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Why board voting comes last

A while ago I read an article about boards and voting by Roger Hitchcock, a senior partner at the Sirdar Global Group which guides boards to become more effective. I met Roger when I was a participant in his Sirdar Applied Directorship Programme some years ago, and as always in this article he was full of common sense, leading me to completely agree with his line of thinking.

While board voting can serve as a mechanism to resolve conflicts and make decisions, he writes, it should be approached cautiously and used as a last resort. This, I may add, applies equally to all kinds of organisations.

The reasons board voting should be the last resort are fairly obvious. By its nature, suggests Roger, it pits directors against each other, potentially leading to divisions within the board.

An “us-and-them” mentality can undermine the overall cohesion and effectiveness of the board, hindering its ability to function as a united entity. Indeed where I am a board chairman I work hard to avoid situations where there are winners and losers — even without that ultimate victory— and defeat outcome that results from voting.

Beyond sustaining cohesiveness among directors, avoiding contentious voting lessens the likelihood of straining relationships between board members, which would create a negative atmosphere within and beyond the boardroom.

This can have long-term implications for collaboration, trust and open dialogue, all crucial for effective board governance.

But it’s not just the soft relationship issues. Avoiding voting improves the quality of decision-making, asserts Roger. When a vote becomes necessary, it signifies a failure to reach a consensus through open dialogue and deliberation.

In such cases, the decision made may not be the result of a thorough exploration of all perspectives and alternatives, comprehensive analyses, and robust debate with the best interests of the company. Yes, voting offers a speedy approach to decision-making, but the lack of these key elements too often leads to sub-optimal outcomes.

So, Roger insists, we can avoid the need for voting by allowing for robust discussion and debate. Encouraging open and constructive discussion among board members is vital, I have seen in my many years as a director and chairman, going back to the late seventies.

By fostering an environment that values diverse perspectives, the board is relaxed and open enough to explore alternative viewpoints, identify common ground, and uncover innovative solutions without having to resort to voting.

This approach involves finding agreement among board members through compromise and negotiation and ensures that decisions that are in the best interests of the organisation are made with support from all board members.

This cannot be accomplished merely within board meetings, I have found. Where I am the chairman I frequently engage with individual directors prior to the formal board meeting to seek the spread of views and build towards consensus. Some may call this manipulation, but given that it is always pursued in the best interests of the organisation I do not hesitate to invest time in such activity.

Boards should establish clear decision-making processes, recommends Roger, like designing appropriate reports and dashboards, or using the normal board committees or temporary task forces to thoroughly analyse and vet proposals and come up with recommendations.

These processes and structures enable boards to engage in deep discussions, gather relevant information, and seek input from subject-matter experts before bringing issues to the boardroom.

Roger identifies a further benefit of boards consistently seeking consensus and making decisions based on that togetherness, which is that it leads to stakeholders gaining confidence in the board’s ability to navigate complex challenges, thereby enhancing the company’s reputation and its stakeholder relationships.

So, seeking consensus fosters a culture of collaboration and teamwork among board members. It promotes shared ownership of decisions, leading to a more cohesive board and stronger boardroom dynamics. Consensus-based decisions tend to be more comprehensive and well-rounded. All those in favour, please vote “Aye”.

This is my last article of the year (my 440th ), so I wish you a happy and relaxing time in the coming days and look forward to re-engaging with you in January.

Board hand in culture change

A while ago, I facilitated a session with the board of a major Kenyan organisation, where I had them reflect on what they were proud of as a board and as individuals, and what additional aspects they wished to be proud of later.

The team is undergoing a review of its culture so as to take it to the next level, and as the directors reflected on the initiative they felt they could and should be more involved.

This is very much the norm at the director level. They are typically far more concerned about the numbers, the financials, which is what led the two Harvard professors, Kaplan and Norton, to come up with their Balanced Scorecard.

Through this framework they had company leaders place equal emphasis on the factors that deliver the numbers: the products and customers; the systems and processes; and the people – the element they described as “learning and growth”.

It is of course the people who define and live the culture, perceived through how they behave, which reflects their attitudes, these being a function of their values.

How many directors feel competent, and hence confident and comfortable dealing with such soft issues? Not many. “Leave it to the HR people,” they may well say, as they return to their easy-to-measure revenues, profits and suchlike.

I have written before in this column that few people at any level possess the expertise needed to enhance a culture.

At best they may find ways of defining the existing one, with all its ups and downs, and of sketching out the aspirational one, with the usual words to describe it: trust and openness, innovation and collaboration….

