Why good boards fail: Part 1

The Middle East business landscape and economy have changed dramatically in the last 12 months, and many believe it will never return to its oil-driven heydays of 15 per cent GDP growth per year.

The arrival of strong international competition, dropping legal and cultural entry barriers, rising geopolitical instability, the growth in unemployment, and the collapse of historical monopolistic practices – all of these elements indicate that any board that choses to ignore these changes or elects a ‘proactive wait and see strategy’ is simply being unrealistic.

Gone are the days that being on a board of directors in the Middle East was seen primarily as a prestige position and supervisory role. Being a board member now is about active leadership, personal accountability and senior executive coaching rather than passive supervision. Board members need to move from being reactive to dynamic and be approaching their board work with increased vigour and dedication to make a positive difference to the organisations on whose boards they serve.

In this monthly series of articles, we distil 10 simple boardroom principles for easy implementation; all based on personal boardroom and client experiences over the years. The failure to implement these principles is the main cause as to why good boards fail.

Principle 1: Board mix

A board of directors is only as good as the individual board members who sit on the board. Understanding the importance of the role, whilst possessing the required skills, relevant qualification and experience is fundamental to success.

Ensuring that board members have an appropriate mix of skills, competencies and characteristics is an important aspect of building a good board and is critical for boardroom performance.

In recent years, boards have evolved into requiring more specialist skills in particular areas. For example, newspaper corporations have been actively seeking IT and multimedia expertise as their industry shifts more online.

However, as well has having a specialised capability, board members also need broad competence and experience across a whole series of skill sets to fulfil their obligations as board members. This has implications for board director acquisition and the development of a robust board director assessment framework as it becomes more challenging to find that combination of specialist skills with the broad suite of experience.

Increasingly, boards need deep operational and industry skills with members who understand the complexity of the business.

Furthermore, the board’s size and the structure of its committees will also have an impact on effectiveness. This calls for a board director assessment framework that encompasses leadership ability, business and industry know-how along with organisational cultural fit.

Jan Bladen is managing partner of Governance Creed – a niche advisory firm specialising in governance frameworks design, board performance, strategy development processes and corporate risk optimisation.