Boards, what for?

I keep seeing long articles on the subject of the composition and behaviour of company boards.

You would have to think that this implies that we in Australia have a problem with boards. I think we do.

In terms of the behaviour this is what I think boards should do:

On a personal level, board members should mentor the CEO.

On a sub-board group level, boards should advise the CEO.

Collectively and individually, boards should audit a company’s reportable data; directors are on the hook for reportable data and this is to ensure that management is behaving both ethically and legally. Normally they are, but there are enough instances of bad behaviour to make this a relevant task.

Boards need to approve management strategy and plans, but not before they have had input and recommended remediation, if required.

And, of course, boards need to hire and fire the CEO. Firing should be seen as a last resort and executed rarely. Indeed, planned replacements of the CEO, with the CEO cooperation, is a much better bet. If a CEO is ever fired then the board that put the CEO in place also needs to go.

As to board composition, the primary issue here in Australia is that boards are often made up of ‘affinity’ groups with individuals of similar attributes, and also people that fail to understand what the primary purpose of a board is (as per above). Some deep and relevant industry experience, and a good mix of this, also seems like a sensible idea.

Getting board composition right is both an art and a science; see my article on the subject at http://issuu.com/ianmax/docs/bored_with_board_meetings