CHOOSING A BOARD TO STEER YOUR BUSINESS
Over 90% of businesses in Kenya fall under the micro, small, and medium-sized enterprises; a space that is highly active and full of potential that however rarely takes advantage of the value proposition high net worth boards present. Depending on the size of your business and your future aspirations, you must consider among available options of advisory services to your business and how to derive value from them.
For micro enterprises– those with less than 10 employees it is best to identify and engage a business coach or mentor to help them guide your business. Small enterprises with 10-50 employees should consider engaging business advisors or a full board based on their financial capabilities. Under medium size enterprises with 50-250 employees, having a full board is a must.
Who are the board members?
Board members are individuals appointed, nominated, or elected and entrusted with the mandate to guide the company and sign off on its strategic direction while also being tasked with hiring the CEO and other key staff.
Board member appointments in Kenya are guided by the Companies Act 2015 and are often guided by the company’s board charter. The primary roles and expectations of board members include acting in good faith, exercising good judgment, exercising diligence, acting ethically, avoiding conflict of interest, and guiding the company strategically.
Choosing your board members
To have a functional board, one needs to choose well and this decision is informed by the company’s SWOT analysis. Your strengths and weaknesses are addressed by internal capacity while your board should be well suited to mitigate your external weaknesses and exploit the opportunities that exist therein. Thus in choosing a board, you need a mix of the following skillsets: –
- CEO Whisperer– typically a knowledgeable person who commands industry respect and one your CEO respects and looks up to and can bounce ideas to. This member largely brings wisdom and guidance to the board and will usually serve as its chairman.
- An Industry Expert– This member usually has a deep understanding of your industry and will bring industry knowledge and credibility.
- Voice of the client and staff– Typically this will be a member with a marketing or HR background that vies the business from the staff/customers perspective and brings stakeholder sensitivity to the board.
- The Diplomat- This member opens doors, brings in business, has the right contacts, manages crises, and is best suited for business growth and development.
As a business person, identifying and constituting your ideal board is critical to the success of your business as the board typically informs, shapes, and guides the direction of your business. In this regard, the process of choosing a board has to be conducted with utmost diligence and with the interests of the business at heart, and where these members are not in your immediate circle prepare a pitch document and approach prospective members to sell your vision.
Deriving value from your board
Onboarding board members is essentially an investment for the business as it typically has a cost implication and in this regard, how do you derive value from them?
- Ensure your board and management are reading from the same script and steering in the same direction. Management must feel the board is supporting them and the board must be confident that management is feeding them with the right information to guide their strategic input.
- The board and management must operate transparently
- Teamwork and cohesion within the board. Members must understand the business, prepare for meetings, take roles seriously, and leverage their expertise and networks to bring value to the board. Non-performers must opt-out.
- Focus and or restrict themselves to the company’s strategic direction. Many instances happen where board members get embroiled in operational issues; a role designated for management.
In this regard, it is imperative for the business through a business consultant to conduct an annual evaluation of the board’s performance. This not only informs the business if and how the board is performing, but it also helps mitigate deviations and provide correction mechanisms.
The above decisions on choosing a board member are also guided by your company’s systems and structures as the following risks exist:
- Not having a board governance framework
- Choosing the wrong board members
- Not having a financial plan for your board
Must haves when deciding on a board
As a business, the decision to have board members while prudent must also be anchored on some fundamentals and irreducible minimums, among them:
- Corporate governance policy
- Board and committee charter
- Code of ethics and conduct
- Board directory + letters of engagement for director’s registration and induction plan
- Conflict of interest register as kept by the company secretary
- Shareholders and beneficial owners register
- Company secretary details and register
- Board work plan and training calendar
- Strategic plan for the organization- to comment and sign off on
- Company manual- details of how the company runs strategically including policies and procedures.
Thus if your business has the aspiration to grow and expand, it is prudent to create space for a board; one that will help you define and steer you from where you are to where you need to be.
Should you wish to become part of our business community and benefit from our expansive network and skill sets that your business needs to grow, Springboard Capital is your ideal partner. We at Springboard Capital understand your network is your net worth and through our networks, we can help you navigate the waters of identifying the right fit of mentors, coaches, advisors, and board members for your business. We also offer various loan products such as Business Loan, Emergency Loan, Asset Financing, Salaried Loan, Loan against Logbook, Import Duty Financing or Title Deed Loan, to help grow and manage all operations. Contact us today at 0700 944 444 or WhatsApp us through the button below, or email us at info@springboardcapital.co.ke.
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Article based on Patricia Wanjama’s BizSmart Webinar Presentation – Patriciais a seasoned governance practitioner and a corporate lawyer with over 16 years of experience gathered in the legal practice and corporate world. She has served as a key legal advisor to various management teams and Boards of Directors in the Financial Services Industry and Not-for-profit sectors, wherein more than one instance has set up a Board of Directors and the Governance Frameworks from scratch.
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