I was at a corporate governance induction programme and as I prepared myself for the presentation, I scanned the audience to know who generated a tiny female voice. I know that some institutions bring in interns to training sessions to support with logistics, but these usually sit some distance away. I was inquisitive about this participant and since everyone was just returning from coffee break, I beckoned the CEO for a side engagement.
‘Director, that young lady over there, is she part of the management team?’ I asked, though fully convinced she was an intern because she looked incredibly young. It was, however, not unusual for me to engage in such discussions because I also take a lot of interest knowing my participants. This helps me know how to engage and probably tone down on content. However, my question ignited some subtle laughter from the CEO before he answered, ‘Director, that lady is my boss. She is one of those to review my contract next week.’ I came to learn she was a college student appointed to the board by the appointing authority. In family businesses, that is somewhat a common feature.
It was, nonetheless, evident from this brief discussion that the CEO was probably excited he had a novice on the board, someone he could easily bulldoze so that he had his way on most board decisions. There is nothing sweater for a CEO than to have a board of novices, one whose neck you can easily twist. You are always assured decisions will go your way and you are a defunct executive chairperson of such a board. It can also be true that a board full of novices is a risk to the organization and this is the kind of board that will not renew your contract even if you scored 99 percent in the KPIs.
I have met board directors who worship the CEO, this happens even for State Owned Enterprises. I recall a moment I was running a board induction and one female board member kept referring to the CEO as, ‘Sir,’ (nothing wrong about that but the tone was that of total submission, unquestionable loyalty). The CEO may have hinted to some directors he had a strong hand in their appointment to the board. This lady may have never imagined she would ever serve on a board, let alone a board where such a personality was the CEO.
It takes one with a strong spine to change loyalty levels and be able to maintain what we consider as ‘Board independence’ (by the way, board independence is not only about the Board members being able to act professionally without undue influence from the shareholders; there are many boards that are not independent of management and such behaviour exists even among the established multinational companies).
Going back to the issue of the young lady who served as a new director on a parastatal board: I have no serious problem exposing young people to high level organizational appointments. If they are engaged early, we will have incredible diversity on individuals eligible to sit on boards. It is such young people capable of bringing up quality contributions if respected and valued. We have come from a culture of ‘Old Boys Club’ where the same individuals got appointed to several boards. It is not so much about what these individuals will contribute to the organization but what the organization will contribute to them.
There are individuals who take pride proclaiming they sit on 20 boards as though that is a sign of efficiency and effectiveness. This trend has not fully disappeared in Zambia especially in the private sector where directors appoint one another and such becomes an issue of serving a friend’s back (multinationals usually appoint directors who are not political but are very close to politicians, which gives them an opportunity to lobby for certain interests quietly).
There has been significant improvement for State Owned Enterprises where most seats are reserved for professional bodies such as ZICA, LAZ, EIZ (though even here, the appointing authority will ask for three nominations and one of the names would have been suggested by the appointing authority to this professional body for consideration and that’s the name that gets picked).
The main benchmark for a board appointment is experience. To appreciate the importance of experience as an essential benchmark for board appointment consideration, let us revisit and assess some of the roles and responsibilities of a board member. First, it is the fiduciary responsibility. This is about trust. For anyone to be considered trustworthy, it means they have travelled a journey of tests and trials and emerged unscathed.
A director should be an individual who values the importance of acting honestly, in good faith and in the best interest of the organization. Such individuals usually focus their minds on protecting their individual reputation, ‘If I act dishonestly, the reputation I would have built over many years will be ruined by this small decision; am I prepared to destroy my legacy for this?’ I do not think a novice with little understanding of what personal reputation means would possess this kind of ‘obligation of loyalty and duty to uphold the integrity of the organization’.
The other thing directors bring to the table is skill and diligence. Even in board evaluations, we ensure this requirement for assessment sits on top of a long list of questions. It is also for the same reason individuals appointed to directorship positions in certain countries are mainly retired technocrats who have nothing to bring to the table except skill and diligence. A director must demonstrate the degree of skill and diligence that can reasonably be expected from someone of his or her knowledge and expertise. A corporate governance guru, Susan FitzRandolph writes, ‘A director must demonstrate the degree of skill and diligence that can reasonably be expected from someone of his or her knowledge and expertise.’
I recall siting in a board meeting where, as member of management, we needed the guidance of the board on an extremely critical matter that potentially had irreparable damage to the company if not addressed that period. We looked to the Board as a resource appointed to provide knowledge based on how they may have handled such a situation from other engagements. At that point, one board member lifted his hand and my heart relaxed. I told myself, ‘This is a man of incredible experience, retired from the civil service and now has something to offer us over this problem.’
The Chairperson acknowledged the hand and when he made his contribution, it was something totally unrelated and we all wondered if we were in the same boardroom. This shows that sitting on the board is not necessarily about age but one’s experience. There are individuals who have served 30 years in the public sector but their real experience is only worth three years and there are other young people who have served five years but when they make a contribution, its worth 30 years’ experience.
Individuals appointed to the boards also have the obligation to have an honest exercise of power. FitzRandolph puts an interesting argument, ‘Power cannot be passive. It must be exercised through regular attendance, diligent review of materials, active participation in decision making, asking for clarification regarding issues and impact of decisions and always balancing the objects of the organization against its ability to attain those objects.’
My own experience has shown that individuals with incredible career experience apply themselves much more effectively in board meetings than upstarts. As you grow, you are much more awake to your responsibilities and expectations of others than when you are young. This is debatable and would not like it to be an issue here; am just sharing from my personal observations and experience. We can, however, agree that, for what its worth, board directorship is not for novices and it is not something to be excited about!.
Chibamba Kanyama is a Fellow of the Institute of Directors- Zambia and Trainer of Trainers on Corporate Governance.