The board of directors has leadership and oversight responsibilities to the company while meeting the interests of the shareholders and other key stakeholders. The board advises and guides management and makes important decisions on behalf of the company. It provides oversight on the checks and balances processes of the company to ensure its smooth running. The board’s focus is on the achievement of the company’s goals and eventually its mission.
The board may however fail to achieve its purpose if the following issues among others are not adequately addressed;
The board cannot lead the company in the right direction or journey if it does not understand and appreciate the strategic direction of the company. It may fail to appreciate the strategic direction because of either an ineffective induction program or a lack of board engagement during the strategic planning process. Therefore, the board will not be effective if it cannot appreciate the current state of the company, the desired state, the means to move from the current state to the desired state, and how to deal with the challenges along the journey.
The Chief Executive officer does not appreciate the role of the board
Some chief executive officers (CEOs) lack the necessary skills to appreciate the role of the board and take it as a waste of time. The board is therefore not given adequate information to make the right leadership and oversight decisions. Some strong CEO may also use their strength to weaken the board.
The board meets to consider the board papers submitted to it by management.
However, board papers are often too detailed and technical and do not summarize the key information and indicate the action required from the board.
Too detailed and technical board papers make it difficult for the board members to read and understand the key issues and actions required.
This eventually leads to poor leadership and oversight decisions.
The capacity of the chairman
The chairman may lack the capacity to lead and direct a meeting and waste so much time talking and not strictly following the agenda. The chairman should have the capacity to work with management to prepare a timed agenda that indicates when the meeting will start and end and the time that will be spent on each agenda item. The chairman should lead the meeting in making the right decisions.
Not a clear mandate from the shareholders
The shareholders may appoint a board of directors with either a vague or too demanding mandate that will make it difficult for the board to effectively function.
Lack of team spirit
There may be a lack of common bonds among the members that make it difficult for effective team spirit at the board level. This may result from a communication breakdown, dominating board members, negative competition, poor leadership, and bad behavior by individual board members among other things.
Issues that prevent the board from carrying out its mandate must be dealt with early enough before they negatively affect the performance of the board.[/vc_column_text][/vc_column][/vc_row]