Effective board performance
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A board of directors oversees the activities of a company and is made up of individuals with relevant expertise. They play an important governance and oversight role. Different types of boards include policy boards, collective boards, and working boards. Effective boards are team-oriented, independent, and encourage open discussion to achieve results. Board performance should be regularly evaluated to assess achievement of objectives, skills, and individual member contributions.
Effective board performance
- 1. Effective Board Performance By Prof. Waswa Balunywa, PhD Prof.WaswaBalunywa,PhD
- 2. What is a Board of Directors • A group of individuals who over see the activities of a company Different names of Board • The Board • The Board of Governors • The Board of regents • Board of Trustees Prof.WaswaBalunywa,PhD
- 3. Why Board of Directors • Growing size of business leading to separation of management from ownership • Need for expertise in management • Need for independent views • Oversee activities of the organisation • Control business activities Prof.WaswaBalunywa,PhD
- 4. Different Types of Organisations Private sector • Private limited company • Public limited company • NGO sector Public Sector • Productive government Enterprise • Regulatory Enterprises Prof.WaswaBalunywa,PhD
- 5. Different Types of Boards • Policy Governance Boards These exclusively set policies and are unlikely to have committees because their staff perform their work. • Policy Boards These exclusively set policies and are unlikely to have committees because their staff perform their work. But they also have committees. • Collective Boards A group of like minded people who work towards a specific goal. Members share responsibility for policy, management and operations. They tend to be in NGOs • Working/Administrative Boards Provide policy and general direction. They also have board committees that do work e.g commission Prof.WaswaBalunywa,PhD
- 6. The Role of the Board • Approve goals and strategies • Appoint CEO and determine compensation • Ensure availability of financial resources • Approve annual budgets • Ensure compliance with laws and regulations • Ensure organization is supplied with right staff • Monitor and control • Identify and manage risk • Represent interests of stakeholders Prof.WaswaBalunywa,PhD
- 7. Risk Function • Establish different types of Risk • Establish the levels of Risk • Establish how to measure the risk • Establish how to mitigate risk • Monitor and manage risks Prof.WaswaBalunywa,PhD
- 8. Control Function • Establish an audit committee • Appoint some internal Audit staff • Approve Financial Controls • Ensure Compliance with relevant laws, regulations and codes • Monitor and evaluate goals, policies, plans and strategies Prof.WaswaBalunywa,PhD
- 9. How are Boards are Constituted Depends on the law establishing the company • Take care of interests of different stakeholders • constituteTeam of different experts relevant to the business • Political interest of founders or government Prof.WaswaBalunywa,PhD
- 10. Board Committees Depends on types of the Board • Finance committee • HR committee • Audit Committee • Capex committee • Technical committee Prof.WaswaBalunywa,PhD
- 11. Role of Board Committees Vary from type of Board • To undertake detailed scrutiny of the business • Enables Board have detailed review of specific issues • To get expert skills to deal with an issue Prof.WaswaBalunywa,PhD
- 12. The Board and Management • These are distinct organizations • The board does NOT manage the company • Management does day to day work • Board does strategic operations Prof.WaswaBalunywa,PhD
- 13. What is an Effective Board One that achieves results • Team oriented • Independent • Has culture of trust • Encouraged open discussion • Attempts to build consensus Prof.WaswaBalunywa,PhD
- 14. Who are Stakeholders These are people with interest in or who are affected by the operations of the company These include; Shareholders Management Creditors Government Consumers Legislators General public Prof.WaswaBalunywa,PhD
- 15. The Business of the Board • Financial Reports • Report of C.E.O Prof.WaswaBalunywa,PhD
- 16. Skills required by Board members Board provides leadership and members require central skills to effectively manage after of the company. Some are specialized, others are general; • Leadership skills • Financial analysis • Specific technical skills Prof.WaswaBalunywa,PhD
- 17. Leadership skills • Management of teams • Conflict management • Ability to communicate effectively • Social skills (emotional intelligence) Prof.WaswaBalunywa,PhD
- 18. Financial skills • Ability to interpret financial statements • Ability to ask financial control • Specific technical skills e.g engineering, marketing Prof.WaswaBalunywa,PhD
- 19. Meetings of the Board • Meetings should be frequent as by law • Adequate preparations and notice • Papers circulated in advance • Reports written with adequate information • Involvement of all members • Avoid domination by Chair • Avoid overly long meetings • Agree on rules on how to behave during meetings Prof.WaswaBalunywa,PhD
- 20. Performance Evaluation Board should undertake annual evaluation of; • Full Board • Committees • Individual members Prof.WaswaBalunywa,PhD
- 21. Objective of Evaluation of the Board • Assess how board is performing • Whether objectives are being achieved • Board contribution to goal setting, strategy, risk taking • How the team is performing • Assess skills of the Board Prof.WaswaBalunywa,PhD
- 22. Objectives of evaluating Individuals • Whether the individual is contributing effectively • Whether the individual is committed to the Board • Whether the individual is the right person to sit on the Board Prof.WaswaBalunywa,PhD
- 23. Wh0 Evaluates • External third party may conduct the evaluation • Non-executive member should evaluate Chair • Outsider can be engaged to evaluate Chair • Chair can evaluate individual members • Peer Evaluation Prof.WaswaBalunywa,PhD
- 24. What to Evaluate in a Board • Performance against the set objectives • Contribution of Board to goal and strategy setting • Board management of risk • Responsiveness of Board to organizational challenges • Relationship of board with management • Conduct of meetings • Composition of skill set of the Board • Effectiveness of committees Prof.WaswaBalunywa,PhD
- 25. What to Evaluate in an Individual • Commitment of members through attending meetings and contributing to Board • Their preparation for meetings and quality of the constitution • How they examine the knowledge and expertise is handling board matters • Their continued interest in different board matters through research, study and readiness to debate • Relationship with fellow board members including communication, respect etc. Prof.WaswaBalunywa,PhD
- 26. Role of Chairman • Ensure success of organization by achieving goals of the organization • Cause business of meetings to be availed in time, setting agenda, giving notices, availing paper in a timely manner • Conduct of meeting of Board to ensure participation of members, taking solid decisions and follow-up decisions of the Board. • Manage relationships among board members and between board and management • Ensure high standard of integrity, open communication and compliance with corporate governance standards. Prof.WaswaBalunywa,PhD
- 27. Board Room Behaviour • A clear understanding of the role of the board • A common vision • Independent thinking • Rigorous Debate • A usage of appropriate knowledge texture • Team work • Respect for colleagues Prof.WaswaBalunywa,PhD
- 28. Disqualification of a Board Member • Become of unsound mind • Become bankrupt • Is convicted of an offense of a criminal nature • When disqualified by a professional qualification where he is a member with a professional body. Prof.WaswaBalunywa,PhD