1. Long-term vision
The primary role of a governance board is to ensure the business has longevity. This requires keeping an eye to the future at all times and constantly asking management “where is the business headed?” and “what risks and opportunities do you see?”.
To provide good governance in this capacity, your board needs to have a long-term vision for success and be able to steer the business in the right direction. This usually involves identifying areas for improvement, identifying risks and, above all, striving for excellence.
There’s no room for secrets or back-door deals in good governance. In order for the board to be able to lead by example and guide management to make good decisions, trust needs to flow throughout every level of the organisation.
Not only does this hold the board accountable for all of its actions, it also promotes a healthy company culture, where all employees feel valued and informed.
3. Risk management and compliance
A good governance board should be relied upon to pass a critical eye over all of management’s plans and ideas, in the aim of identifying possible risks and compliance issues before they escalate.
It’s also the board’s role to come up with ‘worst-case scenario’ responses, i.e. what can the business do if something does go wrong? Other areas of risk the board should be across include regulatory changes, warranties and financial risks such as loans.
4. Depth of experience
The strength of good governance lies in teamwork. There should be several skilled experts working together towards a shared goal. The more depth of experience in a board, the better equipped it will be to tackle challenging decisions and shape the future of the business.
Boards vary in size and structure, but as a general rule, each board should include the following skillsets: the entrepreneur (or business owner), the marketer, the technician (or the ‘coal face’ – someone who has a good understanding of the industry in which the business is operating) and the ‘numbers person’ (this could be your in-house or external accountant).
5. Strong leadership and communication
No matter how experienced, transparent or visionary your board members, if they don’t possess strong leadership qualities and the ability to communicate clearly, they may not be the right fit.
Board members cannot physically implement the strategies they come up with; they merely act in advisory roles. Therefore, if they cannot convince management to follow their advice, they cannot fulfil their goals.
When looking for board members, make sure they are able to educate others about their ideas; they must be teachers, not doers.