Introduction
Different stakeholders are involved in the management of an organisation to ensure sustainability and success of the organisation. These are the shareholders, the executives, employees, and the board of Directors. The board of directors and management play a pivotal role in the success and longevity of any organisation. This is so because they are involved in the organisation’s sustainability, which involves the day-to-day running and ensuring that set goals and objectives are achieved while complying with the codes of corporate governance.
It is common among companies to have various board committees assist the Board in administering the organisation’s affairs. The board committees, handle delegated responsibilities and carry out the required due diligence to provide comprehensive information/ recommendations for the board to make informed decisions[1].
Strategies and Recommended Practices for Sustainable Governance
The Nigerian Code of Corporate Governance (NCCG) has provided recommended practices to ensure the longevity of an organisation. In accordance with the recommended practices, the board must establish certain operational methods to be effective and ensure the organisation’s longevity. These methods must be reviewed in line with the evolving standards of the corporate world.
The board of an organisation can decide on the most appropriate operational methods it will adopt to suit their organisation’s circumstances. The Code has always emphasised clarity of roles, responsibilities, accountability, and transparency of operations and activities of the board which are necessary for the success of an organisation, they are not necessarily sufficient for the longevity of an organisation. The operating methods that a board put in place are essential for the sustainability and success of an organisation.
Beyond the provisions of the NCCG, boards need to review and adopt effective operational methods which may be obtainable in other jurisdictions and are relevant to the business of the organisation for the purpose of improving the efficiency of the board and to guarantee the organisation’s longevity. The board and its committees should have a charter and/ or terms of reference that set out their roles and responsibilities in quorum, membership, the scope of work, authority, and reporting obligations.
Nearly all boards in public companies in Canada, France, the U.K., and the U.S. perform some self-assessment yearly. Self-assessments allow the board to review its performance within a specific period under review which may be quarterly, bi-annually, or annually. It aids in the reinforcement of appropriate board and management roles and ensure that issues that may not be easily identified are identified and addressed promptly. The board of an organisation needs to decide whether to self-assess its performance, commission an external assessment, or use a combination of both approaches. Self-assessment helps the management answer essential questions such as “How is the organisation doing?” “What are our strengths?” and “What areas require improvement in the organisation?”. Self-assessment increases the acceptance of feedback and commitment to the recommendations and solutions proffered.
An organisation’s capacity to continue operating successfully over a long period depends on the existence of a formal and rigorous process and mechanism for reviewing its overall performance. By establishing a common understanding of board roles and responsibilities and measuring the board’s performance against these recognised roles and responsibilities, the board can focus on what’s critical for the organisation’s success and longevity[2].
Companies in other jurisdictions allow non-committee members to attend board committee meetings[3]. This practice ensures that contemplations at the board meeting are more inclusive, as non-committee members would have benefited from the reasoning behind the recommendations by the committee to the board. The committee’s composition must be refreshed periodically while ensuring that directors with relevant expertise and experience serve on committees to which their experience and qualifications are best suited. Committee members should undergo periodic training to broaden their knowledge and enhance their skills. Given the necessary tools, members can contribute and create a better-prepared and more professional committee with a stronger capacity to carry out their duties[4].
Periodic audits should be conducted on time spent in board/ committee meetings. This will ensure effective time management during meetings, discussions, and presentations from management, independent advisors, employees, and other key stakeholders. Committee members should always be prepared to engage, discuss issues, and deliberate at meetings, and not just review reports and hear presentations.
Conclusion
A sustainable governance model is instrumental for achieving the success and sustainability of any organisation. Consistently maintaining a positive board dynamic can be quite a challenge. For this reason, all committee members, especially leaders, need to work to nurture and consistently demonstrate respect and trust for each other. Without a culture of respect and trust, members will not be able to engage in constructive debate but rather devolve quickly into dysfunction. An effective sustainability strategy should be integrated into the business of the organisation and aligned with their respective goals and objectives to create long-term value for the organisation, its internal and external stakeholders, and wider society.
