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ZimCode Secretariat—

There used to be a time when board members were selected because of their social, financial and political status. Celebrities were obvious choices because they generated a buzz. These popular people such as politicians, tycoons and anybody who could give the company the publicity were the preferred candidates.People also used to look at board membership as a cushy way of making a lot of money and recruiters vouched for their friends and relatives to grab such opportunities.

Professionals who had the necessary skills, experiences, and wisdom to be board members were not necessarily invited if they were not well-known enough within their industries. As a result such boards had no clear cut mandates, and no capacity to give adequate strategic guidance to the company as board meetings were reduced to publicity romps.

Most of these boards failed to contribute towards the success of the companies that appointed them.

In addition, financial scandals in the early part of the millennium and many corporate scandals made it obvious that tighter corporate governance rules are needed to protect the interests of shareholders and the public at large.

It is against this background that the ZimCode clearly defines the roles and responsibilities of the board so that all companies stand guided on what to expect from their board.

The ZimCode highlights that the board is the key player in the success of every company. The Board guides long-term corporate strategy, puts the key agents in place to implement it, and monitors performance against the strategy set out.

This places the Board of Directors at the heart of the governance structure of a well-functioning and well-governed corporation, acting as the ultimate internal monitor.

A board that is objective in its oversight of professional management exercises care and diligence in decision-making. They do so by ensuring that key corporate information and compliance systems are fundamentally sound and underpin the monitoring role of the board.

It is the board’s responsibility to oversee the risk management policy as well as the internal control systems.

The board is expected to take an active role in spotting and eliminating fraudulent activities and be prepared to have the law to answer to if circumstances leads to that.

Considering the huge responsibility that is placed on the board, it follows that not just anybody can qualify to sit on the board. The ZimCode advises that companies have to be more careful in choosing truly qualified board members.

The candidates need to demonstrate proof in past experiences, academic prowess, leadership skills, focus, commitment and the skill sets they are bringing. In other words the key question an aspiring board candidate should answer is “what value am I going to add to this company, and not what benefits can I get out of the company?”

In order to promote excellence the scrutiny of candidates should go beyond their intellectual competences to investigate other aspects of their lives such as personal values, causes they care for and their other affiliations.

This might seem trivial but experience has shown that some of the things that board members engage in during their private times have a bearing on the reputation of the boards they sit on.

Some careless behaviour outside work can actually cause the company to lose its market share. Some people always disregard this scandalous behaviour citing that they only affect companies in the developed economies and forgetting that we live in a global village and potential investors carry out these background checks to safeguard their investment.

As such, a company can actually lose a potential multi-million investment based on the fact that one of its board members is a bad debtor or drinking and driving records or some scandals handing over their heads.

Another area to be wary of is conflict of interest. A conflict of interest is where a board member puts his/her personal interests ahead of the interests of the company, when the board member’s duties to the company clash with current or previous duties elsewhere.

Conflicts of interest inevitably arise because board members are members of the community and have numerous families, social and business relationships.

Therefore, conducting a full character assessment focusing on deep and wide-ranging examination of a person’s life and work history over an extensive period of time can be useful in identifying potential conflict of interests.

During these assessments a lot of red flags can be a sign that the conflicted areas are too many to ignore. The obvious ones being those that involve their immediate family members, previous board sittings and appointing shareholders.

It is much better to dismiss the aspiring candidate on those grounds than spend the whole board term trying to navigate the conflicted areas of that member.

If an obvious conflict of interested is not prevented, it can have a very damaging impact on public confidence in the board and the company.

Companies need to clearly define who sits on their board and for what reasons. The main reason should be to enhance the value of the company and not to unfairly benefit from it.

Much care and diligence should be taken when recruiting board members so that the board is equipped with the right skills that they can use to the benefit of the company. People of questionable characters should not be allowed to sit on boards even if they possess the right skills because their behaviour can cost the company its reputation.

For more information on the ZimCode contact: [email protected]