Becoming An Elephant In The Boardroom: The Real Role of the Modern Director
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As we see big brand companies like Qantas and OpenAI go through what we can safely say from the outside is a bit of a ‘governance crisis’, it has brought up the need to be very clear about what is board leadership and why is it different to other leadership roles.
Here’s my twist on the usual elephantish analogy.
You might not know this, but elephants are excellent swimmers. They have enough buoyancy to stay at the surface and use their powerful legs to paddle. They use their trunk as a snorkel when crossing deep water so they can breathe even when submerged.
This aquatic prowess aligns with what board directors do behind closed doors, or more specifically, what they should be doing!
Across almost every type of company and organisation, the role of its board members has become increasingly critical. Historically perceived as stewards of compliance and financial governance, modern boards play a more complex role in steering organisations toward strategic success and the associated risk management (eg what could sabotage strategies).
Let me break it down.
There are six key roles and responsibilities of a director.
1. Strategic Direction
Non-exec directors (NEDs) are responsible for setting strategic direction, often alongside management who are responsible for implementation. However, their role now extends beyond ticking boxes. Modern boards act as visionaries, ensuring the organisation is equipped and resourced to thrive in an ever-changing environment. Boards will engage in in-depth discussions, analyse industry and market trends (usually provided by management), and make pivotal decisions that shape the future of the company.
2. Effective Governance
Good governance or effective stewardship remains the fundamental responsibility of boards. Aside from my strategy setting, boards establish policies, overseeing compliance and risk management, whilst safeguarding the interests of all stakeholders. Yet, effective governance isn't limited to rule creation and enforcement. It now includes creating a culture of transparency, accountability, and ethical behaviour within the entire company. In this capacity, they are the guardians of both the company's reputation and long-term sustainability.
3. Risk Mitigation
In times of crisis, boards must come down from their helicopter view and step into a crisis management role. COVID showed us that, on steroids. They should provide invaluable perspectives on how to steer the organisation back on course whilst avoiding possible further calamities. Board directors must be prepared (and equipped) to navigate unforeseen challenges, and this only comes from a mix of experience, wisdom and innovative ideas.
4. Leadership Accountability
Boards play a pivotal role in assessing the performance of management by conducting regular evaluations and ensuring they remain effective and aligned with the company's objectives. When necessary, they must make the difficult decisions to replace leadership - still the single potential most important role they play. As part of that, the best modern boards actively engage in succession planning; identifying and nurturing leadership and governance talent inside the company and on sub-committees.
5. Serving Stakeholders
Board directors often serve as a bridge between stakeholders and the organisation. Via varying mechanisms (the best being specialist sub-committees), they are now expected to actively engage with key groups, seeking their input into strategic direction, and balancing the aligned and competing interests of a broadening group of empowered stakeholders (ie employees, customers, suppliers, owners, donors, the broader community and environment).
6. Driving Innovation
In today's rapidly changing world, innovation and adaptation are paramount. We have found that those in the Future Directors community are the most forward-thinking leaders, driving discussions on innovation strategies and ensuring their organisations remain agile in response to market shifts. Their role goes beyond the old ideas of good governance; it's about fostering a culture of innovation and adaptability. That's GREAT governance!
Just as elephants will gracefully navigate through deep waters with a combination of buoyancy and powerful strokes, modern board directors find themselves swimming through the complexities of strategic decision-making, governance, risk mitigation, leadership accountability, stakeholder service, and innovation.
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