Board of directors: Enhancing their effectiveness

Board of directors: Enhancing their effectiveness

The board of directors is the ultimate decision making body of an organization responsible for overall policy  decisions and provision of oversight function except for matters reserved for  the shareholders during the  general meeting. The board of directors can only be effective if its functions are clearly spelt out to them during their engagement as board members. The key functions of the board are therefore summarized   as follows;

  • Approving the strategic and business plans of an organization.
  • Ensuring adequate policies to guide staff and management in the implementation of the strategic and business plans are in place.
  • To appoint and fixed remuneration of the external auditors
  • Fixing directors remuneration
  • Engagement  and termination of the Chief Executive
  • Monitor and supervise the performance of management
  • Monitor the organization’s compliance with the legal and regulatory framework.
  • Approving material investments including mergers and acquisitions

The organization can enhance the effectiveness of the board by ensuring the board has the capacity to carry out the above functions in a right way.  This is only possible if the board is competent enough to carry out its functions.

Enhancement of the capacity of the board members

The capacity of the board to carry out its functions can be enhanced in the following ways;

 Board induction program

The new board members have to be taken through an induction program which will enable them to appreciate the role of the board and its various committees .The new board members will also get an understanding of the organization including its financials, the business the organization is in and the market it is operating in.  The business risks the organization is facing should be discussed with the new members so that they can clearly understand them. The new director must also get a feel of the people in the organization including succession issues.  The new board members must also get an understanding of the key business relationships the organization has in place.

Role of non-executive directors

The new board   must clearly understand the role of the non –executive directors as being to bring on board objective and creative contribution.  The non –executive board members are expected to be independent and impartial with wide experience and special knowledge.

Capacity   building

Special capacity building programs which provide both   technical and soft skills should be arranged for the board members to ensure they keep abreast the challenges in the industry including the requirements of the regulatory framework under which the organization is operating.

Right skill mix at board level

For the board to deliver its mandate, the board should have a right mix of members which ensures maximum value is got out of it. The board with right mix should have board members with;

  • Special expertise in the sector
  • Technical expertise for example in the area of accounting , audit, IT and legal
  • Ability to give strategic direction
  • Skills which will  give  right strength  to the board

Team spirit

Team spirit which enables cooperation and working well together at the board level cannot be taken for granted. The team spirit has to be cultivated and encouraged to grow through various team building activities at the board level.

 Succession planning

It is expected time will come when some board members with given special skills have to retire from the board for various reasons. Their retirement should not leave a void at board level. Proper succession planning must be in place to   ensure board members with special skills are promptly replaced when they retire.

Author

John Muhaise Bikalemesa

Director: Big Drum Advisory Services Limited

johnmuhaisebikalemesa@yahoo.com

About The Author

John Muhaise-Bikalemesa (JMB), is the founder of Muhaise.com blog and bigdrumassociates.com company. Learn more about him here and connect with him on his social medias below

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