When the right mix of people sit at the boardroom table, an organisation has a better chance of being in good health and on a successful trajectory. When boards appoint directors, they must carefully consider people who will appropriately suit the needs of the organisation.
Not all companies are the same, and boards are no different. They have individual needs based on the vision of the organisation and the industry they operate in. It is important to understand the importance of implementing the correct board structure to create a solid foundation for future success.
At Board Surveys, we have extensive knowledge and experience in driving meaningful change for company boards. We take a data-driven approach and work closely with our clients, resulting in tangible outcomes. Read on to learn more about why it is so valuable to establish the most appropriate board structure for your organisation.
Structuring an effective board
At its core, the purpose of a board is to ensure the organisation is well-governed on behalf of its members. The need for a correct board structure is paramount to achieving this. A board must comprise the right mix of skills, experiences and attributes to establish a framework, setting its guiding principles and vision for the organisation.
If this becomes part of the DNA of the board, it seeks to promote a diverse and inclusive culture that allows for an even spread of voices to act in the best interests of the board itself and the organisation more broadly.
Boards must use their role to bring the right mix of gender balance, age, ethnicity, and life experience to create the most dynamic and representative board possible. This future-proofs an organisation while allowing it to adapt to changes over time.
Diversity should play a role in a board structure as it allows different points of view to be brought to the table, increasing knowledge-sharing and seeking solutions to organisational challenges. Diversity can promote good governance, and at the board level, it can mean that an organisation is healthy and that this culture may filter down into other aspects of the company.
Roles and Responsibilities
Boards must be clear in establishing where the roles and responsibilities of both management and the board lie – there should be no overlap. For example, the board would likely not need to involve itself with operational matters – that should be a role for management to undertake. A board’s structure must be clear about where it needs to be involved and where not.
A board should focus on aspiring to take the company into the future and address present matters that work towards fulfilling its vision. Boards provide the vision and strategic direction for management to implement into an operational framework for staff.
Boards should promote healthy relationships by setting clear and reasonable expectations for both the board and management. The focus here is to establish meaningful dialogue, so transparency, accountability, and achieving the best outcome for the business are priorities.
It can be easy for organisations to become siloed over time. The purpose behind championing healthy dialogue and relationships is to reduce siloed work which can impact a company’s culture and strategic direction.
If boards and management align themselves by finding opportunities to increase cross-communication and collaboration, it ultimately improves the way the organisation works towards its goals.
Governance and Sustainability
So there is a clear understanding of the company’s strategic vision, the tone needs to be set at the board level. To do this, board members need to quickly stamp out poor performance and behaviour in the best interests of the company’s direction.
A factor in establishing the right tone at a board level means that it can promote good governance throughout the organisation. After all, the board is acting to ensure the company is working at an optimum level, and to do this, board members must be aware of their commitments to the organisation and the key roles they have.
Sustainability is a key element to structuring a board. However, it must be understood from several angles so an organisation can flourish now and into the future. Sustainability is not just how an organisation can keep moving forward but is also closely linked to how it looks from the outside.
Boards need to have a clear direction in showing shareholders and the broader community that what they do impacts society and the environment and what they are doing to be environmentally and socially responsible corporate citizens. Good governance and sustainability are intrinsically linked and need to be highly important at the board level when making decisions.
Continuous improvement is commonplace in business, but it shouldn’t be limited to operations and management. It is equally important from a board perspective. If a board is not structured to focus on improving, its chances to improve are also potentially diminished.
As part of continuous improvement, boards also need to facilitate succession planning which is critical to keep things evolving in real time. In the event of external pressures affecting an organisation’s control, or internal changes to a business, succession planning creates a smooth transition to adapt to any changes with minimal disruption.
When considering a board structure, there is a multitude of ways to strike a balance between skills and experience, diversity, governance, and continuous improvement. One company may operate differently from another and therefore has different goals and driving factors that motivate it. Structuring a board for success, therefore, requires a close look at all of these elements to deliver organisational growth and increases the likelihood of success.
Let Board Surveys help implement the right board structure and composition for your organisation. Speak to us to learn more.