In the era of the business meltdowns of excellent companies like Enron and WorldCom, one should give attention to the Boards of such companies. What were the directors doing while at the wheel? Was the management of the company corrupt? Or not competent enough to handle the crisis? It seems impossible to think that events of such nature could have had happened without negligence of board members and alike.
After a close examination of the Board, no broad pattern of incompetency or corruption had been revealed. In fact, the boards do follow all the accepted regulations required by law. Showing up at meetings, disclosure of interest, adhering to audit committee’s wishes, and following certain codes of ethics.
We need to fundamentally change the way how Boards operate and are evaluated to find the loopholes in the system which lead to corporate disasters. Here, we shall consider which basic 5 qualities a Board member should possess to pass the evaluation criteria.
1. They are fearless and not afraid to voice their opinions
This is the most unappreciated test. The Board members have to be fearless and conviction as well as the courage to face the truth. One needs to take actions when the solution is complex and the path is not all that straight. They should be self-assured enough to be frank with the stakeholders. They should explain them the issues and give practical solutions.
2. Have great judgement
The Board must have appropriate judgement. It helps the company to be out of trouble by navigating through difficult situations. Proper judgement helps them make the right decision about future business strategies which include financing, hiring, expansion etc. Moreover, if the board member does not have the necessary industry experience which is an essential element of a proper judgement, the company shall heavily suffer. Governance over the company is essential. This is a direct result of having policies and procedures with robust internal controls. Also, to make the job easy, the Board can use various tools like VComply to ensure governance and compliance using a single integrated platform.
3. Are knowledgeable and content rich
An ideal board member has contextual knowledge about the business and has The ability to offer actionable insight on the problems of the company at large. The Board member should offer insights on:
A. Industry – It is preferable for the Board member to be of the same industry as the company. Also, it helps the company with its strategy formation, operations and business insights.
B. Stage of Business – The Board should provide advice before the disaster occurs. They should know what the best measure in the said situation is. They should have “seen the movie before”
C. Function – It is helpful if the Board has foresight about the future challenges and opportunities each function (finance, operations, HR, marketing) shall face in the future.
4. An excellent motivator, coach and a mentor –
The members should be the sounding board for all the employees. One should ask questions, pose challenges and encourage different opinions. Also, they should be great listeners and testers of new, unconventional ideas. The stakeholders should develop respect and trust for them in return. It does not mean that they would not disagree with others. It implies that the Board should be strong enough to listen as well as withstand any clashing viewpoints and challenging questions.
5. A sense of responsibility as well as thoughtfulness
To be a great Board member, one should be responsible while making critical decisions. They should strategically think about the future while being thoughtful about the stakeholders. Both responsibility and wisdom are direct by products of experience. Also, absence of both results in the most disastrous situations.Add to favorites