How to make boards more effective
MOST organisations have boards predominantly made up of non-executive directors.
e board's role is to give strategic direction to the organisation, including oversight over the leadership and management. I have been on more than 13 boards in my career and learned a lot. I have been on boards of listed companies, the public sector, NGOs and organisations outside Zimbabwe. e challenge is the same; boards must provide leadership to the organisation.
In my experience, effective boards have board members who are very clear about their mandate. is means having board members conscious that their primary role is not to run the company but rather to lead it. Conflict can arise when the boards get involved in the day-to-day running of the business, which is the preserve of the CEO and their leadership team. As they say, the board must have "nose in and hands out".
e nose must be in to sniff how things are going without undue interference in how the CEO should lead the business. When there is no clarity on the board's role and management, the board becomes operational and, in the process, makes the board ineffective.
e above recommendation assumes that the board has the right executive team to lead the organisation. I have noticed that boards become operational when the executive team cannot lead the business. However, some boards become too operational in other instances because they love power and want to exercise power over executive leadership. While the general understanding is that the board has the power to hire and fire executives, in practice, many factors constrain that power. It is always hard to have a consensus on who should be in the executive team. Based on personal interests and preferences, personal interests can degenerate into factions.
e role of the chairman is critical in making the board effective. Successful boards have a consultative chairman who understands their role is that of a lead facilitator of the board than the boss of other board members. e chairperson must not make unilateral decisions. ey must always use the board structures to get input from board members and drive the board towards consensus decisions. e basic rule is that board members will not take ownership of decisions from which they were excluded.
Effective boards allow board members to speak up when they see issues they feel need to be addressed. e chairman must allow professional dissent by board members. at way, no issues will be excluded from scrutiny. When board members feel safe to put unpleasant discussions on the table without fear of victimisation, that board is on the right path. One of the biggest obstacles to board effectiveness is that board members come to the board without reading the board pack submitted by executive management. Such board members waste people's time. Sometimes, you can find a board member asking questions that have already been answered in another part of the report because they have not read it in full. If you are in such a situation, you are on a board that needs help.
e other challenge is that sometimes boards focus on trivial and operational matters. It is not an easy task to focus on strategic issues for various reasons. To do this, you need the right executive team capable of handling all the operational issues.
If the executive can not handle operational issues because of the risks associated with some of them, the board will end up intervening. In an ideal set-up, the board would focus on issues around the strategic direction of the business, culture transformation, succession planning, ensuring the business has the right executive team and risk management. is is not easy, especially when the board feels management is incapable of handling some issues.
In other organisations, if you have a "powerful" CEO, you may find a situation where they are fighting for control with the Chairman. To assert their power, the CEO may drip-feed the board with their preferred information and deprive the board of the necessary information to make critical decisions. In such a situation, the board becomes dysfunctional.
Setting the agenda for the board meetings is the starting point in giving direction to the business. e agenda should always speak to the strategic role of the board. If the chairman allows trivial issues to be discussed in the committees or the board, the board can not be effective.
Dysfunctional committees mean a dysfunctional board. e structure of the committees has an impact on how effectively the board discharges its duties.
e committees deal with the technical aspects of the issues brought to them by executive management. e committee then reports to the board with its recommendations on all issues that need board approval or direction. If the committees are effective, the board meetings should not take long.
Some board meetings take the whole day. It should not be like that. If your board meetings are focused, they should not take more than three hours.
On some days, when some issues need more exploration, the meeting can take longer than 3 hours. Let these be exceptional cases and not the norm.
To be successful as a board member, you need to be dedicated because board issues can consume a significant amount of time for board members. Overall the board needs members who respect each and allow board members to maintain their professional independence.
In conclusion, not every board member is capable of discharging their duties for the benefit of the business.
Just like employees, you can also find incompetent board members. I think most organisations are not thorough when selecting board members and end up with placeholders who add no value.