This article has been written by Sanjay Saraswat pursuing an Executive Certificate Course in Corporate Governance for Directors and CXOs from Skill Arbitrage.

This article has been edited and published by Shashwat Kaushik.

Introduction

For the success of any organisation, whether public or private, profit-making or non-for-profit, a highly focused team of experts within the organisation is necessary. To achieve tangible business results, a high performing committee shall have to provide strategic direction, oversight, accountability and support to the management and stakeholders. The high performing board should also steer the organisation efficiently and effectively, taking into account the current situation and emerging trends.

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High-performing board committees should be competent and inclusive to evaluate projects, possess an awareness of relevant land rules, guidelines, and permissions required from statutory bodies. To be in control, they have the ability to check and chalk out action plans in order to deliver results in line with the organisation’s goals. Additionally, they should be able to guide resource management and help to regulate ethical and positive financial outcomes.

Salient features of a high-performing board

According to global management consulting and executive search firm Egon Zehnder, board members and executives should collaborate to enhance the success rate. The study also suggests that for a board to be effective, the focus should be beyond its fiduciary and compliance duties. For long term sustainability of an organisation, the board should be constantly on the lookout for talent and delve into strategic issues for the long-term health and sustenance of the organisation.

The challenge in creating a high performing board is aligning board talent and composition with the company’s executives and strategies. To achieve this, an exercise has to be undertaken to include finding directors with both general business experience, and specific expertise needed by the company, followed by identifying the board’s future talent needs.

However, experts recommend taking a variety of factors into consideration when the process of constituting a high performing board is undertaken. Ashley Summerfield, CEO of Egon Zehnder, is of the view that the diverse viewpoints and backgrounds of the directors are important to constituting a healthy, progressive and attentive high-performing board.

The diversity and complexity of the organisation should also be reflected in the board to bring   varied dexterities, competencies, adroitness and experiences to the board and its meetings in taking decisions. Additionally, board members should possess a keen sense of the socio-economic environment that the organisation is operating in.

The board should bring in talent to ensure focused decision making as per the vision and goals while taking decisions regarding the company’s operations. For a robust board, it’s important that inclusive, honest and open discussions are encouraged to resolve problems and long term challenges anticipated by the management and domain experts.

Strategies for constituting high-performing board committees

The processes and frameworks involved in constituting high-performing board committees are directly responsible for their outcome. The strategies for framing high performance boards should be integral and should support operations. Agility and responsiveness to emerging circumstances are other important aspects for performing boards. Steve Bowman, Managing Director at Conscious Governance, outlines the following core principles for the effective constitution of high-performing boards:

  1. Developing decision making frameworks and using a company’s mission objectives as a reference during meetings.
  2. Encouraging members to ask questions or raise concerns, if any proposed actions are not in line with the company’s guiding principles.
  3. Referring to past decisions and reviewing them to revalidate their utility with organisational values and current situation. Wherever required, adjustments should be made for course correction and deciding on future lines of action, including risk management.

The organisation’s mission and vision should be the guiding principles, while diversity of viewpoints and experiences should be the key factors in driving the board. Effective communication and feedback protocols are instrumental in the objective selection and on-boarding of board members.

A clear and common vision and clarity of mission and objectives facilitate organisation friendly decision-making by the board. For deciding, monitoring and achieving short, middle and long term organisational goals, boards should meet more often and not just in AGMs. Meeting frequency helps in fixing priorities and on field actions. Reviews at regular intervals also help in  updating the vision and mission and aligning the organisation with changing times and emerging situations with the objective of overall benefiting all stakeholders, such as customers, shareholders, donors, partners, and regulators, and not a selected few.

Effective communication is key to success for high-performing board /committees

Effective and unbiased communication is the key to the success of a high-performing board/ committee. A high-performing board has the right to agree or disagree with the report and proposals being put to them for consideration. The factuality of the data and the situation put before the board need a 360-degree evaluation before accepting or rejecting an agenda. The anticipated challenges or market situation should be analysed objectively by the board before taking crucial decisions. One important aspect of maintaining objectivity, speed, and better decision making is to circulate the agenda well in advance and give the board members the opportunity to ask for details /data in support of the assumptions / agenda. Before finalising  policies and charting the way forward, the board must understand the viewpoints of the stakeholders and should address disagreements and dissent in an open forum to avoid compilation in the future and to ensure unanimous consensus. Nonrestrictive channels of communication as well as conflict resolution after open discussion at the appropriate level will go a long way. Also, the issuance of detailed, documented minutes will ensure transparency in decision making and the accountability of all stakeholders.

