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How to build the perfect board

The perfect board is diverse, well-trained and highly skilled, says Dr Roger Barker of the Institute of Directors.

Writing in Management Today, Barker describes how to build a great board in eight easy steps.

1) Understand its function. A board’s role is to govern the company and oversee its activities. It manages risk, defines the company’s vision and approves its strategic direction.

2) Consider composition. A good mixture of skill-sets – including marketing, finance and HR – can assist with strategy and the effective deployment of resources. As a general rule, the board should be “a cabinet of all the talents”, says Barker.

3) Decide on size. The average UK board has between 6 and 12 directors. “More than this and the board is in danger of becoming a speaking shop rather than a genuine decision-making body,” warns the author.

4) Aim for diversity. A board should be composed of independent thinkers, advises Barker, who insists: “Group think should be avoided at all costs.”

The perfect board, then, should have directors from mixed genders, generations and backgrounds. But in reality, most boards are very conservative in composition.

5) Recruit non-executive directors. Effectively governing large, complex organisations can be very difficult, says Barker. But the Enron and Co-operative Group crises show what can happen when governance fails.

Non-executive directors (NEDs), are there to serve as “critical friends” to a company, providing objective advice to the executive team.

6) Organise inductions. Directors must hit the ground running, being liable and accountable from their first day on the job.

Barker recommends all new directors be given an induction, providing a full and balanced overview of the company. This might comprise an induction pack, presentations from key players, meetings with directors, the chairman and the company secretary, site visits and analyst reports.

7) Provide training. Training and professional development can help new directors understand the legal and regulatory requirements of their role.

8) Plan for the future. “Supporting board-level diversity should start close to home,” advises Barker. Spotting and mentoring talented individuals is an important step towards creating great, diverse boards in the future.

Source
Dr Roger Barker