But as for how to migrate to that better world and overcome present challenges, don’t ask them. Indeed some will tell you it’s a waste of time, as most culture-change programmes fail to make a difference.

Then, as I read what others write on this subject – not least at the national level – too often I again see descriptions of how awful the present culture is or how wonderful living Utopian values would be, calling for a transformation to that ideal world but without in any way guiding us on how to travel along the journey towards it.

Yet while it is true that many culture-change initiatives fall way short of what they were intended to achieve, some do deliver both significant and sustained impact. What differentiates the two?

First, it’s investing time in bringing people together for open conversations that generate what I call “purposeful reflection”, where participants discuss and agree on what they will do more of and less of, start doing, stop doing and continue doing.

This requires the presence of a safe space, or as it is now sometimes described, one of “psychological safety” – which, allow me to state, is more readily created by external facilitators skilled in creating such a space and conducting such activities.

Without going into other critical success factors for culture change, let me jump straight to the need for enthusiastic support from the board.

Everyone must know that at the top level, it is accepted that culture does indeed eat strategy for breakfast – or, as I put it, that there must be a culture strategy component within the overall strategy.

The directors must be part of the strategy development and then participate in the conversations about culture, adding value to them and being role models for the desired culture.

They must also appreciate that changing a culture is much more than a one-off event but a continuous journey, one that requires focus and time, plus the relevant specialised skills and experience among those driving it.

And the performance management system must be such that those who embrace the desired culture are recognised and rewarded – which is why “Change Champions” are often identified as part of the process.

These days it is expected that directors undergo training, and this is now indeed the norm. But beyond programmes that relate to governance issues of oversight, compliance and risk management, how many cover the softer areas of leadership, like culture?

Happily, the organisation that invited me to spend time with their board appreciated this need, and I am confident that their directors will now ensure that matters to do with culture remain firmly on their radar.

Building private sector, State ties

From left: Kenya Private Sector Alliance Outgoing chair Flora Mutahi, Kenya National Chamber of Commerce and Industry President Dr Erick Ruto, Investments, Trade and Industry Cabinet Secretary Moses Kuria and Kenya Private Sector Alliance newly elected Chairman Jaswinder Bedi during a panel discussion at Kenya Private Sector Alliance (KEPSA) 19th Annual General Meeting at Serena Hotel, Nairobi on June 15, 2023. PHOTO | BONFACE BOGITA | NMG

On June 15, I attended the Kenya Private Sector Alliance (Kepsa) AGM, where CEO Carole Kariuki and outgoing chair Flora Mutahi reeled off the activities and achievements of the previous 12 months.

As at previous AGMs, the sheer volume and variety were staggering to absorb – indeed two years ago I wrote a column about Kepsa’s 17th one, saying what an impressive event it was, and for the same reasons, commenting that a significant positive influence had been brought to bear on the wellbeing of not just the private sector but of Kenyans.

Jas Bedi was confirmed as Kepsa’s new chair, with Brenda Mbathi as deputy – two excellent choices. And I was delighted to see that at this year’s AGM, the newly-elected chair of the Chamber of Commerce Erick Rutto was with us.

He talked about the need for the two entities to work together, music to everyone’s ears.

Also present was Trade Cabinet Secretary Moses Kuria, who interacted with us for more than two hours.

“This meeting is seven months overdue,” he proclaimed, seeking an open, frank discussion that would enable his government to walk with us. The President would have been here today, he added, had it not been for his trip to Geneva.

“I’ve been to 27 countries and met with 14 presidents since coming into office,” he informed us, saying he wanted to see more of us in the room when he travels overseas.

Mr Kuria claimed the private sector is insufficiently focused on working for the country rather than for ourselves personally, our company or our sector — maybe not fully on-target for this Kepsa audience, for whom in my experience national wellbeing figures prominently.

His next challenge was to get us to think big, before hammering us for not spreading into enough foreign countries. “We are swimming pool champions in our own bathtubs,” he scoffed. Hmm, my sense is that more and more Kenyan companies are indeed going Africa-wide.

He then talked about setting up many more Special Economic Zones, and through public-private operations that benefit from a zero corporate tax.

These, he fully expects to generate a million jobs and asked how we will make his work easier. His ultimate goal?

To have Singapore come and benchmark with us. Indeed, while we used to go to Ethiopia to benchmark Special Economic Zones, recently an Ethiopian delegation came to Kenya to see how ours are developing, he tells us.

Mr Kuria expects to see SEZs in each of our 47 counties, and this by sharing the funding for their establishment between the national and the county governments.

To date, despite all their financial constraints, 14 counties have contributed – seven from pro-government ones and seven from those led by the opposition.

