Board to Death

Published in the City Press, Sunday, 28 September 2014, Page 12, Career Section

Reading the book ‘Adversaries into Allies’ by Bob Burg, I came across the question, “How often do we ignore the people doing things right…only because there are not doing anything wrong.” This statement caused me to reflect on the role and value of boards of directors, particularly in the context of the African Bank turn in fortunes. When things are going well in organisations, ranging from conglomerates such as Apple, Google, Microsoft and many others, we heap all the glory and accolades onto the CEOs as the sole brains and drivers of the success without ever giving positive recognition to the strategic role and guidance of the boards of directors. Until things go belly up, boards of directors are usually ignored.

Being a board member is itself a risk. Knowledge, qualifications and experience are important, but board members must also have the courage to act responsibly and timeously. Will these continuing spectacular collapses overtime render the boards of directors obsolete? Board members on occasions seem uncomfortable with their role as monitors of managerial decisions, preferring to exercise more of an advisory role. As we know, advice is not always taken. One reason is that directors may feel obligated to the CEO for their positions on the board, especially when the CEO is also a shareholder, since the CEO is often influential in the ultimate choice of directors. Directors also do not feel free in their evaluations of the people who appoint them, even when management performance is substandard. CEOs are responsible for delivering performance, but the challenge with boards evaluating performance is that sometimes it is clouded by the close relationships that can form between board members and the CEO. There is a tendency to be less stringent in assessing the length of time it should take for strategic decisions to play out thus the boards can give the CEO’s performance some slack to the detriment of the organisation.

The tensions between the oversight role of the boards, their ability to influence the strategic decisions without operational interference or infringing on the CEO’s right to make them are legendary. CEOs such Steve Jobs (Apple), David Neeleman (Jet Blue) and Mike Lazaridis (RIM/Blackberry) experienced the wrath of dissatisfied shareholders and boards when they had strategic differences and were pushed out of the companies they founded. Boards are developing beyond the role of watchdog to provide counsel and coaching to CEOs and the management. The benefit of boards is the independent perspectives, insights and judgement and for the CEO to tap into the vast storehouse of experience and business wisdom. African Bank demonstrated how economic downturns and uncertainty place immense stress on organisations and even greater demands on boards to be more courageous in their dealings with the CEO’s performance. Since boards have to deal with greater ambiguity and more complexity, individuals who choose to sit on boards need to be daring enough to make tough and sometimes unpopular decisions. The lesson for all boards and to ensure that they do not make themselves obsolete is to have the courage to actually act timeously to avert the crisis.

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