An Excellent Board is a Key Determinant to Business Success.
Last week, we looked at in-depth on the need to have an exceptional executive committee as a key component for business success. Today, we look at the need to have a matching excellent board to ensure they offer top notch supervisory role.
The board of management is the governing body of the organization. It has a key role of ensuring that the executive committee, which is simply the executive management, is held accountable and operating according to organizational policy and regulations. Besides, they offer insights on business growth and directions.
Another key component of the board is to ensure that proper relationships are upheld among all the stakeholders and that the interests of the shareholders are safeguarded. They as well keep the organization on track in regards to its mission and vision.
Again, the board is responsible to determine the compensation plans for the stakeholders like dividend returns for the shareholders, bonuses for the executives and employees as duly determined by the financial and HR reports of the organizations for the financial year.
The boards also deal with conflict resolutions where the issues lie out of the jurisdiction of the executive committee. For example, if there is a conflict with another organization, the respective boards work hand in hand towards resolving such or in case there is a conflict with government.
These among other roles are very pertinent issues that get handles by boards of management. We realize thus, that a board should match at the very least the excellence of the executive committee if great success is to be credited to an organization.
As I have realized over time, no business embarks on its journey with a clear-cut plan to play it small for its entire business life. Most entrepreneurs begin small with a view in mind of growing big someday. The shift however comes with the mindset that mSMEs don’t have need to have boards.
Another challenge comes in with the thought of domination where if the business is private, then the owner is the one who appoints the few individuals to the board based on their acquaintance and how quickly they can compromise at his discretion. A fact which squarely contradicts the independence of the two arms of management though with a shared mission and vision.
It is thus very important that the board comprise of individuals who are keen industry leaders with experience, knowledgeable, innovative and skilled think tanks. Such a people should clearly understand the role they play and the matrix that governs the organizational corporate management.
So, what kind of people should comprise a business board that is destined for tremendous success and growth? Just like the case of executive committees, the board members should have a mix of the skill, expertise, industry experience and well acquainted with corporate governance. In other words; a strong blend of the soft and hard skills.
The excellent board should have members with adequate unconventional wisdom. Whereas conventional wisdom can take us from point A to point B, which most organizations can pride in, it takes unconventional wisdom to take the organization from point A to point E seamlessly and smoothly.
Board members should deeply understand the need for personal accountability and integrity. In other words, they should understand that the success of the organization lies at the palm of their hands and that trust plays a major component in their decision making and guidance process.
In other words, they understand the need to avoid conflict of interest in the business such as interference with operational matters, seeking favors, involvement in matters pertaining to recruitment of the personnel or assertion of authority outside their jurisdiction.
They should be people ready to exercise the rules governing an open culture of dissent. People who are ready to disagree and agree honorably. People who will attend meetings regularly. The perpetuity of the organization lies not in the hands of the people who simply agree with anything but rather the divergence of thoughts which finally point the organization to a single agreement determined by principle.
Another of the important aspects to be looked at to ensure an excellent board has got all to do with industry expertise and experience. In other words, the choice of the board members should not simply be based on how famous one is but rather how valuable and committed will they be to the organization. This is like the case of taking a famous golfer to play a football match for a team.
No wonder some companies fail because the boards members who sit in the finance committee for instance have no iota of any financial knowledge and skills. We can now realize why expertise is important for the individuals tasked with oversight, advisory and determining the general direction of the company.
Choosing a board on the basis of these key components among others will only mean one thing, an excellent body at the helm of the organization. With proper communication, coordination, understanding of the organizational roles for each party and doing the job at hand by the dictates of corporate governance; nothing can stand in the way towards the success of such organizations.
Whether you are an mMSE or a large company, private or public, in whichever sector of the economy, it is important to have a good board of management. Make it diverse in terms of age, skill, expertise and industry experience. It doesn’t have to be big; a small board is a good as a big board.