Author's Name: Mark Schultz
Date: Mon 09 Nov 2015

Good governance – structure the board to add value

A key ingredient in best practice in corporate governance is the actual structure and composition of the board. Diversity should generate a superior outcome, if all members are acting in good faith and in the best interests of the organisation they are charged with governing, during their individual and collective tenures.

Organisations should have a board of an effective composition, size and commitment, with a balance of skills, experience and independence appropriate to the nature and extent of the organisation’s operations. Let’s expand on some of these characteristics:

Size: between 8 and 10 seems to be the best number. Less and the workloads become more onerous and the input is reduced and any more and the board becomes unwieldy and more difficult to appropriately engage;
​Commitment: board members must be prepared to commit the time and effort required to effectively undertake the role, no room for “seat warmers”;
Composition: diversity in age, gender and culture will deliver a much better outcome than 8 clones of a single type. Multiple perspectives will enhance the decision –making process and ultimately the outcome, all of which must be a bonus for the organisation;
Skills & experience: appropriately trained and experienced members from different professions and life experiences will also add to the effectiveness of the board. Furthermore, such diversity will also contribute to the ongoing learning and development of individual board members, again having a flow on effect to the organisation and its development. 

To achieve this goal of good governance through diversity, boards will need to take the initiative and include the review, planning and implementation strategies into its annual planning cycle.  Nothing will happen unless it’s driven from within the board and the Chairman will play an important leadership role in this process. If all act and behave in the best interests of the organisation, committing to a diversified board should be a matter of course … so, how does your organisation stack up?

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