Tuesday, 6 December 2011

Board's Culture

Effective boards understand their role and duties, are actively engaged in the work of governance, and accept accountability for their performance and the performance of the organization they govern. Over time, either deliberately or not, every board of directors creates a governance culture—a pattern of beliefs, traditions and practices that prevail when the board convenes to carry out their duties. Each board is responsible for shaping its own culture. As stated by Joaan Reed:

“Good governance is hard work. Boards must develop a culture of accountability and engagement. Board leaders should pay strict attention to how much board time is spent passively listening to reports and how much time is spent discussing strategic issues and the duties of care and loyalty. Active and vigorous board discussion, debate and questioning is not only a sign of a good board, it is the sign of an engaged board. Board members should not allow a ‘don’t-ask-questions’ culture to thrive and become the norm. An open culture of cooperation and transparency is healthy and will attract skilled board members.”

In too many cases, boards are insufficiently committed, the governance culture is passive, and the result is under performance. There is a growing belief that effective governance requires a proactive culture of commitment and engagement that drives both the board and the organization it governs toward high performance.Non executive directors must be bold enough to challenge the CEO's decision so as to create healthy discussion and debate on company's business strategies. Board meetings is a place where board's members are able to contribute their ideas in decision making process. Many research findings has shown that an active board is able to drive company's performance.A good corporate governance practices must always be observed so that shareholders' interests is always paramount.

No comments:

Post a Comment