Business management requires political knowledge well above technical knowledge, although this is also necessary. Where this capacity that we call “politics” is most manifested is in the governing body par excellence: the board of directors. When a directory works properly, it contributes a lot to the proper functioning of the organization.
The first to benefit from this is the general manager or the management committee, if the government is of a collegiate type. However, experience indicates that the good functioning of the directories is usually not as good as it would be desirable. Also is true that The inefficiency of the boards is often not so much associated with not knowing what a board must assume as a task, but rather with the fact that the coexistence between the directors is affected by external factors that condition their actions.
Most of the time the pitfalls are linked to characteristics of the property and, on other occasions, to the personality of the person who controls the share capital.
A practical way to check how well we are doing is to compare the performance of the directory with some basic typologies that I have been able to characterize over the years.
Sometimes it has coincided with directories in which I have had to be a part, in others my relationship was external and circumstantial, in the least, of subordination.
With a bit of effort and a bit of irony, I share here some of these categories, a bit caricatured. I trust that they serve as a guide so that those directors who are interested in working well, serving the company and those they represent, do an exercise that allows them to review if there is not something they can improve in their work.
“Type pathologies” of the directories.
Annual meeting
These are meetings in which the main objective is to comply with the formality required by law. Its agenda does not go beyond the call to the shareholders’ meeting in order to approve the balance sheet and other formalities, such as the approval of the dividends to be distributed and little else.
You could almost say that this is not a case where the directory is malfunctioning. Directly, what happens is that the directory does not act as such. The positive thing about this case, if there is anything that can be classified as such, is that, as a minister said a few years ago in the face of criticism that he was doing nothing: “Sometimes doing nothing is the best thing one can do ”.
management meetings
They happen when the issues being addressed are not of a political or exceptional nature, but rather focus on what is operational and what is urgent. The agenda they pursue is typically managerial. They replace the work of the general manager or serve him as support. Sometimes, this pathology is aggravated by the general manager acting as a simple executing secretary of what is decided in the board of directors.
Gifting Forum
Although the name may seem exaggerated, believe me, dear reader, I am not exaggerating at all. It happens when a board of directors, numerous in general, dedicates itself to patiently listening to the person who presides over it, be it this shareholder or simply a president who represents a part of the capital with the capacity to control.
In the sessions, the majority dedicate themselves to claque to whoever is in charge or simply to accompany with the vote, although it is understood, in the private forum, that what is being resolved is not the best. It may happen that the majority behave this way for the simple fact that they cannot influence the final decision, due to excessive respect for the leader, due to a misunderstood loyalty or, unfortunately on too many occasions, for fear of suffering reprisal. When an important issue needs to be discussed, the person presiding does so at a small table that functions outside the plenary session.
therapy sessions
They are easily identifiable, since they are characterized by long cathartic participations, either individually or in groups, about everything that is wrong and should be fixed. In general, no agenda or order of the day is respected, wasting time talking and criticizing everything that is wrong without making the slightest effort to accept the responsibility of the board itself.
After all, it is the body with the maximum power, which has been invested by the shareholders. Many times they are family businesses in which some branch of the family or some of the members face problems of real representativeness.
battlefields
They are usually found in companies with fractional ownership and without a group being able to exercise real control of the company. They tend to dedicate themselves to discussing problems that are far from what the business needs and all the effort is concentrated in a mutual blockade, where, rather than seeking the good of the company, each party tries to impose its share of power. Directors, whether they are owners or appointed by them, feel more obligated to defend their own conflicting interests than those of the company as an institution with which they should feel obligated.
consolation prizes
They are usually made up of executives with frustrated careers or, in the case of family businesses, with members who do not find a place in the line and are compensated with seats on the board of directors or on the fiscal commission. These are overpopulated directories, poorly paid and with an activity very oriented to reviewing figures and balances.
So far the critical view. Space does not allow to comment on what, in my opinion, are characteristic signs of directories that add value to your company. It will be the subject of another column.
But as is always the case in matters of company policy, it is not so much about seeking perfection, but about continuously correcting. Surely in this list of bad practices there will be something that can be identified that deserves an improvement effort.