He is also promoting Kenya to take the leadership in Africa for spreading digitisation. Through the American Chamber he’s been bringing together US tech firms such as Google, Amazon, Microsoft, and Meta, he related, encouraging them with preferential tax rates.

His next point, which he asked Jas to also elaborate on — largely in his capacity as chair of Keproba, the Brand Kenya and export promotion entity — was about the facilitation of exports.

This is through establishing “logistical infrastructure”, an initial 20 warehouses around Africa, and eventually 50 globally.

The Kenya International Trade Agency (Kita), is being formed, and it will hold the master leases for the warehouses, with exporters taking out sub-leases. Exporters will be allowed to share container space for shipping their goods.

By 2030, Jas told us, the objective is that the value of our exports should be equal to the value of our imports. And Mr Kuria explained that the commercial offices within our embassies will now be situated outside of them, selling locally on behalf of our exporters.

How will this be financed? By taxing imports, thereby making imports more expensive and enabling local value-adding manufacturing.

The CS concluded that he looks forward to working with Kepsa and the Chamber.

What an uplifting morning it was, far away from all the Kuria noise we’ve been exposed to since!

Why it’s a good idea for family businesses to form boards

Much of my talk with owners of family businesses is about whether the time is right for them to create a formal board with independent directors.

Very few do, even where their companies have reached a significant scale. So I was pleased that on a recent webinar hosted by Sirdar, the South African-based organisation that helps build better boards around the continent, this was the topic of discussion.

There was easy unanimity among the contributors that appointing independent directors is a good idea. So why are most family business owners reluctant to bring in such independent voices? What do they fear? Why do they hold back from what is commonly labelled as “professionalising”?

Well, they’ve never done it, and doing so has never been on their horizon. As one owner-director-manager put it to me, “My brother and I just talk about things like strategy as we drive to and from our office,” and another does so with his father at their family Sunday lunches. That’s worked well enough, they reckon.

But as younger generations have been emerging into senior leadership, and as “sustainability” is entering the mindset of SME owners, more family businesses are bringing external minds into their worlds.

Not to hand over control to them, and perhaps not – at least initially – to have them be full directors with fiduciary responsibilities, but to be “advisory” board members. This way they can test the waters, seeing how much value they add and how well the chemistry works between them.

A common concern is loss of control, having been used to always acting as the sole decision-makers. Yet disagreements among family members are all too normal, and a common role of independent directors is to act as mediators and consensus builders.

More so if they are offered the position of chair – in itself recognised as displaying good governance. This implies seeking individuals with high emotional intelligence, able to bring together different perspectives.

The challenge is often between generations, where younger, more exposed directors may feel constrained by their elders – who remain convinced that the way they’ve always been handling the business should remain untouched. “If it ain’t broke, why fix it?” they pose.

A major benefit of bringing non-family members into a board is the formalisation of strategy development and implementation, along with more effective performance management.

Professionalising also implies having a Board Charter; circulating board papers in advance; and agreeing a calendar of board meetings (and perhaps board committee meetings, assuming the appetite exists), at least quarterly and each with their purpose and agenda. In these ways the business becomes more focused on the longer term – and is therefore more sustainable.

How do owners go about identifying the benefits they can enjoy as a result of appointing independent directors? It’s not hard.

The family decision-makers are typically the father and two or three from the next generation, maybe brothers, maybe cousins, and now including the occasional female member. They should list the areas where they are strong and ones where they are less so, and seek external contributors to fill the gaps.

Likely candidates will have their own functional, geographic and other experiences; they will come with complementary educational backgrounds and networks; and their personalities and styles will be compatible with those of the family.

It may be good to offer them initial engagements that don’t even include directorships. To offer a personal example, in a couple of family businesses where I was invited to be a director, it was after carrying out some consulting activity with the company. They were happy with my contribution and my style, and I felt comfortable with them.

Even once appointed, there may be benefits in having the independent directors carry out activities beyond merely attending board and board committee meetings. They can guide strategy retreats, meet stakeholders and offer other areas within their expertise.

At the conclusion of the Sirdar webinar, one of the panelists’ closing comments was to urge families to bring in external directors, as his family business had done to great effect. And for my conclusion here I turn to Manu Chandaria, whom I interviewed recently on a Nairobi Business Forum webinar.

In commenting on how it was that he and his family managed to grow their business to the scale they have achieved, one of his explanations was the bringing in of professionals as both board members and executives at an unusually early stage of their development. So if you are running a family business, try it!

Do women in boardroom improve performance?

