Does Your Business Have A Good Board?
As another year comes to an end, it is timely to ask why some company boards add tremendous value to the organisation? And why others don’t.
The importance of strategy
The commitment of board members in shaping strategy ranges from those who engage a little to those who engage a lot in the process. Most members hover somewhere in the middle depending on their skills and the experience of the senior management team. Each board member’s grasp of their role and understanding of how to contribute in a way that supports the business is, however, a key factor in the development of a successful strategy. Whichever approach is taken, it is vital that board members learn to challenge what management present in a constructive way. But without a full appreciation of the role they should play, it is difficult for board members to make a meaningful or significant contribution at meetings.
When any business follows a strategy that is out of date or unfit for purpose, it is only a matter of time before sales and profits suffer from a loss of focus. While it is not the job of board members to interfere in the day-to-day running of the business they must ensure it is properly managed and well positioned for future success. And board members must always question the status quo and test new ideas to ensure the company’s relevance to its customers and the marketplace.
The importance of culture
Many businesses struggle with an internal culture that is reluctant to change even when faced with clear evidence of the need to do things differently. The practical out workings of such unwillingness include a loss of clarity about the purpose of the business; a too busy agenda focussed on operational rather than strategic issues; an under appreciation of board members who ask questions; a resistance to constructive challenge; a lack of clarity in setting an appropriate strategic direction; and a pattern of reviewing strategy on an occasional basis, rather than treating it as a constantly evolving process of action and thinking.
The belief that the collective knowledge of the group is better than any single voice captures the essence of an effective culture and high performing board. And such an approach is the bedrock of ensuring any period of prolonged financial success. But in the everyday life of a business the necessary equilibrium between board members becomes unbalanced when too few voices dominate the discussion. A good board will, of course, guard against such peril and ensure the wisdom of the collective wins through on every occasion.
So, a good board is always clear about what it is doing and why and individual members are never afraid to question the status quo when the need arises.
