“In a dynamic business environment, a board with appropriate skills, diversity and expertise brings vital support and timely direction to the organisation, offering concerted individual skills merged as a group,” explains Basheer Ismail.
He adds: “The quality of board members reflects the organisation’s strategic focus and investor confidence. Therefore, a well constituted board is important to a company as its success is often contingent on the quality of its board.”
So what due diligence must be conducted and factors considered to ensure that companies pick the right members?
There are numerous aspects which must be assessed: technical skill and experience in accounting and finance, legal and regulatory, risk management and human resources, are desirable and useful; personal attributes such as integrity, dedication, good judgement and empathy are important as board members are examples of leadership, as well as providing direction and guidance to a corporate.
In selecting members for a board, key actions should include vetting the details of companies of which a prospective candidate is already on the board, determining the reputation of other directors and ascertaining their performance in the corporate milieu.
Assessing the number of companies a prospective candidate is on the board of is also a good practice. If they are already on the board of several companies, one should evaluate how much quality time could be devoted to a company in view of their expected role. The age of a prospective candidate could also be considered in relation to the demography of the board.
Board members are guided by the vision and mission statements of a company, for their key responsibilities and contribution to a corporate’s performance; and the board deals with aspects that include strategy formulation, performance monitoring, career management, succession planning, risk management and implementation of business initiatives.
Commenting on the level of commitment and engagement members should display, Ismail says: “It is often said that the board is responsible for oversight, insight and foresight – this is a challenging task in today’s complex and volatile marketplace.”
He continues: “Often, although board members are not involved in the daily operations of the company, certain entities may expect some members to visit plants, sites, branches and so on, if this is particularly appropriate to that individual’s role and contributing expertise on the board.”
Musing on qualities such as integrity, transparency and accountability, he remarks: “In addition to skills and personal traits, these attributes are fundamental and should be integral to ethical business practice. Although less talked about, equanimity is also a much desired personality characteristic in a volatile and vulnerable business environment.”
As chairman, if he were to pick a board of directors, he reveals the qualities he’d look for: he would consider a person’s understanding of the business and its environment; appropriate diversity of experience and qualifications to provide leadership to the overall management of the business; demonstrated ethical conduct; decisiveness; and the courage to express an informed opinion openly and honestly.
Ismail says that “a company may not have all the skills and expertise it may need, but a robust board with diverse and appropriate skills, a shared vision and an independent view would definitely be an asset.”
He sums up: “In the same vein, contribution to a board will remain relevant as long as a member continuously develops and improves his or her capabilities. Board members should look towards growing and building for the future, instead of looking in the rear view mirror to see how things were done 25 years ago.”