The board of directors holds ultimate responsibility for the success of the company

The board of directors holds ultimate responsibility for the success of the company

The success of modern corporate organization depends on how well the different boards and management teams answers the following three key questions as an   organization exists in perpetuity;

  1. What is the current state of the organization and why is the organization in that state?
  2. How the does the organizations move from the current state to where it wants to go?
  3. Where does the board want the organization to go and in what time?

The above questions are discussed in some details in the paragraphs below.

What is the current state of the organization and why is the organization in that state?

For any organization to succeed in its mission,   the board and management must first   establish where the organization is as a starting point before steering the organization towards   its mission. It is also important to establish why is the organization is where it is. The reasons for the organization being where it is will help both the board and management to develop an improvement action plan.  This will also help the board to confirm whether the current state is the ideal state the organization is expected to be in and what needs to be done to further enhance the performance   of the organization.

The journey to success is either possible or impossible depending on how well the challenges or risks relating to the organization have been identified and the effectiveness of the mitigation strategy developed by management under the direction of the board.  The organization can only capitalize on its strength and opportunities and overcome its weakness and threats if its key challenges and risks are correctly ascertained. A business cannot exploit an opportunity or overcome challenges which have not been clearly identified at this level. The identification of   current challenges and opportunities of an organization is important for purposes of enhancing the capacity of the organization to exploit the opportunities and overcome the challenges in a better way than the competition in order to gain a competitive advantage.

How the does the organization move from the current state to where it wants to go?

Business organizations are always formed with the aim of making profits for the benefit of the key stakeholders. The level of the profits to be made by an organization on yearly basis depends on effective execution of the goals set by the board.  The board sets the goals of an organization and appoints a team to help it achieve the goals. Success of any organization therefore depends on the capacity of the board to set SMART goals and to appoint an effective management to help it   implement the activities which will lead to the achievement of the goals. The board is therefore responsible for the success of an organization.

The board has to determine the success level (goal) as focal point. But often boards accept low or vague success goals as suggested by management. Remember management is not responsible for the leadership direction of an organization but for the performance towards a direction defined by the board. Why should management set low or vague goals?  I guess all depends on the mind-set of the management team as there is always a temptation for management to set safe target that can easily be achieved. For sure management always aims on being on the safe side with the board as the appointing authority. This is why budgets are tabled before the board for approval. It is up to the board to challenge the planned performance levels. The board should ask itself the question of ‘What should be done in an organization to inspire management to set and implement stretch goals culture in the organization. The stretch goal culture has to come from the board. The board has to encourage or inspire the management team to aim high in terms of   top line (income) and bottom line (profits) performance levels if extraordinary results have to be achieved. Everyone in an organization must focus on achieving extraordinary performance in order to be ahead of the competition.

The board must drive out of the mind of the staff team the fear of failure resulting from high performance targets.  Success in business will be only attained when word ‘failure’ is not taboo word to the board. An organization can only succeed if its management is prepared to fail and rise again in the pursuit of success.

Where does the board want the organization to go and in what time?

An organization can achieve any goals provided it has a positive minded team to move it from its current state to its future state using an effective plan or roadmap. The positive minded team is necessary because success is attained first in the mind before it is achieved in action. It is easy to say that an organization will double its profits from US$ 2 million to US$ 4 million without addressing the question of   how to achieve it.  You can only achieve your goals through effective implementation of a plan you have developed to move you to your goals and no other ways. In an organization, there must  be an effective plan of achieving   given goals  as developed  and  approved by the board which must   be implemented by an effective and  winning team as put together  by the board.

Conclusion

Achievement of selected goals of an organization is a deliberate effort by the board supported by a management team it has selected and put in place.  The board also develops and implements a plan to move the organization from where it is   to the desired state.  It is extremely difficult if not impossible for an organization to achieve its mission if the board does not effectively play its leadership role.  Before you accept any board position you should ask yourself of whether you are prepared for the leadership role. A board should not wait for management to guide it but should guide management in the execution of the approved plan.

Author

John Muhaise Bikalemesa

Director: Big Drum Advisory Services Limited

john.muhaise@bigdrumassociates.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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