Every company is unique. Each one has its own objectives, missions and vision. The role that it plays and the contributions it provides its community and stakeholders are also unique. Therefore the role, operating mode, and even the composition of its Board has to be tailored to the company’s specific context – its history, its current situation, and its priorities.
In an era of increasing business and social challenges, and sometimes boisterous demands for greater accountability, we believe it is imperative that the nomination and selection of Board members must follow a disciplined and objective process, with clear and selection criteria aligned with the needs of the company.
As such, the composition of a Board requires careful nomination of its members. While many an enlightened Board will consider diversity among its members, with a good mix comprising academics, professionals representing areas of specific interests, gender and age, one non-negotiable quality of a member is almost always taken for granted: a member’s credibility.
Just as a prosecuting lawyer will want a credible witness on the stand, a good Board will want credible members in its midst.
BUT, WHAT DEFINES THE CREDIBILITY OF A BOARD MEMBER?
If you are nominated, you must know that the Board is convinced that you are a person of Integrity. By that we mean that you are honest and congruent, and that you have a reputation for being truthful and that you would not lie. This characteristic speaks volumes at a time when a strong, trust-based relationship is expected to exist between the Board and management, with the Board constructively challenging, and at the same time, supporting management. Management, in turn, is expected to interact and report to the Board in a similar spirit and fashion.
Second, the Board is convinced that you have good Intent. This is to say that you are perceived as someone who will not try to deceive or protect anyone, and that you do not have hidden motive or agenda that will colour your action. Good intent negates conflicts of interest – a key element in good and fair decision-making.
Third, the Board must be convinced that your Credentials are excellent. The Board believes that you do, indeed, have the expertise, knowledge, skill and capability in the area in which you are called to contribute. It is important that each Board member has real management or commercial experience, including specific functional knowledge which meets the organisation’s unique context.
And fourth, the Board must be convinced that you have a good Track Record, and that you have demonstrated your capabilities effectively in similar situations in the past, and that you produce results, and that there is a good reason to believe that you will do so now. Much of the future of the company is dependent on this very characteristic.
IT IS IMPORTANT THAT EACH BOARD MEMBER HAS REAL MANAGEMENT OR COMMERCIAL EXPERIENCE, INCLUDING SPECIFIC FUNCTIONAL KNOWLEDGE WHICH MEETS THE ORGANISATION'S UNIQUE CONTEXT.
As many seasoned Board member will affirm, the success and influence of a Board really depends on these four issues: the collective integrity, intent, capabilities and results of the Board. It is what makes the Board believable.
Believability or the credibility of a Board is important as board members will be held accountable by the public for their stewardship of their organisations. Through their oversight roles, Board members are jointly and severally responsible for ensuring their organisations set and follow clear strategies aligned with their missions, all the while governing themselves transparently.
Ultimately, effective Boards are the result of good individuals working collectively as a team, with skills and expertise tailored to address an organisation’s specific needs and context.
Just as there is no “one-size-fits-all” approach to management, there is also no explicit formula for developing and ensuring an effective Board. Both are organic, people-driven and diverse, where relationships and interpersonal skills are just as important as well-crafted policies and procedures.
In an era of increasing business and social challenges, and demands for greater accountability, it is imperative that Boards rise to their new responsibilities so as to enable active leadership and the agility to respond to ever-changing external contexts.
The way we see it, as leaders of their companies, Board members are entrusted to oversee three primary roles:
- Nominate, oversee and support the Chief Executive Officer:
This role entails the Board to review the CEO’s performance, support his work towards institutional goals, and make recommendations to the shareholders regarding extensions or termination of his tenure.
- Oversee the company’s finances and fundraising:
In this role, the Board is entrusted with the authority to approve internal budget allocations, oversee spending and set salaries, and oversee investment decisions.
- Safeguard the company’s mission:
Here the Board is assigned to steer and approve strategy, approve management decisions with financial or talent development impact, set operational policies, communicate with external relevant stakeholders and institute a culture of performance management.
These three basic roles depend a lot on the expert and unbiased credentials of its Board members. Expectations of Board performance will rise as the organisation expands its clout. Members will be required to contribute more time and possess more applicable knowledge and skills so as to oversee their institutions through their transformational journey.
But the start to this ever-improving process rests on the existing credibility of the Board members. So, when nominated, you have to ask – have you got what it takes to be a good and effective Board member?