Prerequisites for building quality boards of directors – 2

Examples narrated in my previous article revealed an underlying governance challenge – blurred understanding of where oversight ends and management begins. While it is important for board members to remain informed about operations, they must do so through established channels, reports, site visits, or management presentations rather than through ad hoc or self-directed actions. Boards are most effective when they concentrate on policy direction, institutional performance and long-term strategy, leaving daily execution to management. Maintaining this balance not only builds mutual respect but also strengthens accountability and trust across an entity.

While some boards exhibit problematic behaviours, I have also observed organisations that take a structured and disciplined approach to board management as I will propose in this series of articles. These organisations implement structured process for on boarding, training, evaluating and compensating their board members and, as a result, they tend to have highly effective boards. Members of such boards remain focused on their core responsibilities of oversight and strategic guidance, providing strong support to management in executing the organisation’s objectives.

For organisations to thrive, it is essential to understand and apply effective methods for managing board of directors. Adopting these methods can prevent negative influence and strengthen governance. As illustrated in Andrew Ross Sorkin’s book, Too Big to Fail, Page 220, “…a little Dutch boy noticed a small leak in the dike protecting his town. Somewhat desperate and worried about the horrors of the flood, that kinder and gentler Dutch boy, stuck his finger in the dike and held it there until help arrived. Though uncomfortable and uncertain, his intervention prevented a disaster.”

Similarly, while writing these articles, I put myself in the position of that kind and gentle little Dutch boy, seeing my articles as interventions that might help prevent disasters in most organisations. I observed challenges in board appointments and governance and felt it was important to share practical insights that could help organisations improve the effectiveness of their boards.

I will dwell on the quality of boards of directors and the processes that are important to be considered during appointments, continuous training during board membership and how to measure performance of board members during their tenure. I will also stipulate significance of good compensation for members of the board.

Upon joining one organisation as managing director, I observed that the prevailing approach to appointing board members involved the MD identifying potential candidates and submitting them to the board, which would then select a single candidate for presentation to the shareholders’ annual general meeting (AGM). Recognising the need for more structured and transparent processes, I proposed several improvements.

Initially, when a vacancy arose, CVs were submitted by potential identified board members and three candidates were shortlisted. These candidates were then interviewed by a board committee, which included me as the MD. The successful candidate was subsequently presented to the AGM for formal appointment. This procedure was repeated when additional board members were required later on.

A transparent and competitive appointment process is essential to ensure the board is effective and accountable. When candidates are selected based on merit, experience and integrity, it not only strengthens the board’s oversight and strategic role but also prevents favouritism and conflicts of interest. This foundation is crucial for cultivating board members who are committed, responsible and capable of contributing meaningfully to the organisation.

With that in mind, we later on further improved the approach to make it more open and competitive. The vacant board positions were advertised publicly in newspapers, which brought in a larger pool of candidates. Management prepared profiles for all candidates and submitted them to the board for shortlisting. Successful candidates were then invited for interviews conducted by the board committee and the final candidate was presented to the AGM for appointment.

These changes represented an improvement not only by increasing transparency, but also ensured that candidates were evaluated on merit rather than solely on recommendations.

In the next part of this series I will continue to discuss recruiting procedures for board members. I will also point out organs that are supposed to be engaged in the recruitment process. 

Dr Muhsin Salim Masoud is a seasoned banker and academic, who has also served as managing director of the People’s Bank of Zanzibar and Amana Bank. [email protected]