Ineffective Boards: At the Root of Unsuccessful Organisations

Sep 27 , 2020
By Halima Abate (MD)

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Public policies, precise in their formulation, might be executed to produce unintended effects or fall prey to corruption and ineptitude. The problem might, in the end, be attributed to lack of resources or political malfeasance, but all of these mean only one thing – poor governance.

Governance is defined as how societies make and implement collective decisions through the establishment of polices, strategic decisions and activities for the effectiveness of an institution. Effective governance greatly assists the systems and organisation, as it allows a constructive conflict of ideas that find their resolution in the green lighting of the most optimal move forward, and in focused, integrated and synergistic approaches that preserve effective organisational structures.

Many organisations, representative of or owned by many shareholders, are governed through the establishment of boards that are empowered to make collective decisions and exert authority in a way that is strategic and significant to the organisation. Governing boards have the broad responsibility of protecting limited resources to accommodate the needs of the organisation and ensure their cost-effective utilisation. Such boards are in effect legally responsible governing bodies with an oversight role in setting the tone of the organisation and have a major say in its performance and effectiveness.

It is certainly true that few would then object to being board members. Indeed, it is a highly exclusive club. In most cases, the boards of organisations are made up of people who either have fame, riches or are well-connected. Whoever they may be though, their core responsibility remains the same - detect problems and suggest possible interventions.

It is thus the case that the circumstance under which an organisation fails without extreme negligence on the part of the governing board is rare. How effectively the organisation’s mission and true values are met is strongly correlated with the board-level responsibility in combating malfeasance - corruption, misaligned incentives, regulatory capture, conflicts of interest and nepotism - incompetence and poor planning.

In today’s environment, many misunderstandings about the role of governing boards exist. This probably arises from the controversies that board members are often immersed in. The paucity of board meetings due to other commitments, poor preparation when meetings do indeed happen, factions and personal feuds and competing priorities give such boards a bad name. The claim that members are there as favours given to them by powerful allies is not new and remains a potent force in casting doubt over firms' and enterprises' activities.

It is difficult to tease out the factors that make board members effective. But well-functioning members develop a climate of respect, trust and coherence. The highest-performing working boards also have progressive members that are flexible in their outlook and are not resistant to change. New ideas, new ways of thinking and flexibility should be embraced, especially in hard times, and the board should be able to reflect that. Besides, transparency, accountability, participation, integrity and capacity should be the centrepiece of the governance.

But such effectiveness is often undermined by personal and political interests. This makes most boards unresponsive to outside feedback, unable to take chances and dependent on managerial expertise for decision-making, making their oversight roles quite superficial. It also does not help that the members sometimes become so in conflict with one another that they begin to undermine one another.

It is time for some fundamentally new thinking about how boards should operate and are evaluated. We need to consider not only how we structure the work of a board but also how we manage the social system that a board actually is. Adherence to procedural rules and holding a progressive outlook is the more pressing need. They need to be determined, high-functioning working groups whose members trust and challenge one another and engage directly with the critical issues of the organisation to serve as value-adding entities.

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PUBLISHED ON Sep 27,2020 [ VOL 21 , NO 1065]

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