The board should be progressive enough to ensure the assessment, evaluation, orientation and training of the board committee members at the constitution stage. Regular assessment should continue thereafter in order to create a dynamic, high-performance board that is actually contributing to the overall growth of the company.

An appropriately experienced, involved, progressive and vocal chairperson is pertinent for a successful High performing board. He must be strong, fair and demanding, and he has to act as a custodian not only for the values of the organisation but also for the benefit of all the stakeholders and to form a positive public perspective. To ensure appropriate involvement, roles, responsibilities, and duties for the chairperson must be codified at the constitution stage to ensure the healthy functioning of the organisation and ground level operations.

Responsibilities of high-performing board committees

A high-performing board has superior fiduciary responsibility to maintain the financial health of the organisation. While ensuring financial health, the board has to also ensure that all  regulatory and ethical standards are being complied with. Balancing practical imperatives with ethical concerns is a challenge that the board has to undertake to provide the required  leadership and oversight for the decisions it takes and at the same time, it should be able to hold management accountable for any lackadaisical approach to achieving the set targets and modus operandi. The overall good and sustainability should be the key principles for high-performing board committees. The board is also responsible for developing forward-looking governance structures and facilitating efficiency in the organisation.

It is imperative to cultivate a constructive and supportive culture in the organisation. The adopted or cultivated managerial system by the Board should support its own functions, set examples of organisational values for others to follow and promote effective management through clarity in directions, creativity, capability in problem-solving, collaboration for organisational growth, commitment to organisational improvement and prioritising actions for continuous improvement.

Optimising involvement of high-performing board committees

It has been observed in various cases that despite reputed and intelligent members constituting the board committee, companies have failed. On the other hand, in organisations where board members devoted time to learning about the fundamental issues and operational difficulties of the shop floor, the management and the executives, improved decision-making and execution of board mandates were achieved. 

It is imperative for a board member to understand the core business activities of the company to facilitate effective, tactical decision-making as per the core business activities. This is especially critical for companies operating in data-based or scientific domains. Members of a high-performance board committee may also proactively interact with various stakeholders and project heads to understand and assimilate necessary information specific to the environment. This approach will equip the board members to take focused decisions, and as a consequence, there will be better coordination between the management and the board, which will build trust with all stakeholders

An interface between board members and management has to also be developed with the  management for monitoring and reporting. A clear delineation between the roles of board members and management is essential for organisational success. To effectively delineate the two important verticals responsible for the success of the organisation, a well drafted document  should be circulated and shared with all concerned

The document, which elucidates the roles and responsibilities of the board and management, will mitigate the risk of conflict between the two and help to inculcate mutual respect and trust. In keeping with the spirit of open and consistent communication, structured protocols for reporting and review must be created, which will help the organisation adhere to its long-term vision. The board may also encourage the management to come up with new strategies for the company’s success; once accepted, the strategies for benchmarking performance should be put in place and an action plan to manage anticipated risks should also be in place beforehand. 

Another interface for board committee members with management and executives can be set up at the monitoring and reporting level. Clear delineation between board and management is essential for organisational success; to do so, a neatly drafted protocol should be circulated immediately after constituting the board that demarcates the roles and responsibilities of the two verticals to mitigate the risk of conflict and to inculcate mutual respect and trust. In keeping with the spirit of open and consistent communication, structured protocols for reporting and review must be created, which will help the organisation adhere to its long-term vision. The board may also encourage the management to come up with new strategies for company success, and monitor the success of these strategies by benchmarking performance. It may also create action plans to manage anticipated risks.

Conclusion

When it comes to a high-performing board committee, the sum is greater than its parts. The success of a board committee depends upon various factors; it is not limited to the appointed individuals and their talent and is affected by their capacity to work collectively as well as in tandem with company executives.

High-performing board committee members must act with integrity, and serve as the north star for the company’s ethics. The clash of personal agendas and company interests may derail the impact of the board committee, and it is necessary to devise fail-safes against the same, at the constitution stage as well as operational stage. Failing to do so may damage the long-term health and reputation of the organisation.

In conclusion, the success of an organisation hinges on the effectiveness of its high-performing board committees. By fostering collaboration, embracing diversity, and ensuring robust communication and decision-making frameworks, these committees can provide strategic oversight and drive the organisation towards its goals. Establishing clear roles, continuous evaluation, and proactive stakeholder engagement are essential. Ultimately, a high-performing board sets the foundation for sustained organisational growth, ethical governance, and long-term success.

References

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