Governance
The small habits around your board table today often determine the quality of the decisions your organization lives with tomorrow. A decision made informally today becomes a contract dispute tomorrow. A conflict left undeclared today becomes a lawsuit tomorrow. A question left unasked today becomes a crisis tomorrow. The future is shaped in the present, and the present is shaped by these small choices. make decisions over lunch, in hallways, or through casual emails, they are bypassing the entire legal framework of governance. They are making commitments without the benefit of proper discussion, without the presence of the full board, and without the formal record that protects the organization. This strips away collective accountability and creates immediate personal liability for every director involved. If a casual decision causes corporate harm, the courts will not care that it was made informally. They will hold each director personally responsible. The boardroom exists for a reason and it is not a formality but a way of protecting Directors.
MARKETING AFRICA
Governance
Prof. Kellen Kiambati
Slow Erosion Of Good Governance
Governance failures that we have witnessed in the world did not start as fraud or scandal. The famous Enron scandal whose business strategy essentially incorporated criminal acts with investigators finding that the governance failures leading the company to bankruptcy, erasing $ 74 billion in shareholder value, loss of jobs and imprisonment is an example to teach institutions that the collapse at the end are only final acts of long story of unaddressed small governance failures here and there.
They start as a decision made over hurried coffee and meetings that were characterized by quick conclusions to run to yet another meeting, holding brief for an absentee chair for a few minutes, some members dropping off the meeting for a few minutes to be back later and something that felt too small to matter. Unfortunately, these happenings do not come shouting, they look ordinary and routine until over time they shape board habits and quality of oversight. Before knowing it, the board is building its own downfall.
I have served as a Board Chair and as a Board member for some time now to clearly know the difference between good and bad board governance and the difference between them is rarely dramatic. It is not about intelligence or experience or access to resources, it’ s about attitude towards the details and taking action with seriousness because they understand that the small things are the foundation upon which everything else rests. It is about questioning casual choices and informal agreements before the foundation crumbles.
When a board is appointed because they are trusted individuals of high repute, the fiduciary duty does not require them to settle down and instantly trust management. It requires them to oversee management in an active and not passive way by testing reports and evidence provided through the lenses of law and approved policies. When a board fails to scrutize and ask questions, it is not loyalty but neglect of duty. Fiduciary duty requires an attitude of constructive skepticism, not a comfortable belief that everything is fine.
The relationship between Board of Directors and staff should be regulated and there should be no directors arbitrarily contacting staff directly. Contacting them directly may look harmless but it violates the principles of organizational structure and erodes authority as well as violation of separation that makes good governance work. Directors govern through the CEO. They do not govern through the staff. Important to note is that the most difficult governance environments are those where management ignores the boards and the boards interfere with the day-to-day operations of the company. This creates a toxic cycle of mistrust and confusion. The board feels ignored and responds by micromanaging.
Informal decisions made in hotels is a pathway to governance failure. When a Chair of the Board or all Board of Directors
The small habits around your board table today often determine the quality of the decisions your organization lives with tomorrow. A decision made informally today becomes a contract dispute tomorrow. A conflict left undeclared today becomes a lawsuit tomorrow. A question left unasked today becomes a crisis tomorrow. The future is shaped in the present, and the present is shaped by these small choices. make decisions over lunch, in hallways, or through casual emails, they are bypassing the entire legal framework of governance. They are making commitments without the benefit of proper discussion, without the presence of the full board, and without the formal record that protects the organization. This strips away collective accountability and creates immediate personal liability for every director involved. If a casual decision causes corporate harm, the courts will not care that it was made informally. They will hold each director personally responsible. The boardroom exists for a reason and it is not a formality but a way of protecting Directors.
Meeting of a Board should not be viewed as a boring administrative exercise as they are a legal shield of the board that demonstrates that the board did its work and if a regulatory scrutiny is done, they will look at what was minuted, evidence of proper due diligence, of rigorous questioning and of informed decision making. If the minutes are vague, incomplete, or rushed, the board has erased its own evidence of good governance and it is a legal vulnerability that can destroy an organization.
The small habits around your board table today often determine the quality of the decisions your organization lives with tomorrow. A decision made informally today becomes a contract dispute tomorrow. A conflict left undeclared today becomes a lawsuit tomorrow. A question left unasked today becomes a crisis tomorrow. The future is shaped in the present, and the present is shaped by these small choices.
Prof. Kellen Kiambati holds a BA- HRM from Kenyatta University, MBA from the Kenya Methodist University and a PhD in Business Administration with a focus in Strategic Management from JKUAT. She is a member of the Institute of Human Resource Management of Kenya. She can be reached via: Kellenkiambati @ gmail. com.
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