It is acknowledged that the office of a Director is a “high calling”. It is oftentimes challenging and requires of the individual certain attributes to achieve effectiveness. Whilst each Board has its own peculiarities, being possessed of those attributes will contribute to the effectiveness of a Director and by extension the effectiveness of the Board.
These include the following:
Strong interpersonal and communications skills: This key attribute is relevant in and out of the Boardroom. An effective Director should be able to relate well with his/her peers, be approachable and communicate clearly. Striking an appropriate balance between talking too much and too little at Board meetings is also critical to achieving effectiveness. An effective Director will be able to clearly articulate the key issues and provide critical insight. He/she will speak to the issues before the Board rather than attack the persons involved. Furthermore, whilst Executive Directors are required to engage with third parties as part of their day job, Non-Executive Directors will occasionally have to represent the company at meetings and in discussions with third parties including the media. Thus the ability to clearly articulate the company’s position even at short notice is desirable.
Independent judgment: Managers are expected to be “team-players” and sometimes get knocked when they criticize a decision made by their peers or superiors. However, the Director’s role (whether as an Executive or Non-Executive) is to take a step back and critically assess the motivation and consequences of a decision, and where necessary, put forward a reasoned view – even if it is unpopular. A Director is expected to apply independent judgement to all issues before the Board. This requires the Director putting the overall interest of the company at the forefront. Directors for the most part, find themselves being swayed by narrow or short term considerations when faced with certain decisions. An independent mindset will enable the Director take a stand when he/she is of the view that the company’s long term future is not being prioritized, no matter the consequences.
Analytical: Directors are often presented with problems that have a number of potential solutions, and the ability to analyze, sift through data and make sense of it to find the appropriate solution is aninvaluable personality trait.
Not sweating the small things: Directors are expected to be strategic thinkers and not waste time and effort on the small stuff. Sometimes in a bid to demonstrate their competence and area of expertise (show off) they tend to distract the Board’s attention from less critical issues. Everyone can identify the culprit on their Board! The ability to stay focused on those matters strictly within the Board’s purview is a desirable attribute. For Non-Executive Directors, this also means respecting the professional and technical competencies of the Executive Directors and not seeking to micro-manage. This does not take away from the Board’s responsibility to drill down into proposals before the Board.
Staying power: Companies are bound to face pressure from regulators, short-term focused shareholders, the media and competition, particularly during periods of perceived poor performance, or significant structural changes. An effective Director should have the strength of character to stay calm in the face of pressure to provide the much needed stability to the Board and the Company. Some Directors are quick to look for the door at the mere whiff of crisis.
Respect for alternative viewpoints: There are “many ways to skin a cat” or execute a given strategy. At the height of Board effectiveness is diversity of skill set, experience and perspectives. A Director should recognize that the overall interest of the organization will be better served if multiple perspectives are considered before arriving at a decision on any issue before the Board. The Director should not attempt to force his/her viewpoint on the Board on the oft wrong assumption that it is the way to go. This also requires appropriate listening skills – a sincere attempt to actually “hear” what another Director has to say as opposed to waiting to counter that position. The Board should benefit from the diversity of its composition and not take decisions from the narrow prism of its most vocal members.
Integrity: A significant attribute of an effective Director is integrity. Integrity connotes sound ethical values, transparency, accountability, commitment and courage. Ethical values to set an appropriate “tone at the top”. Transparency and accountability that ensure all actions pass the test of public scrutiny. Enough time and attention committed to making a good job of it and courage to ask the right questions – or to walk away if that becomes necessary.
In addition to personal attributes, certain experiential factors also contribute to the effectiveness of a Director. These include:
International exposure: Companies have embraced regional and global expansion which come with unique challenges. A director that brings to the board an international perspective and exposure to global benchmarks is an asset to the Board. An effective Director is one who keeps abreast of global issues that would have direct or remote implications for the business.
Industry expertise: The Board is enriched by a Director that can contribute knowledge of the particular industry when evaluating issues and decisions before the Board.
Financial knowledge: Whilst not required to be a financial expert or an Accountant, the ability to interpret financial reports and evaluate the financial implications of an action or decision is definitely an advantage. Directors should not shy away from seeking help in this regard.
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