The Supposed and the Required Role of the Board
The role of the Board is depicted in the diagram below.
With so many well-publicised failures of organisations in recent years, including iconic firms and institutions, one can be forgiven for supposing that, to a large extent, these all represent Board failures. There is a strong argument that they do. The Board should have the access to information, knowledge of risks, eye on the ball, decision-making ability, and ability to ensure implementation to head off materialising hazards as they occur. So why do they fail?
The answer is multiplicious but strongly correlated. At their heart is a lack of clarity and vision on the Board role and purposes, often bureaucratic mindsets and the organisation’s Executive Management’s de facto control of primary information access for the Board.
Hence, the Board may:
Not be clear on its own Vision & Purpose
Not identify Risk & Opportunity effectively
Not Act on the above
Not Make It Happen
Not Have Access To Information, as Access is Controlled by Executive Management
Not have the ability to Process & Use Information Effectively
Moreover, the Board may see itself or may act, as having a more limited remit than its statutory and business responsibilities and the above model presents. In particular, it may limit its focus and vision primarily to day to day operations and planned developments. Hence it may give detailed consideration to Management Accounts, Budgets, Cash flow, Sales data and historic Customer Information in pursuit of deciding “Will it be OK?”, with the only attention to the Environment being to Interest Rates. Thus it assumes continuity and duplicates the work of management. Of course, Board members may be Executive managers, and think like them, or may not be, but think like them anyway.