Author's Name: Mark Schultz
Date: Wed 24 Feb 2016

Is your board sustainable?

The word “sustainable“ is thrown around a lot lately and sometimes when this happens, the word and its intent lose meaning and are de-valued. Whilst we do not want to contribute to the devaluation process, the concept of sustainability is important and worthy of a commentary in relation to the composition and performance of a board. So here are a few questions a board should ask itself to contribute to its own assessment of its sustainability status.

For a board to be successful in the long term, it must have both an oversight and sustainability orientation. Fundamental components of the latter include:

  1. Financial literacy: is there a real financial management competence on the board – someone who has considerable experience and knowledge of financial management relevant to the organisation and the sector in which it operates?
  2. Focus – does the finance subcommittee or board in general, if no such committee exists, really understand the business drivers and the actual business model or does it simply focus on the preparation of the budget, variance analysis and the annual audit?
  3. What internal and external factors currently impact or are likely to impact on the organisation’s sustainability and does the board have in place a framework to assess, monitor and make decisions in relation to these matters?
  4. How healthy, from a financial perspective, is the organisation? Has the balance sheet improved or deteriorated over the past 3 years, what has caused such movements and what is the boards thinking about this for the next 6, 12 and 18 months?
  5. Internal relationships: is the board leveraging individual and collective strengths not only across the board but across the senior leadership of the organisation as well, in relation to its thinking and decision-making around sustainability and what this looks like and means for the organisation?

Five simple questions that will enable a board to assess its own performance and approach to sustainability. If the board is not asking these questions, then who is? Sustainability and achievement thereof is a core component of good governance.

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