A few months ago I wrote a column about my session at a Women On Boards Network (WOBN) event on building one’s brand as a board member, and today I share the views I expressed at the recent WOBN annual conference on how the presence of women on boards influences board governance and performance.

Over the last few years significant research has been carried out on this subject, with varying conclusions. Some (including one by IFC) found a positive correlation; others (like one carried out in Taiwan) reached an opposite view; and more saw no distinct impact, either positive or negative. Studies have also been carried out to see how the presence of only one woman differs from when there is more than one, creating a critical mass for the feminine voice.

As I have read the literature on the subject a number of questions kept nagging me. The first was to do with attributability. OK, performance was more this way or that way when women were members of a board, but how do we know it was their gender that made the difference? Couldn’t other factors have been the determinants – like the board focus on strategy and innovation as well as oversight; the qualities of the chairperson; the relationship between board and management?

Finally, how do we judge performance? Merely by growth and profitability? Or also taking into account other desirables, such as culture, purpose, sustainability?

I was almost amused to read in one study that found women are more conscientious in reading board papers and in their attendance at board meetings. Plus that where women are on boards the attendance of the men on those boards is also higher.

Another variable to consider is the effect of women directors who are either executive – with managerial positions; or non-executive – independent. And here the Taiwan-based study concluded that it is the non-execs who add more value, thanks to their broader and higher-level perspectives. Fair enough… as it would be for their male counterparts.

Generally, what we should be looking for among our board directors is previous experience – a portfolio of operational and board leadership positions; their ability to prevent and resolve conflicts; their networks; and other capabilities that reach beyond their gender… or how many degrees and other formal qualifications they have.

For sure we should enjoy the benefits of diversity on our boards, bringing in a collection of directors who together cover the spectrum of needed knowledge, skills and attitudes. And among these of course there should be a gender balance, just as there must be ethnic and generational balance.

My big conclusion, the consequence of my personal experience on boards and working with boards over many years, is that we should not over-generalise. I feel quite uncomfortable when I hear statements like “women are more emotionally intelligent” or “more spiteful”; or – as one study found – that they are “less economically oriented and more philanthropically focused”; or, as the IFC study showed, that “women are not as great risk-takers as men”.

Prior to addressing the WOBN conference I had a long conversation with my wife Evelyn Mungai who has been on many boards, and on not a few as their chairman (as she liked to be described). As I was already aware, her experience was aligned to mine, also leading her to an avoidance of gender stereotyping.

Let’s judge each individual on their personal merits. Let’s select board members, including women, who add needed value. Certainly there should not be tokenism, with flower girls merely decorating the boardroom. We equally disapprove of the “Old Boys’ Club” from which women are excluded. (Evelyn has smoothly entered some of those too, as an invited and welcomed member.)

What I – and my wife – want us to move to more fully is a situation where women are appointed to boards neither because of nor despite their gender. We look forward to a world where people ask: “Men? Women? So what? What difference does that make?”

Here in Kenya and elsewhere, she and I have been seeing that where boards are composed of innovative, responsible, progressive directors they will naturally include women among them, including as their leaders. Because they are good people. And don’t tell us you can’t find any.

How to make your board exit as smooth as possible

OK, so you’ve served your two terms as a director, and now it’s time to give way to someone else. You’ve enjoyed being in all those board committee meetings with your fellow directors, and you have developed close relations with several of them. You also feel good about the value you have been adding to an organisation with which you have come to associate yourself closely.

You became an ambassador and a champion for the brand, and you were a mentor and coach to several of the staff. If you were the chairman then your sense of ownership was the deeper, your relationship with the CEO the stronger. And now what had come to be an integral part of your life is coming to an end. It will leave a big gap. You will miss the collegial spirit, the sharing and the learning, the celebration of triumphs and breakthroughs… and even the mutual condoling following setbacks and crises.

Having been through numerous such transitions over the years I thought it would be helpful to write about how retiring directors can find ways of dealing with their loss of board positions, and equally how those they will be leaving behind can make their exit much smoother and more graceful than many turn out to be.

As I have thought about the stages one goes through, it occurred to me that they are actually akin to the grieving process. The first instinct is denial, to so wish your time will not be coming to an end that you actually avoid the reality of its imminence. But just as with the loss of a loved one, denial must inevitably give way to acceptance… and so the period of mourning over loss ensues. Eventually, with the further passage of time, the person reaches closure, heals and is able to look back at their years of service on that board with a sense of detached retrospection.

So first, what advice can I give the retiree? Always accept that your appointment was never meant to be for life, that no one is indispensable, and that as one door closes others may open. Keep giving your utmost till the last day of your term, and hand over on the due day with no regrets. Your inner motivation and sense of commitment may have dimmed somewhat, but let this is in no way affect how you perform your duties. Be proud of your legacy, and have others speak well of you.

