What Constitutes The Ideal Composition Of The Board Of Directors?

Last week's article raised more questions. Readers want to know more about the ideal composition of the board.

Several dynamics cause boards to be constituted as they are. Some have a long family tradition and will reflect a heavy family presence if that aspect is crucial for its long term existence.

But when faced with a cosmopolitan market, these stakeholders want to see a reflection of themselves on the board. Or at the very least, a piece of themselves in the visible management team.

So, we are forced to address what we call the face of the country without compromising on individual competence.

If the organisation in question is a parastatal body, then one expects to see a fair representation that is regionally balanced. This may not be achieved completely due to the limitations of the available board seats. But because we have several Parastatal bodies, the complete list must reflect that national balance.

The need for regional balance may not be as pronounced in other parts of the world that have people of one race, creed and language. Here in Kenya, inclusivity is a serious national aspiration. Political considerations play a great role in the final appointments because the overall political process that hands power to the winner vests the instruments of appointments to the government of the day.

In the private sector, several boards depict the origins of the sponsors and owners of the organisation. And because it has been that way for long, the inertia to change the composition is apparent. But let's face it, as we firmly settle into the realities of a knowledge economy with technology and the availability or creation of new knowledge at the beck and call of so many people, rhetoric and biased opinions are quickly called out and people will vote with their pockets.

Emotion is key in commercial decisions. The part of you that strongly connects to your own people is the same part that accommodates positive or negative emotions towards organisations and their products and services.

We have what I call latent disdain. This is a kind of negative emotion against a business that is presently serving you with excellent products. The realities of the day are such that you have no choice but to partake in their offerings. But as soon as an alternative supplier is available, you embrace them as a protest vote against the things you never liked about the earlier organisation. Is your board composition harbouring latent disdain?

Some businesses fail during economic boom times because a new entrant provided an emotionally charged market with an alternative to embracing what closely aligns with their emotive side.

Is your board diversified enough or is it carrying with it the latent disdain risk?

This is answered instantly by your present composition. Do you have women on the board? If not, you will suffer from two things.

First, women are no longer the silent audiences that watch without partaking in the decisions of organisations. They lend critical mass to the market dynamics. The new Africa has women as active participants. Ancient Africa restricted their importance to microeconomics.

Secondly, mentally, women are wired differently from men. Male biases are best neutralised by the presence and participation of women in board deliberations. I have seen this in the things planned by men for a market that has women. And the opposite holds true in women-led organisations that over-emancipate and go beyond the prevalent market realities to shut out the male consumer and possibly the boy child. Enough said.

Many times, religion blinds us from gender biases because we are too happy to have our own faith mate on the board, be it male or female. But on its own, religion is an emotive subject. Some religious groups won't touch products from organisations that are not presided over by their own people. Your growth may be impressive for a while but once you saturate your religiously aligned market, your growth curve flattens out. You cannot appeal across other faiths because your board composition tells them: "you are not needed here". Need I say more?

We have another elephant in the room. This is about age. Granted, people now live longer and we are thankful for that, but our bodies and mental faculties give in to the wear and tear of life's rigours. One of Coca-Cola's Chairmen Robert Winship Woodruff served on the board for 31 years and outlived several CEOs.

His is now a case study that helps us urge older directors to smell the coffee and give way after offering an excellent service streak to all stakeholders. Regulated boards clearly spell out the age limits. For unregulated enterprises, a clear succession plan is crucial. The barton must be passed on through term limits.

Names carry emotions in them and neutral names take organisations quite far. There are exceptions to the rule depending on the reasons behind the name. What it means in one place or community, may carry an offending meaning in another. So, please remain sensitive to the markets that we serve.

Finally, competence is crucial. If you want a watchman, please put him at the gate and not on the board. If you want a spy, put them in the security department, after all, you have an internal audit department that reports directly to the board. If you must reward someone, buy them a gift instead of giving them a board seat. Incompetent directors never win the respect of management and overall, the organization will suffer from the effects of their underwhelming contributions.

You could also have very competent people but placed in the wrong type of board for them. They are like good players in a team that places them out of their normal positions. Unless you are getting an engineer for innovative input into a board that otherwise depends on legal competencies, let them serve where they can be impactful. Likewise, a historian put on a technology-based company may focus on historical products instead of appreciating the management's efforts to churn out new offerings. And if you must have someone by force, please ensure to have them trained enough for the job at hand.

It is important to balance between scientists and artists on the board. Their strengths come through at different times depending on the situation. There are times when circumstances call for methodical approaches and at times when the persuasive path must be taken.

So, please get a board of directors that balances gender, religion, the face of the stakeholders, age, personal competencies and cares for what the brand stands for.

I may not be very popular for covering these crucial topics but they must be said as we have. The board composition can be a boon or a bane.