The board of directors, in private, public or not-for-profit organisation, is an appointed group of persons with a fiduciary duty to represent the interests of stakeholders.
They provide oversight and direction to an enterprise’s aspirations, management and its operations.
The board operates independently of the day-to-day management, offering oversight and accountability to safeguard stakeholders’ interests.
In many instances, the board includes internal and external directors, each with different roles and perspectives.
Internal directors provide invaluable industry or sector knowledge and operational insights, while external directors commonly referred to as independent directors, provide nonpartisan judgment and objectivity in decision making.
A modern board of directors is also charged with looking after the organisation’s risk and opportunities, its sustainability, human talent management, culture, leadership succession, brand management, client service, and so on.
A well-functioning board is recognised as a competitive advantage for the enterprise. In an increasingly volatile, disruptive environment the world has assumed, boards that desire success need to be agile in making the right and data-anchored decisions.
Further, to steer enterprises in the right direction and sustainability, boards need robust corporate governance practices that mitigate against potential crises, manage compliance, actively promote accountability, increase transparency and minimise agency conflict in their organisational value creation role.
The increased demands on boards make regular board performance evaluations a necessity.
A regular deliberate deep-sighted review of the board’s governance structure and processes inevitably shows where the board is delivering successfully and where its areas of opportunity to improve might lie.
Board effectiveness enhances an enterprise even as assures its internal and external stakeholders.
Delivering best board practice calls for recognising that good governance is not just about compliance, the board has a responsibility in thoroughly understanding the major functions it is required to perform, vis-a-vis those executed by management.
On the organisational strategic direction, the board needs to clearly define its role and that of management to ensure a robust definition of the enterprise’s way forward.
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Monitoring of the firm’s performance matched against its strategic objectives, is an essential board function. The board must thus be aware of the organisation’s key performance drivers and the appropriate measures that determine success or lack of it.
One of the most important role of the board is to appoint, review, work through and develop a succession plan for the executive leadership of the firm.
The board must also recognise that governance of risk and crises preparedness is a responsibility it carries.
This responsibility includes risk profile stress testing, scenario planning, to understanding how risks interweave.
The board must of necessity demand and expect from the organisation’s management, the right amount of information in quantity and quality to aid in policy guiding and agile decision making.
Today’s boards need to make sure that their organisations are prepared for the opportunities created by transformative technologies, as tech innovations are impacting every aspect of how business gets executed.
An increase in cybercrimes should also now be front and center fo=r boards, as the need for cutting-edge cybersecurity measures is abundantly clear.
In view of global geo-political uncertainty currently at play, war tensions in Europe and the Middle East, the supply chain particularly for capital intensive and manufacturing enterprises, has gravitated to be a leading topic of boardroom active conversations, engagement and decision making.
This is so, because supply chains are a huge cost centre.
And because some organisations see the supply chain as an area of opportunity to drive innovation for a competitive advantage, to what extent thus, is your organisation’s board engaged in this important subject matter, in order to counsel, advice and guide the organisation’s sustainability?
In view of the accelerated pace of global change and the rise of the knowledge economy, the board renewal process has acquired a survival and critical role, to ensure the board’s continued effectiveness and success in guiding the organisation into a thriving future.
Guided by current and future trends, the renewal process in a disruptive world should identify gaps and needs the board (and by extension, the enterprise) must attend to. What for example, does the statistic that Kenya’s population of 35 years and below forms 80% of the total population, mean to the organisation’s board?
And what does the proliferation of social media succinctly mean to the board? And how should the board lead the organisation in the new era of sectors with blurred or no borders?
To obtain a clear view of the renewal need-state, the board must gain continued in-depth knowledge of their operating environment to fully comprehend how the world is changing and how this impacts their enterprise and the role they play or should play.
Guided by this and a clear, transparent criteria and process, the board renewal process and its composition, should have a clear outline of the metrics, action-steps, and timelines to for example reappoint, retire, remake, reconfigure, replace as well as recruit new board members (with the needed identified human talent capacities) in line with the organisation’s declared strategic intent, purpose and business canvas model (particularly if this has had to be re-constructed or modified).
The need for a board culture of unlearning, re-learning, learning, innovation adoption, and transformation mindset embracing, cannot be over-emphasised.
Training, coaching, mentoring and networking must of necessity, form part of the board’s active agenda if the organisation they lead is to successfully navigate its future.
In the fourth industrial revolution, the role of the board in integrating sustainability into the organisation in a rapidly unsettling and cross-sector ecosystems, is too important to be left to the board alone, because society, and by extension the economy, is dependent on sustained, evolving and thriving organisations.
- The writer is an expert on leadership and a former media executive
The Standard Group Plc is a
multi-media organization with investments in media platforms spanning newspaper
print operations, television, radio broadcasting, digital and online services. The
Standard Group is recognized as a leading multi-media house in Kenya with a key
influence in matters of national and international interest.
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