The Power of the Governing Body Composition- Part 3

We would like to apologise for labelling our last article Part 1 instead of 2. In that article, we discussed the main aspects of the board composition such as diversity, equity, and inclusion ( DEI) of all stakeholders of any organisation.

We further discussed the effect of legislation and corporate governance in the composition of the governing body. In addition to the effects of legislation and corporate governance on the size of the board, there are other socio- economic considerations driven by the dynamics of boards and other self- interest agenda peddling issues.

Some of the ‘ isms’ of nepotism, cronyism, favouritism, etc. may also play out in the board composition. A lot of these factors, if not identified and properly addressed may cause serious conflicts of interest.

In this article, we will further discuss how factors influencing the board composition and DEI manifest in the practical situations. One of the virtues of the board composition and DEI is the independence of directors irrespective of the nature of their appointment and relationships.

Independent directors approach the issues in the discussions in board meetings and other fora with independent minds which drive and distill the issues to diverse points of view.

The discussions are permeated by directors challenging one another which results in reaching the consensus ad idem or agreement of the parties involved. As stated earlier, the independence of the board can be enhanced by its composition comprising a majority of non- executive directors more also of which are independent.

In addition to the non- executive directors, the board should at least appoint two ( 2) executive directors comprising the Chief Executive Officer ( CEO) and Chief Financial Officer ( CFA) or Chief Operations Officer ( COO) to enhance the employees’ relationship as well as facilitating effective and equitable sharing of information with all directors for effective decision making ( King IV Report, 2016). Diversity of directors- to be effective and ethical, directors should be diverse in many respects including knowledge, skills, experience, age, culture, race, gender, and ethnicity. Knowledge, skills, and experience should also be diverse to bring different perspectives to the boardroom.

Therefore, this serves to remove the dysfunctionality of bifurcation of qualifications and consequently advocacy for supremacy of certain professions at the expense of others without any equitable evaluations. Age, culture, race, gender, and ethnicity, further brings rich and value- added dynamics of the board which enhances knowledge, sympathy and empathy of different tribes, races, and cultures of various societies. These also enhance the virtues of international business and multinationalism of corporations. All these factors add to ease of doing business in many nations and hence the development of international trade. Mentorship and succession planning facilitates a progressive organisation to appoint at least one member of the board who is completely new as a director. In other words, the company should waive the prior requirements of the experiences of such directors. These are the directors who could be handy to enable the company to anticipate the disruptive and rapidly changing environment due to the fact that they have acquired suitable qualifications for the modern environment. However, the caveat ( warning) to nomination committees and other human capital recruitment agencies should be aware that the hunt for a new director who never served on the board should be done in context.

His or her assessment should not be conducted based on technocratic skills, competencies, and experiences. Committees must look for strategic visions, the ability to think laterally, being able to learn quickly, and the capability to exert influence by working through others ( SpencerStuart, nd).

There are also basic soft skills for the purposes of blending directors’ skills to enable them to work as a collective, for example, they require skills ( which are to work on prospective directors’ character and temperament including his or her background) and key attributes such as: selfawareness, emotional intelligence, interpersonal skills, intellectual approach to directorship issues, integrity, independent- mindedness, inclination to engage, etc. If directors are not offered these unifying skills and competencies, they are likely to fail in executing their oversight role. They are likely to be too big for the management and therefore making one- way communication in the form of issuing instructions in a disrespectful manner to everyone in the organisation.

These are the type of directors who believe they cannot stoop that low to meet with ordinary staff members. They will never share buildings lift and transport with staff members.

They will deprive members of staff of mere greetings in the corridors. To compound the situation, they will compete with senior managers who share some basic qualifications with them.

During my invitation to one organisation in South Africa to attend their strategic plan and board meeting, one of the directors invited me to accompany him over the weekend to assist management to complete the accounts.

In response, I advised him to instead give them support to do the work themselves. In the next article, we will be continuing this topic. We thank our readers for their continual feedback.