8 THINGS THAT MAKE A GREAT BOARD
Michael Tait sets out the 8 things that make a great board. A good board of directors possesses several key characteristics and attributes that enable it to effectively fulfil its responsibilities and contribute to the success of an organisation. Here are some factors that make a board of directors exemplary:
Diversity and Expertise: A good board comprises members with diverse backgrounds, skills, and experiences. Diversity, including gender, race, age, and professional expertise, brings a variety of perspectives and enables robust decision-making. Directors with industry knowledge, financial acumen, legal expertise, and strategic thinking skills contribute valuable insights to the board’s discussions and decision-making processes.
Independence: Independence is a critical attribute of a good board. Independent directors are free from any conflicts of interest and can provide objective oversight and advice. They are not influenced by personal or business relationships that may compromise their objectivity. Independent directors ensure checks and balances within the board, promoting accountability and ethical conduct.
Strategic Vision and Guidance: A good board is responsible for setting the strategic direction of the organisation. Board members must possess the ability to think strategically, anticipate industry trends, and identify growth opportunities. They provide guidance and challenge management’s decisions when necessary, ensuring alignment between the company’s strategy and its long-term goals.
Strong Governance Practices: Effective governance is at the core of a good board. It includes establishing clear roles and responsibilities, defining decision-making processes, and implementing robust internal controls and risk management frameworks. The board should have well-defined committee structures, such as audit, compensation, and nominating committees, to address specific areas of oversight and ensure specialised attention to critical matters.
Active Engagement and Participation: Board members should actively engage in board meetings and discussions. They should come prepared, thoroughly reviewing materials, and staying informed about industry trends and the organisation’s performance. Active participation involves asking thoughtful questions, challenging assumptions, and contributing to the decision-making process. Engaged directors demonstrate commitment to their role and the organisation’s success.
Ethical and Responsible Behaviour: A good board upholds high ethical standards and promotes a culture of integrity throughout the organisation. Board members should adhere to a code of conduct and demonstrate responsible behaviour, ensuring transparency, accountability, and compliance with legal and regulatory requirements. Ethical conduct by the board sets the tone for the entire organisation and fosters trust with stakeholders.
Succession Planning and Board Refreshment: A good board recognises the importance of succession planning, both for the executive leadership team and the board itself. It actively identifies potential candidates and prepares for leadership transitions, ensuring continuity and the availability of diverse skills and perspectives. Board refreshment involves periodically assessing the composition and performance of the board and making necessary changes to maintain effectiveness and relevance.
Effective Communication and Stakeholder Management: A good board emphasises clear and transparent communication with stakeholders, including shareholders, employees, customers, and the community. It fosters an environment where stakeholders’ voices are heard, and their concerns are addressed. Open lines of communication enable the board to understand stakeholder expectations, align strategic decisions, and build trust.
In summary, a good board of directors possesses a combination of diverse expertise, independence, strategic vision, strong governance practices, active engagement, ethical behaviour, succession planning, and effective communication. These characteristics enable the board to fulfil its responsibilities and guide the organisation towards sustainable success.
LEADING GOVERNANCE: 10 things that make a great board