Insights by Wendy Luhabe, Social Entrepreneur

‘I have been on the boards of listed, unlisted, private sector, public sector, non-governmental, business school, my own businesses, and think tanks in multiple sectors of both the economy and society from the age of 36. All in all, I have over 16 years of multiple experiences as both a non-executive director and chairman.’ Wendy Luhabe, Social Entrepreneur, and Non-Executive Director of Women Private Equity Fund in South Africa, speaks about her experience as a board member and shares tips and tricks on how to contribute efficiently to high performance of boards and transparency in corporate governance.

When I first joined the board of a listed company on the stock exchange in South Africa, I had no idea what happens on boards, what gets discussed, how one contributes, learns and becomes an effective director. The first thing that was suggested to me was to sit with the Financial Director before each meeting to go through the financial reports, which for that company comprised 70% of the board agenda; a most intimidating context for a new board member. Once I became comfortable with the numbers I began to ask questions, which to the so called experienced board veterans, mostly white males who were above my age by at least 10 – 15 years, must have come across as irrelevant or unintelligent. However, I continued to ask the questions, and eventually, after 5 years, I succeeded to convince the company that having top brands, being successful and having a large market share were not sufficient to ensure that the company would survive in the future and remain competitive. I achieved my goal of getting the company to include a new priority in its business model; to develop a marketing capability for their products.

I share the experience of my first board position for a number of reasons. Overall the experience gave me an opportunity to build healthy habits, which enabled me to be an effective board member over the years. This was even long before corporate governance became a business imperative, with South Africa being among the leading countries with respect to compliance. In my experience, in order to provide valuable contributions, board members should acquire the following habits:

· Prepare for their board meetings: Board members should read their board packs so that they can understand and relate to the key issues for each board meeting.

· Regular meetings with the CEO: This enables board members to understand the business issues and challenges.

· On-site visits: Board members should take the opportunity, for instance, to visit the factories where manufacturing takes place and to engage with the operational management level.

· Asking Questions: Board members should feel comfortable enough to ask the questions that they deem relevant or to clarify issues that may be clear to the management but not to the directors.

· Identifying gaps in board discussions: Seizing an opportunity to add value by addressing business issues, which are often not discussed at board meetings like for example succession, strategy etc. depending on the board member’s area of expertise.

At the time I became a director I had just started a business in human resources development called ‘Bridging the Gap’ with a particular focus to prepare new employees to be effective in their jobs. My work experience prior to that was in all the disciplines of marketing management in South Africa, in Europe and the US for a luxury brand product. I therefore used the two areas, one I had experience in for 10 years and a new area I had a passion for to make a unique contribution as a board member.

Why are Some Boards More Successful than Others?

As most people reading this will know, most boards have enough number crunchers and people who know the best way to achieve growth every quarter. However, there is often a lack of those people who can lead the discussion to move beyond quarterly results and short-term interests to consider long-term strategy, with respect to how one manages, challenges, develops and utilises people in order to raise our level of productivity, performance and competitiveness to sustainable levels. I am convinced, therefore, given my initial board experience and that acquired over the past sixteen years, that there are very distinct features that make some boards more successful than others. The first overriding feature relates to the quality of leadership in the board. Effective leadership of the board is absolutely fundamental. The world is not just experiencing an economic recession but also a chronic leadership and moral recession. As the board is the highest governance structure, it must lead by example, particularly with respect to integrity, character, discipline and accountability.

There must be a healthy relationship between the board and the company, particularly with the CEO, a relationship of trust, a relationship that values the collective wisdom and experience of the board and recognizes how it enriches the organisation with new insights and ideas, with more effective decision making and with best practices. This is why, in my view, effective and successful boards are those that value multiple intelligences and those that are diverse in gender, generation, work experience, cultural orientation and passion. This of course, provided these differences can be leveraged to the advantage of the organisation and provided they are all equally valued.

Next to the aspect of leadership within the board and the organization, is the ability to tap into the knowledge of every board member, to solicit their views when issues are discussed or a decision needs to be made, to hear every perspective and of course to utilise directors in the various board committees i.e. Human Resources and Remuneration, Audit, Risk, Nominations, Strategy etc. When everyone feels his or her views matter we can raise the level of quality contribution beyond the ordinary.

Thirdly, whenever new directors join the board there needs to be a proper and comprehensive orientation of the organisation otherwise it takes too long for new board members to contribute and add value. Fourthly I have found that it helps for the board to meet outside of the board meetings to enable the directors to get to know one another and to have an opportunity for confidential discussion without the presence of management. Fifthly, the board needs to interact with the executive team annually to review and confirm the strategic priorities of the organisation and to assess the competence and the relationships in the team. Finally, directors must serve a limited term to allow new blood to continue to renew the leadership of organisations.

In conclusion therefore, successful and effective boards need to be dynamic, they must evolve to stay ahead of the demands that exist, they must embrace multiple intelligences, they must be effective in their decision-making, they must add value, they must ask questions, they must inspire management to their highest capability, they must have the courage to take unpopular decisions. In short, boards must be the custodians of a value system that sets the organisation apart from its peers, and that values thought leadership and integrity.

Tharawat Magazine, Issue 4, 2009