According to professional director Rob Campbell, “we need to be searching for effective directors and spreading the search to include a diversity of age, culture and gender”.
His view is that different situations require different governance input, and even within a given business and its environment there is a variety of ways for a director to be effective. Rob feels that one of the reasons “why one person boards are not prevalent is a recognition that diversity of opinion, skill and approach has its own value”.
Rob recognises that “one must recognise that a business does not operate in a vacuum. When you strip aside all the brand, corporate structure and mission statements a business is an economic entity. The economics of any business determines the outcome”.recognises that “one must recognise that a business does not operate in a vacuum. When you strip aside all the brand, corporate structure and mission statements a business is an economic entity. The economics of any business determines the outcome”.
Rob recognises that an effective director must study and constantly review the core economics of the business, seek to correct what is amiss, and push to maintain focus on the sound core. He feels that “Management is or should be in the field dealing with incoming and outgoing issues. The effective director keeps both oversight and communication to those in the field to clarify the economics of the business, how they are evolving, how they are being challenged, and what the options are." He recognises that an effective director must study and constantly review the core economics of the business, seek to correct what is amiss, and push to maintain focus on the sound core. He feels that “Management is or should be in the field dealing with incoming and outgoing issues. The effective director keeps both oversight and communication to those in the field to clarify the economics of the business, how they are evolving, how they are being challenged, and what the options are”.
His first point is to understand and communicate around the core economics of the business. “If you are not capable of and intent on doing that you cannot be effective”.
He feels that “there is no one set of skills or experience to enable this. It is better that a board has diverse perspectives but the core economics to which they apply must be shared. So in addition to having this focus on core economics an effective director has to be able to think constructively and co-operatively. One has to be able and willing to be open to different perspectives and to incorporate those. No director is effective, no matter how brilliant, if they are not able to work in a team”.
Its important that directors have different skill sets that are “genuine skill sets, not simply historic qualifications. For this to be the case an effective director must be constantly updating their skill set. Knowledge in today’s business is not static. This is one of the reasons he thinks we may in many boards place too higher value on length of experience and too little on the effectiveness of current skills. He hopes that there is still a “place for older people in these roles but it is a strong conviction that there is no place for old skills and ideas. No one stays up to pace without effort and continuous “new skilling” is a requirement of an effective director”.
His next comment is on a personal characteristic. “An effective director must have a strong level of probity and ethics. Despite the many laws and regulations which govern the activities of boards there is what would be to an outsider a surprising frequency of situations in which directors are called upon the exercise moral judgements on what is fair, for example as between staff, suppliers, customers or other stakeholders in the business. These judgements cannot be avoided and they should not be made arbitrarily”.
The next thing which an effective director needs is the ability to listen. According to Rob, “some of us find that quite hard especially when directors have had success in a business endeavour. The nature of corporate boards is that there is a degree of deference often shown. Directors are perceived to have some power and in particular influence over management careers. So it is easy for a director to become a little self important and to see the board meeting as an opportunity to express one’s valuable views. On occasion, this can lead to one-way communication which is, or should be in this context, an oxymoron. Listen carefully to what is being said, credit the view with being potentially right or even just useful. Feed constructive questions. Be supportive”.
“This does not mean you have to go along with everything you are advised. Far from it. One important measure of an effective director is the courage to express a considered view, engage in debate, and to seek resolution of differences. It is important not to become an isolated dissenter”.
Finally Rob says “you should be having fun. This does not mean laughing and joking all the time. But a director who is not fully engaged, interested and enjoying the business and the process involved is not effective. Being a director is one of the most fascinating and rewarding roles one can have in business. You have great access to information, options and ability to input. It is not a grim, drudging enforcement or compliance role. You have responsibilities but they have clear relevance to good outcomes so there is no need to resent or grumble about them. They are good things. Approach them with a positive view to how they assist the business. You can even get to enjoy audits!”
Henri Eliot is CEO of Board Dynamics.
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