As we stand at the crossroads of unprecedented change within the corporate governance landscape, the significance of the board of directors has never been more pronounced. This esteemed body not only commands respect, awe and admiration, but also serves as a beacon of aspiration for many within the corporate world. The board acts as the guardians of the organisation, ensuring its efficient operation and financial stability. Their responsibilities extend beyond mere oversight and they prioritise the interests of shareholders, while also considering a broader spectrum of stakeholders. In doing so, the board plays a crucial role in fostering trust and accountability within the corporate structure.
Drawing from my own experiences on various boards and working with seasoned board members, I have always valued the insights and perspectives they bring to the table. They are equipped with a combination of wisdom, experience and thinking that anchors the company. They ask difficult questions, often directing us back to the drawing board to look at the bigger picture that is best suited for the company.
In discussions with younger colleagues in my previous avatar a recurring question emerged: What skills are essential for becoming a board member? What exactly is the role of the board of directors? How does a board help the company? What are these quarterly meetings about? Why do team prepare streams of documents and presentations that shows the progress of a company?
Imaging: Deni Lal
A board that engages meaningfully during crisis fosters a culture of transparency and collaboration. By challenging assumptions and encouraging open dialogue, board members can help management teams reassess priorities and explore innovative solutions. This dynamic relationship is essential for any organisation striving to emerge stronger from adversity.
Recent dialogues, such as those featured in McKinsey & Company’s ‘Inside the Strategy Room’ podcast, shed light on the complexities faced by today’s board directors. The convergence of global geopolitics, advancements in generative AI, rapid digitisation, and an ever-growing emphasis on sustainability have reshaped the board agenda. Directors are now required to engage more deeply in strategic discussions, encompassing areas such as investments, mergers and acquisitions, performance management, risk assessment, talent management, and organisational development.
While these new challenges emerge, it is essential to recognise that the foundational responsibilities of the board remain unchanged. The expectations placed on board members have expanded significantly, reflecting a broader scope of responsibilities that cannot be overlooked. This evolution demands that directors be proactive and well-informed, ensuring their contributions are both meaningful and impactful in the governance process.
Moreover, the challenges confronting management teams today are unlike any we have encountered in the past. Karen McLoughlin emphasises the necessity of fostering robust relationships between the board and executive teams, particularly as we navigate the complexities of the modern business landscape. Directors are increasingly viewed as advisors, guiding management through intricate decision-making processes and assisting them in navigating uncertainties.
In times of crisis such as Covid 19, or issues related to brands and products, the board members ask tough questions that propels team to think. I have experienced a board that has stood by the entire company in times of a crisis, guiding the team, listening to the management. Asking pertinent questions. Telling us what to do.
The board’s role extends beyond mere oversight; they are integral to the decision-making process, especially when it comes to addressing issues related to brands and products. In times of uncertainty, the board must ensure that the organisation remains aligned with its core values while adapting to rapidly changing market conditions. This requires a delicate balance of risk management and opportunity identification that can help shape the future of organisations.
Narayanan is former chairman & managing director, Nestle India