Improving Boards Practices

The board is the most important part of any organization in terms of making decisions, rectifying processes and ensuring the necessary quality level prevails in the workplace. Similarly, it is also the responsibility of the board members to organize meetings well and effectively despite their frequency. The business leaders or senior executives should also try their level best to set right benchmarks in terms of board practices to improve its performance, and in turn, the performance of the organization in general.

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What the Board’s Role is?
Experts have contrasting opinions about the board’s role in an organization. However, the general definition states that “the board’s role is to provide entrepreneurial leadership of the company within a framework of prudent and effective controls.” This is a very good definition because corporate government is all about encouraging people to take risks, actions and entrepreneurial leadership but within a framework of a prudential control exercised by senior board members.

Good Board Practices:
Talking about effective boards, there are essentially 8 practices which make any board good and effective. These practices are:

  • A board should have clearly defined roles and responsibilities mandated by board charter.
  • Board Directors should also understand what their specific duties and responsibilities are. These duties should be clearly mentioned in the organization’s legislation.
  • Every organization should have a well structured board.
  • All the board members should offer appropriate mix and composition of the skills to better and effectively run the organization’s affairs.
  • It is extremely important for a company to devise effective board procedures.
  • The remuneration package of directors should be according to the board’s best practices.
  • The organization should conducted regular training and evaluation of board members.
  • There should a board secretary for provision of effective secretarial support.

Total Number of Board Meetings:
How many board meetings you should hold is a very important question. It actually depends upon the organization as how many board meetings they deem necessary to have. In general, 60% of listed companies in GCC region have around 4-5 meetings each year which is a reasonable number. However, there are also some which hold more than 15 meetings annually. In this case, the frequency of meetings is far too high unless the organization is in some sort of crisis.

listed

The Board’s Meeting Agenda:
It is better for you to prepare annual calendar for board meetings specifically mentioning the points which will be discussed in each meeting. Furthermore, the company secretary can also suggest a list of topics that should be discussed during meetings taking place at different times of the year. Following is an example of annual calendar for board meetings.

agenda

Characteristics of Dysfunctional Board:
In the context of above discussion, following are some of the characteristics of a dysfunctional board.

  • Dysfunctional boards are poorly structured.
  • Members of such boards don’t offer required range of expertise and skills.
  • They don’t have specific agendas for meetings.
  • Inadequate debates and non agreement about matters on which opinions conflict.
  • Board members don’t have power to make tough decisions.
  • They fail to identify risks.
  • They don’t have oversight to determine the decisions they make are correct.

However, dysfunctional boards can considerably improve their performance by doing many simple things. For instance, all directors should be well prepared for the meetings and actively participate in discussions. They should receive all the required information prior to meetings in order to devise an effective meeting agenda. Similarly, it is also important for organizations to detail competent directors in boards and specify their roles and responsibilities for the boards to perform up to expectations.

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