“To be an exceptional board member, know the details first”, Mustapha B. Mugisa.
Conference speakers and lecturers have taught today’s leaders, specifically board members rather wrongly. That as a top manager or a board member, one does not need to know the details of the business in which they serve. That is the worst business advice people who have not managed any business will tell you.
It is like saying, since someone is the President and CEO of the country, they don’t need to understand the details on ground about the state of poverty and level of development in the country. On the contrary, what makes exceptional leadership is ability to be up to date about the critical details. It is not possible to devise appropriate solutions UNLESS
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You have a board member who lacks the critical skills about the business. Most of today’s board members are too busy to understand even how the business makes money, including the critical processes that must be supported to remain resilience.
While making a presentation to Board of Directors of one of the financial institutions, a Board member explained: “if I spend my time in understanding the details, what shall be the work of the MD or the junior staff. I want to focus on the bigger picture. As board, our work is to ensure going concern. As long as the business opens, other things are secondary.”
His point is valid, only after having understood the details.
Take the case of a bank, if it experiences a system down time issue due to load shedding, such could appear as a small detail. However, if daily, people cannot access their money because the banking system is off due to some technicality of power downtime left unfixed it exposes the bank to reputation risks. It is the Board business to know such details. It is until the details are clearly understood and fixed, then they can focus on the bigger picture.
I have found that the value added by majority of the Boards is minimal because they have no time to review and understand the business.
When the board sets a risk appetite as “LOW” for operational issues like system downtime, it means the board has no tolerance for any event that could cause the system to be off say for more than two (2) hours. Any event that exposes the bank’s core banking systems to downtime beyond two hours is unacceptable.
As a new board member ask:
- What is the Board’s risk appetite? i.e. how much risk is the organisation willing to accept
- How do you monitor risk appetite?
Remember the difference between micro-monitoring and micro-managing. A great leader micro-monitors. That way, you have all the information you need to make decisions.
If you are appointed as a new leader or board member, the first step is to get all the information you need. Undertake your own mini-due diligence on the business.
What is a due diligence?
The due diligence or independent business review involves analysis of the entire organization, without leaving any stone unturned.
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The following guide may help you look out for critical details to give you a good picture of the business so that you add value. Avoid being on the board or working for a company you don’t understand very well. Of course, if you are there for convenience and livelihood, you may have no guts to seek for critical information.
Below is a template for you. If you obtain and review the following information, you will understand the business well and be valuable as a Board member or senior staff.
- Download: >>> Boardmember-Template.docx (46 downloads)