Written by Joseph F.X. Zahra, 16 June 2014
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Board directors expect to receive what they consider a standard board agenda. It includes management accounts, (perhaps) a sales and operations report, (hopefully) budgets, a request for approval of a capital expenditure project, besides the even more standard corporate governance items of approval of half yearly or end of year financial statements, auditors’ reports etc. I consider these the “hard agenda items” of any board meeting. They are rather routine and become less engaging when the company’s performance is not facing any external or internal turbulence and the board meeting becomes more of the same.
This description of a board agenda and the subsequent meeting is far from being reflective of a healthy animated board. The agenda is expected to stimulate discussion and debate and be directed towards agreement, decisions and approvals. The board of directors is not a rubber stamping committee, but a decision making body with authority and teeth. It has to consider not only the restricted items of financials and governance, but has responsibility for a much wider spectrum of matters that relate to stakeholders. Is company strategy discussed at board level? What about the performance of key executives and people performance and strategy? Is corporate responsibility an item on the agenda? Many of these “strange” items can easily be given short shrift in boardrooms that are famous for their macho attitude – an attitude that bulldozes over the agenda.
There are robust corporate governance principles behind this suggestion of including strange items in the agenda. First, the company operates in an organic environment composed of inter-relationships (sometimes complex and intricate) with various entities in the supply chain, with more discerning and informed consumers and society. Second, directors need to be committed to the enterprise and to enable them to do this, they need to participate in the wider process of decision making. Finally, directors have to be open –minded, consider their decisions in a wider context, think beyond data and statistics, and understand that any decision they take has an impact which goes beyond the confines of their company.
I will go for a strange board agenda.