Boardrooms: Don’t blow it when the rubber hits the road
Integrity has no price, and if even a fraction of it is for sale then, like power, the rest becomes worthless
The composition and functioning of boards of directors has been in the news lately, across both public and private sector companies – and it’s not all been good.
There seem to be lots of gaps. Beyond issues of compliance and governance and the various other matters admirably covered in King 4 and other literature, we need to think about what kind of people need to be in the room, and how they should behave there, where the rubber hits the road.
The board is management’s wise counsel, not its prefects, not its judges, not its examiners. Executives do not submit board papers to be marked, but to inform, to question, to discover – whether to ratify, guide or enlighten. It is the knowledge, experience and cohesion of the board that must test, but also augment, the efforts of the executives, to decide whether to abandon, hold steady or change course. Management are typically represented by the CEO, COO, CFO and, increasingly, the chief information officer.
These are experts and leaders in their fields, specifically selected for their ability to deliver on the tasks within the mandate and time frames of the firm. Nonexecutive board members have a different purpose, a different character. Knowledge, experience, independence and integrity are the major pillars upon which functional nonexecutive board membership are founded.
If you don’t know the subject matter, you’re simply not able to judge the sensibility or otherwise of the proposed initiative, let alone assess its risks or returns. You must know and understand deeply what business the company is in, and the real economic model that drives it, in your gut as well as on paper.
If you don’t, you won’t even know what questions to ask, and you’ll likely drag the discussion down to the lowest level of common understanding, or, worse still, into the comfort zone of your narrow field of competence whether that’s relevant to the matter at hand, or not. Everyone is not expected to be an expert on everything, but your specialist knowledge must be relevant to, and have been applied within, the business of the company. Experience is different from knowledge, and it is most often best gathered from mistakes.
You need to have actually done something before, not just studied or read about it. While some technical academic qualifications may be entry-level requirements for a debate, they certainly do not alone qualify anyone to sit on a board. Independence seems to be crudely accepted as the absence of any economic alignment. While this is an essential ingredient, it doesn’t sufficiently define the requirement.
Beyond obvious specific contract interest, if the money you get paid to sit there is beyond a certain level of significance in your life, then that alone can disqualify you. If you need to go with the flow just to keep the job, that’s not independence. If you are merely a representative, of whatever cause or affiliation, you’re not independent and the value of your contribution will, at best, be limited and biased.
An independent mind does consider information from a position of predisposed opinion. Such positions are obvious and predictable and can be factored into the business case. Integrity cannot be inherited, it cannot be appointed, you can’t get a diploma for it, and it does not attach automatically to any position, rank or title.
Integrity has no price, and if even a fraction of it is for sale then, like power, the rest becomes worthless immediately. Without it there can be no place for you at the board table – you are reduced to an economic sieve, an opportunist, or simply a crook.
The chairperson of the board warrants specific mention. Beyond any of the other qualities required, there are those required to be ingrained in the good chairperson. Empathy, understanding, an ability to listen, to distill essence and to find middle ground are necessary, as is a sincere interest in the current and future position of the company. A good chairperson never bullies, never demands respect, seldom overrules and often encourages. Such a combination of skills and maturity is rare, but it should be sought until it is found.
The centre of trust of the board and all other stakeholders cannot be placed in a lesser person. The absence of such qualities can destroy the essence of the functioning imperative. Finally, it is not a prerequisite that you get on with your board colleagues, but it helps.
• Mark Barnes is CEO of the Post Office.