The board of directors in a company is responsible for the success of the business just like a captain of a ship is responsible for its safe sail. The captain is responsible for charting the course of the ship, ensuring that it stays on track, and making decisions that keep the crew and passengers safe throughout the journey.
Similarly, the board is responsible for setting the strategic direction of the company, ensuring that it is managed effectively, and making decisions that protect the interests of shareholders and other stakeholders from reputation and other risks like fraud and penalties for non-compliance. The board provides oversight and guidance to the executive team, much like a captain guides the crew.
The ship captain is accountable for the safety and well-being of everyone on board, the board is accountable for the success of the company. It must ensure that the company is managed in a way that maximizes shareholder value while also considering the interests of other stakeholders. An effective board must make a deep dive analysis of the stakeholders, profile them and understand their interests and expectations, and most importantly, craft strategies and interventions to meet those expectations.
Every captain knows that they will find a rough patch in their journey where the waters are challenging to navigate. Like a ship sailing through rough seas, a company may encounter challenges and risks that require the board’s attention. The board must navigate these challenges with skill and determination, making decisions that protect the company and its stakeholders. After all, the board should provide insights that the executive staff may not have. The board brings experience, leadership acumen and connections that are essential for success.
The board plays a critical role in corporate governance for business success. Companies with effective boards are more successful than their counterparts. By acting as the captain of the ship, the board ensures that the company stays on course, makes effective decisions, and navigates challenges with skill and determination.
If you have a board of directors, ask yourself: is our board effective?
Do board members ask for the same benefits as employees? Do board members have time to understand the business, its competition and the market dynamics by doing their research as well as reading all board packs and induction materials? Do board members proactively engage with the CEO and executive to add value? Do board members want offices at the company like the staff? Or your board members are people with skill, experience and passion for the success of the business?
For effective board training and induction, contact Summit Consulting Ltd.
By Mustapha B Mugisa, Mr Strategy. Copyright 2023 All rights reserved. Mustapha is the author of the book, “7 tools of an effective board member” which is available on Amazon.
