By Anil Sharma

Here’s an interesting statistic that’s gleaned from a survey done by the National Association of Corporate Directors.

“Only 25% - of the total time available to Board Directors was devoted to reviewing key company data and reports!”

Of the 250 hours spent on average every year by Directors on board-related matters, only about 61 hours were for digesting reports and a large part i.e. 74 hours spent in Meeting process.

A Board Director aspires to make the best of opportunities for the companies’ stakeholders, yet they get caught up in the drudgery of the ‘this-is-our-process-here’ and spend time on compliance, presentations, administrative trivia while missing out on the real strategic and substantive matters.

What is the way ahead for passively run Boards that typically deliver scripted statements to shareholders?

Start with Leadership

Boards will need to transform as forward-thinking group of leaders that meaningfully straddle the two sides of delivering Shareholder expectations and overseeingExecutive Management.

One can draw parallels in the way a company is managed, and a Country is governed. We have witnessed a massive stakeholders mandate recently for PM Modi’s development intent and resultant grass roots reforms and can learn lessons in leadership from an action & results oriented Prime Minister of India.

What learnings can company Boards draw from the transformation leadership in action as exhibited by PM Narendra Modi?

The following three parameters have potential to execute transformative leadership for effective governance;

1. Retooling Governance operating model
2. Shaping board dynamics with management
3. Reviewing Board performance   

A.   Retooling Governance operating model

Successful business leaders who have managed growth have a secret - they term it as managing their 'business with a certain rhythm' where a rhythm can be understood as a regularly occurring sequence of processes and events.

In the context of managing a large enterprise this can be understood as the Weekly, Monthly, Quarterly and annual work routines to run the business effectively.

What could such a model look like?Here’s an example;

I.            Board Pack: On a quarterly basis, the Board Pack can resemble the Management discussion and analysis for the past quarter and then supplemented with the numbers. In addition, the Board will also consume the reports from various committees and appraise themselves to forge relevant actions on assessing the CEO, developing the leadership pipeline and conduct risk management processes across the organization.

II.            Monthly review: A quarter is a long period for the Board to be out of touch from the business. Without getting into a meeting, the CEO can be helpful in preparing a Monthly overall review as an email communication that can help keep Directors updated.

III.           Engagement Surveys: Boards can request semi-annually, that management initiate surveys to assess very specific issues within & outside the company.

IV           Strategy review:A Strategy review before the final quarter to assess the direction of the business in future and its environment is critical.

V.           Field visits: When conducted with operating teams, this helps assess the improvement areas and the state of competition / other disruptions.   

B. Shaping board dynamics with the management

At the beginning of May’19, PM Modi thanked the entire PMO staff as the outgoing head of Govt making way for the eventual new administration. Known for his authentic speech, the PM exhibited 3 key leadership criteria;

  I.            Defining the Purpose

PM Modi clarified that the expectations of the Indian citizens from his Government are high. The PMO as a synergistic team needs to rise to the occasion and deliver on the objectives of the manifesto.

  II.            Sharing of Leadership

PM Modi enunciated his philosophy that an authoritarian leadership approach is not conducive to achieve multi-faceted development goals. He stressed the achievements have been as a result of leadership practice at all levels of the hierarchy and this helped build detailed execution plans from brief mission statements expounded by PM Modi. 

III.             Appreciating diversity & building partnership

In his speech, PM Modi extended special thanks & appreciation to the families of the PMO staff, who were key in supporting the PMO officers to performnational duty. Modi stressed that the sacrifices of the family institution would lead to a transformed India for all.

Board members under the sense of delivering value to the management discussion at times may spar with the executive team. This happens when specific responsibilities and purpose definitionfordirectors is missing.Articulating a professional job profile that goes along withthe responsibility, can enablerobust board practices.

Any profile definition starts with asking;‘What is the purpose for this role?’

Here are few pointers;

Vision

Being careful to avoid getting drawn into administrative matters, Boards need to encourage seeing the big picture and look for answers to;

• “Why does this Organization exist?”
• “Who does it serve?”
• “How does it make money?”

Culture:Boards can start with defining the way-we-do-things-here. It starts with the essence of mutual respect, seeking out contributions and forgingfact-based consensus. 

Setting expectations and boundaries with Executive Management: The governance mechanism can be better structured by setting the Executives expectation on what the Board would like to review, the format and the timelines to do so.

C. Reviewing Board performance    

Most Leaders remain unaware of their weaknesses.

In Coaching practices, this came as an interesting observation: when Leaders went through a 360-degree leadership profile assessment, they came up with low scores on certain leadership behaviors. They became receptive after the initial shock had given way to acceptance.

What comes about as a weakness is a result of the Leader not doing something. This is more like an act of omission, which actually gets noticed by the stakeholders.

The need for Board performance reviews was mandated by the Companies Act of 2013 to facilitate better performing boards.

Here too, corporates can learn from the Modi Governments way of measuring and managing performance. This is probably the only Federal Government in Indian history to publicly provide real time updates on flagship Government Schemeson https://transformingindia.mygov.in

https://transformingindia.mygov.in/performance-dashboard/

Taking time to plan and structure themselves for the governance challenges will allow a Board to start a job that is ultimately congruent with the adage“Well begun is half-done!”

Author Mr. Anil Sharma is the Director at Management Consulting firm M/s Leaders for Growth, Mumbai and is a qualified executive coach for professional success. Anil is a Member of the Institute of Directors and helps businesses with corporate governance advisory. He can be reached on anil@leadersforgrowth.com www.leadersforgrowth.com