A person should never accept a board position without knowing what they are signing up for. When you agree to take on a governance role you are accepting a range of legal, moral and ethical responsibilities. You should therefore have a good knowledge of the organisation that you are being asked to govern, how it works, why it exists and how it does what it does.
Ask yourself: “Why am I doing this?”
You need to know who you will be governing alongside, ie your fellow directors, what role (chair, company secretary, sub-committee chair) you will be expected to fulfil and what skills and importantly how much time you will need to devote to the role.
You can assume that it always is more than you are told to expect. You also need to examine your own reasons for wanting to join a board and what you hope to get out of your participation – this will help you to decide whether or not your expectations can be fulfilled.
Of course, you should also know what you will gain. Most board members agree that any challenges or frustrations are generally outweighed by the satisfaction.
Benefits include:Being given the opportunity to “make a difference” and have a real say in how an organisation is governed.Being exposed to new challenges, thereby developing your capacity to manage change as well as new knowledge and skills.Getting to know new people and expanding your networks.Being inspired through the exposure to a committed, effective team.Being inspired through the work of others associated with the organisation– its members, staff, volunteers, stakeholders and the people who benefit from its services.
Policies and procedures
Good governance is much, much easier when a board gets the nuts and bolts right.
This means having the right policies and procedures in place.
Policies and procedures are designed to guide board members in their conduct and decision-making, helping to ensure greater consistency and transparency.
As mentioned in the previous article, a charter or handbook for directors of the organisation is the starting point for understanding how you are expected to engage, behave, govern and make decisions. In addition:
The number and type of policies and procedures needed will differ from board to board.
Common policy documents include: Staff management.Ethics and conduct. Conflict of interest. Financial and risk management practices and so on.
The usual suspects for board ineffectiveness: Few outside directors on the board. Boards are too big (eight to 12 is recommended).Dual CEO/chair.
Board Sub-committeesThe board can delegate functions and/or authority to sub-committees of the board. However, individual board members must take ownership of and responsibility for any decisions made. Each sub-committee should have terms of reference (TOR) which have been approved by the board. The recommendation is that certain committees (audit/finance/governance) should contain skilled, usually external, experts.Larger companies are required under the Companies Act 2014 to establish an audit committee or otherwise explain in the statutory financial statements the reason for not establishing such a committee.
Key factors for board
The quality of the individuals; sometimes referred to as having the “right minds” around the table: A board should have diversity with different skills and background to achieve a well-balanced team focused on acting in the best interests of the organisation over the long term.The ability to get work done as a group: teamwork is critical to build a cohesive board. Trust is critical when it comes to making difficult decisions. The foundation of the relationship between board members, and between board members and the executive must be trust, which is verifiable through insightful questioning.Every director is a leader: it is vital to create the right environment. Boards have failed because staff have felt fearful of giving the full information, because of how some board members might react. It is critical that directors engage respectfully, and challenge diplomatically. If a director loses the respect of other board members because of his/her attitude or approach, they jeopardise the effectiveness of the board.Ability to manage tension/conflict/risk: directors should not have conflict of interest and directors have a specific duty of disclosure under the Companies Act 2014 to disclose an interest. A conflict of interest policy should be adopted and followed. Commercially sensitive information (CSI) can be another source of tension. It is important that a board has clear and consistent protocols for dealing with CSI. Conflicted directors must leave the meeting, and minutes to them must be edited to ensure no sensitive information is shared. It is important that any conflicts are treated consistently and are not a box-ticking exercise.Directors are responsible for ensuring that internal controls are in place and for the relationship with the auditor/external controls.Use informed ignorance: that is know what “stupid questions” to ask to get the answers directors need to make informed decisions. Distance from the organisation allows directors to ask questions that may not otherwise be asked. Being part of a board should be a knowledge creation process. Agreement to act: action should be taken on early warning signs in relation to behaviour (directors
or CEO), risks, and strategic decisions.
Karen Brosnan MBA is a consultant specialising in strategic planning and implementation, leadership development, governance, best practice, diversity and inclusion, culture change, communications, staff and stakeholder management.
Karen advises boards and executives of organisations in the ag food sector.
What are my responsibilities as a board director?
Jordan calls for greater diversity on Ornua board following restructure