An efficient board of directors should provide strong oversight of operations and administration while offering guidance and strategic support to the executive leadership efficiently and effectively in creating actions to generate short, medium, and long-term value for the company and its shareholders. Many boards fail in this regard.
The failure of a board of directors is often attributed to:
Inexperience or incompetence of board members; lack of experience and a lack of an integrative vision of the business environment, the competitive landscape, their competitive advantages and disadvantages, knowledge of customer operations and experiences with the company, their desires and demands, regulatory environment, and market size.
Lack of a skeptical, critical, and constructive posture. The ability to believe in reports produced by the executive leadership can be biased because it is the management itself that wrote them, with their own perspective and flaws. The skepticism of a board of directors is beneficial to shareholders. Questioning what is in the reports and even more so, questioning management about what is not in the reports but should be.
Lack of understanding and involvement in the company's operations on-site, rather than relying solely on harmonious reports. Immersing oneself productively in the company is enriching. Spending a few days following core activities, from supplies, production, logistics, and sales to after-sales, gives the board member an understanding of limitations and missed opportunities regarding the company's operational assets: its people and their respective skills, technology, and production processes.
Personal maturity, life experience, and experience in handling crises and difficult times. The feeling of clarity during turbulence (rather than in fair weather) allows one to see beyond what the executive leadership sees.
The quality of company information presented by the executive leadership. In some cases, certain complexities in operations and business models are difficult to express in writing. No matter how detailed a report from the executive leadership is, there is always a lack of information whose complexity exceeds the ability to put it into words. In some cases, certain information is suppressed.
Lack of an innovative mindset: discussing and proposing disruptive innovations that can lead to the creation of new products and services, and most importantly, improving the customer experience and increasing market share.
7. Board meetings that fall short in terms of time and quality in strategy. Evaluating the long-term strategy, questioning it, improving it, and ensuring that action plans align short and medium-term activities with long-term strategies.
While the design and composition of a board of directors can address solutions to the above points, it is all very complex to articulate and implement, taking into account the company's history, the shareholders, and the market context. But there is a solution, undoubtedly!
Terus Consultoria specializes in forming shareholder agreements, efficient and effective boards of directors, and strategies and tactics for executive leadership.
"Terus, intelligence, advisory, concrete cases, and objective actions!"
Contact Terus right now: contato@terusconsultoria.com.br / +55 011 2503-6747.
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