Tuesday, March 24, 2015

A Focused Board

A focused Board concentrates on the strategic oversight and governance practices, avoid getting lost in the forest.
Corporate Board is one of the most important governance bodies in contemporary businesses, it also plays a significant role in leadership exemplarity and practices. Is there any way for shareholders and key stakeholders to evaluate board governance effectiveness? Wouldn't it be good to see how strategy is managed by the board, what elements are delegated from the board and how they are monitored? And what does a high-effective board needs to focus on?

The focus of the board is strategy development and oversight: It is opposed to sitting on an operational audit committee and getting lost in the forest. Boards need to spend time on strategy, not operational issues that should be delegated to management or others. Then, boards need to understand how to delegate, which means articulate what is delegated and then monitor, not micro-manage what is delegated. A good policy governance system guides the board down this path. There are many times when boards need to spend time on operational issues due to their impact on the enterprise and reporting but should be the exception, not the rule. Why the board members get confused sometimes, obviously it’s not always on bureaucracy. When companies become bigger and bigger, they try to control processes and performances with practices and administrative procedures, that make it difficult to disguise the real goal of the company. Hence, the board has to laser focus on strategic oversight.

The focus of the board is also about effective governance: Poor board governance causes organizational confusion, which wastes resources and hurts the ability to maximize the company's mission. A well set up governance system would have the board involved in developing, setting and monitoring the companies' strategic plan, orchestrating the strategy across the enterprise, the governance committee, depending on the mission and how it is staffed, can assist connecting the dots. If you had a complete strategy validated etc and implemented it at 85% or more, you would be successful. Having a rubber stamp board that operated without an organized policy governance system, creates the perfect environment for ineffectiveness even disaster, due to a lack of appropriate board oversight. Governance experts should push for boards to operate with and share a mandatory policy governance system. The chronic poor governance madness needs to stop, Boards need to deal with the poor governance and eliminate all the bureaucratic regulations that deal with the symptoms, not the root cause.

Does the Board lead by asking the right questions: Does the company have a business plan, fully developed, showing where the checks and balances are? Does the plan describe how to not only implement strategic decisions but also how to monitor success? Are they SMART goals? Do they apply the rules of good risk management? When reports to the board are expected, is there a drill down the path to the important questions to be asked or are gaps discovered along the way that the board needs to fix so that in future they are answered? Key questions include:
-Are your HR efforts finding the right C-Level people?
-Are your board strategies being implemented the way you expected them to?
-Is corporate board setting the right tone for business culture and talent strategy?
-Are you getting a lot of unanswered questions in the boardroom to the reports presented?
Finally, WHY?

Governance is a process for a group of people governing with an organized process. Boards make the ultimate decision and they should really focus on organizing corporate assets toward the achievement of the corporate vision and mission. So, a focused board can set the right priorities, clarify confusions, practice both leadership and governance discipline effectively.


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