So What’s a Board’s Most Important Job?

When I was asked recently to present a paper at a corporate governance symposium in Kuala Lumpur on ‘What is a Board’s most important job?’ it didn’t take me long to arrive at my answer and prepare my paper accordingly.

It also had me thinking what answers others might proffer, so we decided to use social media to tap into the broader thinking – and here’s a sample of what came back…

They were good answers and ranged from “understanding the difference between governance and operational matters that are the responsibility of the CEO” and “setting strategic direction for the organisation and supporting the CEO and staff to deliver it” to “finding the perfect skill set for the board as this will ensure that everything else falls into place”.

My response?

All things being equal, it’s the selection and appointment of the CEO. For when a board gets this right, they can step back, relax and do their strategic.

They are comfortable in the knowledge that the CEO has the skills and experience to attend to the operational matters – and do what is essentially their job.

The right CEO is an efficient and effective leader who protects and nurtures the culture of the organisation so that it is healthy and productive.

The right CEO also works with the board to set robust strategic direction and see to it that the internal systems and policies are in place to deliver on that direction.

Finding the right person can, of course, be quite a challenge and as it is something we explored in detail in an earlier blog, I won’t labour the point here. Suffice it to say, a good starting point is to always remember that strategy comes before structure.

When we know what the strategic direction of the organisation is, we can visualise the person required and detail the skill set and culture of the individual who best matches the strategic imperatives of the company.

In my experience, when a CEO tells me the board is interfering too much in operational matters, it’s often because the board has lost confidence in the CEO’s ability to manage the company effectively.

The board then needs to remove its principal governance hat and don some operational attire…and when that happens, the board is no longer focused on doing its primary job of setting the strategic direction.

And that’s when everything can start to untangle and go awry.

That’s why I maintain that, with all things being equal, the selection and appointment of the CEO is a board’s most important job.

Of course, there are exceptions to every rule and you might well find that if, for example, a company is seeking a stock exchange listing, the board’s concentration will understandably be on all the due diligence work associated with the documentation that will go out to the public.

But these are exceptions.

Until next time…

Kate

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