Prerequisites for building quality boards of directors – 7

I will also dwell on training, meetings and travel by board members while conducting assessment.

There are scenarios where management and boards collude and training or meetings are arranged under the pretext of learning and focus, but the choice of location raises suspicion. Sometimes even local trainers and directors select distant venues, claiming that it is for the sake of quiet and focus.

I was once told of a story where a certain board was dissolved after the appointing authority discovered the true motive behind holding a meeting in another town.

In some scenarios, boards increase the frequency of meetings and create multiple ad hoc committees, often under the pretext of enhancing oversight.

However, this constant engagement can distract management from its core functions by constantly keeping it busy through implementing directives, writing reports and attending sessions rather than taking action.

Although internal audit and other oversight bodies exist, they are often unable to point to such shortcomings effectively. I was once made aware of a case where a department responsible for proper governance highlighted this problem in its report to the board and the head who raised the concern faced a serious backlash.

This example underlines why assessors need to include a review of meetings, travels and training conducted and measure their impact on the organisation.

Sometimes, chairpersons or board members pressure management into organising training courses that are of little relevance or value. If management is not resolute, it may yield to these pressures and allow such questionable training to proceed.

When management resists, conflicts can arise. This emphasises the importance of including these dynamics in board assessments, as proper evaluation can deter misbehaviour and promote accountability.

Another key responsibility for assessors is attending board and committee meetings to observe how discussions unfold. I recall while using the traditional questionnaire method, one board member questioned its validity and practicality, echoing what I am proposing here – that questionnaires should not stand alone as an evaluation tool but rather be combined with document review and observation.

Assessors can also conduct one-on-one discussions with senior management and individual board members to understand the board-management relationship.

There are situations where tensions escalate and some board members use unacceptable language towards senior management or vice versa. I once heard of a board that would set aside all submitted reports and attack senior management over ad hoc issues, many of which were unrelated to the meeting agenda.

Including senior managers in the assessment process allows assessors to capture such behaviour, providing insight into the dynamics between the board, CEO/MD and senior management.

To ensure the findings are reliable, assessors should triangulate information from multiple sources, board documents, committee charters, reports and feedback from senior managers.

This comprehensive approach strengthens the validity of assessment results offers actionable insights to the appointing authority. Such evaluations enhance productivity, responsibility and accountability, while also enabling management to perform its functions effectively.

The assessment results should be compiled into two reports. First, a report to the appointing authority, prepared after discussions with the board and individual members, serves as a reference for retention or replacement decisions with regard to board members, the CEO/MD, secretary, or chairperson.

And then second is the development report, shared with the board and individual directors, which guides improvements in conduct, addresses performance gaps and ensures boards are not left unchecked.

Assessments of board performance can at best be conducted annually or once every two years, depending on resources. Their purpose is to drive improvement and prevent poor practices, not to unfairly single out individuals.

When applied consistently, these methods cultivate a culture of accountability, responsibility and continuous enhancement at both the individual and board level.

In next week’s eighth and final instalment of my series, I will share insights into how remuneration for directors. I will also share additional procedures to be used when appointing board chairpersons when they are assigned separately.

I will also advise against appointing board members by virtue of their positions and provide concluding remarks.

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]