sections but more so putting these guidelines into practice so that there is no room for unnecessary interference.

Though the board oversees the decisions taken by the management and ratifies them along with acting as the final arbiters of the strategic direction and focus that the company is heading into, it does not mean that the management is considered a lesser partner. The relationship goes deeper than that. The relationship between the board and the management should be based on trust and respect.

A team approach in which they all strive to achieve the same vision and objectives is more appropriate than boss-subordinate one that can kill the team spirit.

There should be a clear mutual understanding of roles, delegations and boundaries which allows each party to respect the other’s responsibilities, contributions and expectations.

This is usually set out in the board charter, as highlighted in Section (56) but it needs to be translated into practice as the culture of the organisation.

This is the primary responsibility of the board chair to ensure that a culture of respect, tolerance, trust and mutual understanding is cascaded throughout the organisation as according to Section 119, paragraph (i,m, n) of the ZimCode.

The board-management relationship highly depends on the open flow of relevant and timely information in both directions.

Information asymmetry is often the major cause of unpleasant relations between the board and its management and efforts should be made to foster and maintain free flow of information.

This allows the board to trust management to implement strategy and deliver outcomes without undue interference and at the same time help management to accept that the board’s role is to monitor and question.

The board should be prepared to respectfully listen to its management. Considering that the management is much more deeply involved in the detail and operations of the organisation, board members rely on management to share in a timely manner all material information needed for decision making to allow them to effectively fulfil their obligations as directors.

The management is expected to ask advice and make use of the directors’ wealth of experience in various projects it undertakes.

For this reason boards and management must work together cohesively as a team with respect and candour.

It follows that when the management reports to the board, as indicated in section 119, paragraph (e), the meeting should not be reduced to a witch hunt.

Management should be allowed to make its contribution with confidence and clarity of viewpoint, and without undue interference and constraint.

If the board creates a hostile environment for the management, it becomes very easy for them to simply adopt the “mushroom technology”, whereby the board is fed junk and kept in the dark.

Therefore, the board should provide constructive criticism based on clearly defined milestones, at the same time recognising achievements and acknowledging it.

Management expects the board not to unduly meddle in operational matters although being respectful of the need for the board to delve deeply from time to time, especially if problematic trends are emerging and are not being resolved by management.

In this sense, leadership by the chair is critical in managing the relationship to meet the reasonable needs and expectations of both board and management.