Tribuna Libre | Diario Financiero | Mario Mora
In every Board of Directors there should be at least a couple of individuals with a truly impeccable and deep business track record in terms of their background, experiences, exposure to transformations and complex cycles, capable of listening and asking management the right questions at the right time.
Always in these months, the corporate environment in Chile heats up a bit as a consequence of the large number of shareholder meetings that take place at this time of the year, and their natural impact on the composition of company Boards. In this context, I believe it is time for shareholders, instead of looking at which individuals are qualified or not to be directors, to start asking themselves if the composition of their Board is adequate for the company and the sustainability of the business.
No one doubts that directors today need to be much more active and productive than they were; nor that nominations as a reward for a manager's great past contribution are no longer sustainable. The increasing number of regulations, the complexity of business and the flourishing of so many new stakeholders is putting pressure levels on the shoulders of directors like never before. It is therefore vital and key to look beyond this and carefully consider the quality of board composition, and the need for it to be carefully evaluated and managed. Regardless of the “weight” of a director, Boards as a body also need to show a strong specific weight. In this regard, there are several competencies or characteristics to highlight.
In every Board there should be at least a couple of individuals with a truly impeccable and deep business track record in terms of their background, experiences, exposure to transformations and complex cycles, capable of listening and asking management the right questions at the right times.
It is vital that there is a strong awareness on the board of the need to have a strong General Manager in the company. If you get used to living with a fragile CEO, the whole scaffolding of governance and management will crumble. He or she is appointed by the Board.
Industry experience cannot be left out of the Board. It is critical that there are directors with relevant industry experience on the Board. There is no place in the cockpit for apprentices or observers.
There must be a close relationship between the CEO and the Chairman of the Board. This relationship is absolutely critical to the success of the business. Mutual knowledge, respect, complementarity in vision and experiences, transparency and the ability to discuss with strength and honesty.
Boards must monitor their own performance as a group, and directors must shift a critical attitude to their own performance. If the director is not involved enough to push in the right direction within the board, and add real value to the company, he should resign and leave his chair to someone more competent. There is no place for directors who do not see themselves in an active and “rolled-up” role.
When it comes to board selection, shareholders should lessen their focus on individual qualifications and evaluate more the composition of the board and its agenda.
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