29
Jan

The advantage of selecting a Director who holds multiple Directorships is clear. But make a mistake and you’re left with a bag of hot air.

Multiple Directorships in the right hands can provide a unique capacity for benchmarking and the development of a normative framework of comparison and trend identification.

The elephant in the room is that the opposite of one person holding multiple Directorships and making a positive contribution, is equally true and in South Africa unfortunately characterises many Directors.

In the wrong hands it simply creates the opportunity for the individual to massify income generation while neutralizing the Directorship role. In the wrong hands it is trading on ones “old boy network” or BEE status at the expense of a fitting and proper contribution to solid corporate governance.

A mature directorship is a massive asset in the Corporate Governance repertoire of a savvy company. Mature directors have the capacity to draw on hard-earned success and failures being able to translate those experiences into measurable, replicable quantifiable metrics and analytical processes. That individual is able to spot trends indicating success in management, oversight and project implementation, but equally is able to identify mistakes before they happen indicating possible pitfalls as an advisor to management rather than someone responsible for operational implementation.

Despite South Africa harboring many codes on Good Governance, the norms of those codes, are hard to come by. Very little has been documented and extremely scarce research exists focusing on behavioral and performance normative metrics in governance. At best it is allegorical. At worst it is a figment of the imagination and changeable to suit the situation rather than standard-based, measurable and most importantly replicable.

That is why the constant is the experienced director who holds multiple directorships and can be to a Board of Directors what a normative database would be in any other standardised environment.

What a waste therefore when the seat is warm but the capacity missing!

There are a number of popular benefits, which can accrue to a Board strong enough to select effective directors who hold similar roles on multiple bodies.

People who sit on many Boards have the ability to control their time effectively. They do not have space for inefficient time wasting and hence are diplomatically able to hold meetings within ridiculously constrained time space rather than allowing those meetings to linger with very little productivity. Such effectiveness can save huge amounts of time and equally administrative budgets and even, to the chagrin of professional managers and career directors, do so remotely via video-conferencing and tele-conferencing. Corporate Governance is not a face-to-face sport and yet in South Africa the luxury of unaccounted for, wasted expenditure has unfortunately made it just such a pastime.

Effective directors take pride in being intolerant of hypothesis and academic theory. A Board generally constituted of accountable and effective members can distinguish very quickly between strategic creative license, which is highly encouraged, from unproductive inexperienced postulation going nowhere. A multiple directors’ exposure to these trends in different environments helps sharpen such discernment.

Board meetings generally take too long. Often scheduled over many days they consist of massive wasted time on socialization between the members and very little productive and effective time spent dealing with the business end of the meeting. Such meetings are often more about rubber-stamping operational activities and less about insight, analysis and strategic decision-making. They are traditionally scripted, driven and orchestrated by controlling a CEO, often in-concert with an ever-absent Chairperson. Effective meetings cut out the socialisation. They ensure that every Board Member is called upon in sequence to contribute in his or her area of expertise and then for decisions to be made on the basis of facts, analysis, strategic debate and discourse. If time must be spent it should be on these processes and only these. Board Members are paid as external consultants and hence their time is expensive.

It cannot be over-stated that effective Boards hold every member individually accountable based on his or her particular area of expertise and generally for the decision making of the entire Boards process. Effective Boards are not fat. There are few exigencies and they do not create a culture of excess. Every single person on that Board has a role to play and without them the Board becomes defunct and ineffective. A typical Board reflects expertise in areas of both financial and managerial accounting, law, human resource, organisational diagnostics and insight, labour relations, marketing and sales and leadership. Each of these are unique disciplines requiring the best representatives in a team to be operative and functional. Such a Board becomes very quickly intolerant of glory-seeking members who are unproductive and eagerly expunges them without a thought.

The advantage of assembling a Board of Directors who you need rather than those you want, is that very little extra by way of research or insight is required because such people bring the necessary tools with them to these meetings. Such competence allows for real-time comparisons and benchmarking based on personal experience and insight and hence is often quicker and more reliable than processes involving a completely new and green collection of would-be Board members.

The very process of discourse will quickly allow for generic or company specific case studies to be customized to the situation at-hand. Inferences are specific and decision-making generally instantaneous.

What is remarkable in-terms of the concept of effectiveness at these levels is the distinguishing culture in a company with a well run Board. It is a culture characterized by intensive mentoring at the senior levels through Board strategy and decision-making, and effective coaching off the grid and on a voluntary basis, to ensure corporate effectiveness.

A well run Board automatically translates into a single, unified and identifiable mission statement from top to bottom. Rare, but present if one searches in the right places.