INNER EMOTIONS

Then, how should the remainers support those who are “rotating out”? Understand that your departing colleagues may indeed be grieving, however stoic they may appear. We are all human, and so our stiff upper lip may hide uncomfortable inner emotions.

Therefore show generous appreciation for where and how they have made a difference, and in addition to expressing this informally it is good to lay on a ceremony, however brief, to acknowledge their contributions with a speech or two and a notional gift through which they can continue remembering their time among you with pleasure.

What I have seen is that in too many situations – not least in the public sector – when your time is up, that’s it. You are immediately disconnected, no one is bothered to tap into your skills or your institutional memory any longer, and it’s as if you never existed.

Some organisations have devised ways of holding on to past leaders so they can continue benefiting from their wisdom, whether as consultants and advisers, or maybe as Fellows. In such “life after death” positions these elders must in no way compete with the directors of the day but be available to complement their roles.

I have found this to be particularly helpful where directors are volunteers, and the best example I can think of is Kenya private Sector Alliance (Kepsa) with its Advisory Council (of which I am a member) and its Foundation.

In conclusion therefore, I invite board directors to appreciate that their outgoing colleagues are normal men and women with normal human emotions, in need of empathy and appreciation as they reach the end of their terms in office. Say farewell nicely, and have them continue to speak well of your organisation.

Building your brand for boardroom role

Just before all public events were cancelled earlier this year I was invited by the Women on Boards Network to run a session on building one’s brand as a board member. It was, as I expected it would be, a lively evening with over 50 bright, engaged women in the room.

How fortunate we are in Kenya to have many women who are already competent directors, plus many more board-ready members of that gender. And how fortunate we are to have an organisation dedicated to developing women to become high-contribution board members and to link them up with organisations seeking such people.

My theme for the evening was about making a contribution, about adding value as a board member. And of course just about everything I shared would have been just the same had I been with a group of men.

The process must start by understanding oneself and appreciating what it is that one is offering. Yet too few of us have indulged in the kind of self-exploration that this requires, and here I quoted Benjamin Franklin, who found that “there are three things extremely hard: steel, a diamond and knowing oneself”.

But it is very doable, and I advised the good ladies to start by listing their achievements and the strengths that explain them, without bragging and without undue humility. That establishes (or rather should establish) a base for self-esteem and hence confidence and boldness.

Then, as they look back over how their lives have evolved, to identify their areas of competence, ones that are needed in the board room. Are they a financial guru, a legal eagle? A strategy wonk, a digital wizard? Is their field marketing, or talent management? Are they change champions? Which sectors do they know inside out? Is their hot spot compliance or sustainability? Have they been through challenging mergers or acquisitions? How will they add value in the post-Covid world?

More questions, now more to do with values, attitudes and behaviour. Are they trustworthy and reliable? Emotionally intelligent? Skilled communicators? Thought leaders? Disruptive innovators? Mediators and consensus-builders? Networkers? What is their risk appetite? Are they short-term problem solvers, long-term sustainability builders? And before all that, will they make the necessary time?

I also introduced the Women on Boards group to personality assessments they would benefit from undertaking, helping them to reveal more about their preferences. What role in a board team would they naturally gravitate towards?

In the language of Meredith Belbin, what “team type” are they? A “People person”, who revels in coordinating; being a team worker; or a resource person? An “Action person”, who is a task-focused pushy character; an implementer; or a perfectionist-completer? Or a “Thought person”, who is a creative; a specialist; or someone whose natural home is monitoring and evaluation? Then, are they more of an extrovert or an introvert? Guarded or open? So many questions to help a person position and further build their brand.

I also helped the group I was with to examine their suitability for being the chairperson of a board. Are they the type who can bring people together around common visions and values; run lively and useful meetings to which participants look forward; build relationships with colleagues, management and other stakeholders… and so earn the respect of all concerned?

Good governance requires boards to list the personalities, skills and exposure mix that’s needed for them to fulfill their role holistically as a team. So those seeking directors’ positions must be aware of the gaps that any board wishes to fill and match these with what they are offering.
That’s what Women on Boards Kenya helps with, and so if you are a woman who believes you are ready to sit around one of those board room tables I encourage you to reach out to them.

The last slide from my presentation to the ladies came from a disturbing study which revealed that there are more men named John running big companies in America than all women. More named David too. But at least there are more women than men named Robert or James.
Good luck, ladies, the women on boards cup isn’t yet full, but here in Kenya it is filling reasonably well.