The Peter’s Principle suggests that people thrive and perform well in each role they undertake and so are promoted. This continues until the point at which they can no longer perform and so people are promoted up to the point at which they are incompetent. One area where we cannot have any level of incompetence is in the boardroom, where so many of the decisions being made have a strategic impact on the future of the business.
In Board Games: Straight Talk for New Directors and Good Governance, Montford and McCool have provided a clear and well-structured book that defines the roles of the Director and provides both generic and specific guidance on the actions and the key responsibilities held. This is helpful for the both new Directors but also for those that have not refreshed their responsibilities in some time.
Firstly the book explores the reasons a board may wish to select you and how you can increase your chances of being selected. The key point raised is that you need to bring something to the board that it doesn’t have already. This might be an insight into a new business area or market. It might be awareness of a new facet of operations such as social media or a change in technology. The principle is that you have to bring something that isn’t already available. Boards are generally quite small so you need to bring something that is both Unique and Relevant.
The 4 areas you should consider here are:
- Your Reputation Experience or Credentials.
- Expert knowledge or insight into critical business areas
- The relationships you hold for business growth or engagement with other Companies
- Your influence
A Director also has a fiduciary responsibility to the Company and to the Shareholders. It is important that Directors recognise that they are responsible to the shareholders for the good direction and governance of the Company, and are legally required to act responsibly in their actions. This is set down in the legislation in the various jurisdictions. In LINK, the governance and legal discussions are written for a US audience, however, the points to note are as relevant in any other country. These governance points typically address:
- Strategic Direction for the Company
- Increasing shareholder value
- Ensuring solvency
- Resolving any conflicts of interest
- Reporting to Shareholders and any Government entities
- Ensuring a good level of fairness and moral activity
- Efficient and effective operations
- Protection of company material and assets
- Compliance with Legal requirements
- Succession planning
- Performance evaluation
- CEO and Director level compensation
The book explores succession planning and public accounting in some depth, reflecting the level of importance that these areas have in the Boardroom. Additionally, there is an introductory section on Cybersecurity and Cybercrime that explores the board level relevance of this key consideration and gives the book a contemporary feel. Auditing and Governance are also presented n a clear and straightforward manner, de-mystifying this important area for the new Director.
Scattered with ‘Straight talk’ information nuggets, the book has built in notes to refresh the memory of the reader. These could be extracted as precis of notes as an aide memoir for any new Director to review routinely.
Overall, Board Games is a clear and helpful manual for an aspiring or new Director and gives an initial and quite thorough insight into how a board operates and the responsibilities a Director holds. It will require refreshing routinely as legislation changes but the concepts and areas covered will be evergreen. This is a great book for any new Director and would be a great addition to a business library for those looking to climb the corporate ladder.
Dare to Aspire