By Proctor Nyemba
WHEN you get appointed as a board member for any company, a time will come when you have to exit. It is important to prepare for that moment.
Below are red flags indicating that your term could come to an end and how to exit honourably.
If your term has come to an end, it is time to let go. It is difficult to add something new if you overstay. Do not hang on. Quit honourably.
No time to attend meetings
If you are finding it difficult to attend board meetings as and when you are called, it is high time you quit.
Most of the time when board meetings are called for, check if they conflict with your other obligations? If yes, consider resigning. If you decide to stay, you risk having a tainted record in terms of professional attention as well as poor time management and planning.
When you accept an appointment to the Board and find that out of the four meetings of the Board, you can only manage to attend one due to other commitments, you will not be not adding any value to the company.
When you are a board member, there are certain expectations people have of you and delivering is one of them.
We have seen situations where people feel proud of being a board member even when they are not adding any value to the company.
If you are board member and you do not have time to attend the meetings, the best thing to do is to put in a resignation to the person who appointed you. “Given my other commitments, I am unable to continue serving up to my capability”. Do not deny
the company an opportunity of having another capable person serving on the Board.
When unhappy with the company
The Board of Directors is responsible forrecruiting and supervising the managing director (MD). Once you recruit the MD, you then provide oversight and risk management of the company through the managing director.
This means, the MD must be fully accountable to the Board. Many times, after joining as a board member, you may find the MD has visible weaknesses steering the company. It may be he/she was not competitively recruited and might have ‘overwhelming’ influence on the board.
If you generally feel the MD is not good and you raise concern on this to the Board but they are not listening, it is a red flag.
As a new board member, you can easily see things which are not right but when you raise your complaints, you might also see a lot of resistance.
There exists organisational politics in many entities and the MD might know, which board members to influence and how, that is, what are their weaknesses or pain points?
For example, if the MD/ CEO know that one of the Board members’ weaknesses is money, he will try to give it to him in form of allowances.
This is how board member becomes ‘corrupt’ as they will be getting vast allowances by the virtue of their position on the company’s board.
They will now be working at the mercy of the MD/ CEO whom the board members are supposed to supervise.
Now if this favour is extended to many board members, it means the MD has definitely taken control and any decision the MD will make will be approved synonymously by the board whose members no longer have moral authority to question the MD’s position.
Now if you are coming in as a new board member to such an entity you are likely to get a cold reception should you raise any concerns.
The board members are already vulnerable and cannot prevail over the MD. The best decision for you as a new Board member is to quit since you cannot add significant value to the board.
If the board just rubber-stamps the position of the CEO/ MD, of what use is it as far as oversight and risk management are concerned?
You may also join a board and find that the owners are interfering in the day-to-day activities of the business. This is a big problem in the private sector where you find the owner is the board chair, MD and finance manager and his/her decision is final.
Usually, the appointment of the board is as a result of the bank’s advice so that the company projects good governance practices. In reality, nothing works as there is limited or no separation of powers.
You must be weary of such companies that set up window dressing boards because they want to get benefits such as loans or donations.
They try to project the image of good governance by establishing structures that indicate good governance to outsiders.
Structures like Internal audit, external audit, Board of Directors and documented policies and procedures, try to reflect impressions of good governance.
However, on a closer look, you will find that the internal audit is not empowered to be effective – they have no budget, the report to the Board through the Managing Director or the head of the department lacks the requisite professional qualifications, skills and experience to deliver the role due to limited support.
In that case, the ‘good structures’ are just for window dressing because on the surface the company has a Board of Directors, which is not functional should you dig deep.
In that case, having been appointed to such a board, you are unlikely to add any value as the board is not in a position to make decisions or influence strategic direction.
The best thing to do would be to resign.
How do you resign?
To sum it up, when you see the above red flags, resigning will be the best decision you can make as a professional corporate director.
In addition, you could also resign when you go through a company’ documents and you are not happy with the direction it is taking.Given that the board is responsible for oversight, risk management and going concern, every business must have a strategic foundation.
However, it is possible to find no strategic foundation for the business. Now if you review the strategic plan or things which have been articulated, you see the business is not moving in the right direction, you write a report to the chair, present to the full board and if you see that no one shares your views, it may be time to consider exit. Take time to help people see the business clearly. Also, try to articulate this to the person who appointed you on the board.
If everything else fails, resign. However, before you resign, manage relationships.
Before you even write a letter, talk to the board chairperson or the person who appointed you. As a professional, you must be concerned with relationship management in case you are appointed to another board. If you leave a bad record, it may become problematic. It is very important to engage people before you do anything.
It is important to resign in a professional way to ensure no one is hurt in the process especially the shareholders. For some public companies, if a key member of the board exits, it could cause a run on the company in terms of loss of value in the share prices since valuations depends a lot on future value which is a result of good governance and risk management.
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