Board of Secrets
Mystic sometimes surrounds an organisations Board of Directors, fuelled by the perception that it is seen as an exclusive and overly paid club of retiring men in dark suits sitting around a board room table disconnected from customers and employees.
“…the motives of the board reflect the needs of the shareholders …. And that at times it is in direct conflict with the needs of the customers and employees.”
In an endeavour to sort fact from fiction we pull the veil of secrecy away to reveal what a board of directors is, if women are allowed in, what the board is responsible for and most importantly what can you to do to gain their approval during your next presentation!
The board of directors is a body of elected or appointed members who acts on behalf of the shareholders (members) in overseeing and governing a company.
In debunking the myth that board members are mostly men, the Australian Institute of Company Directors collates information on board diversity in Australia. Women have comprised 55% of new appointments to ASX 200 boards to date in 2012 (23 January 2012).
The breadth of the board’s responsibilities is determined by what is delegated to it however there are five broad areas of responsibility that most boards in Australia carry:
- Compliance, the board is ultimately responsible for ensuring the framework of rules and guidelines by which a company must operate including policies and statutes are adhered to and ensure the company’s assets are protected through appropriate risk management.
- Company Performance; The board delegates the day to day management of the company but remains accountable to the shareholders for the company’s performance and rate of achievement against it’s stated objectives.
- Strategy and policy making; development of the overall strategy and policies to move the company successfully forward.
- Supervising; the level of board involvement often depends on the size of the organisation and very much on the skills of the CEO and the CEO’s executive team. The board monitors and supports the executive team in an on-going way.
- Approve and work with the CEO; the board is responsible for clearly communicating its vision to the CEO and shareholders. Inturn the CEO is responsible for interpreting the board’s strategy into action items for the organisation.
The Australian Institute of Company Directors (AICD) proposes the Tricker’s framework (Table1) as describing a 'best practice' method of operation of the board.
It is worth noting that whilst this best practice method is sound in theory, in reality directors hold personal liability for breaches of the law which encourages their concentration on compliance whilst investors are more heavily interested in company performance. Directors must balance these roles and give enough weight to all.
When presenting to the executive team or the board it is important to remember that the motives of the board reflect the needs of the shareholders (whom they represent) and that at times it is in direct conflict with the needs of the customers and employees.
A presentation to garner support for a project sign off, funding or otherwise should align to the key areas of the board’s responsibilities. Such an alignment will demonstrate understanding of the board’s position and the next time those aging men (and women!) get together in secrecy around a boardroom table, sign off of in favour of your presentation might be the key agenda item for the day!