Why we need a balance in our governing body composition
“Equilibrioception or sense of balance is one of the physiological senses. It helps prevent humans and animals from falling over when walking or standing still. Balance is the result of a number of body systems working together. Specifically, in order to achieve balance the eyes (visual system), ears (vestibular system) and the body's sense of where it is in space (proprioception) ideally need to be intact.” Wikipedia indeed; the modern source of all knowledge offers the above definition as one of many meanings of the word ‘balance’.
Where do I ramble with this story? I was recently intrigued by the realisation of a simple analogy while walking around a building site. All walls, floors and ceilings were still a stark grey colour. I had wandered to the upper floor where there was a bridge above an open-plan lower area. There were no railings and with everything a blend of grey the edges were not easily identifiable. I found myself becoming very uncomfortable and I instinctively hugged the centre of the bridge. If the truth be known, I’m sure I looked like a ramp model placing each foot immediately in front of the other – but in very slow motion. I felt quite unstable and uneasy. I just felt out of control in that situation.
That’s when the reality struck me. Because of the lack of colour differentiation in the surrounds and the absence of railings, I could not identify the edges of the bridge. I had no fixed boundaries with which to align my path. Simply put; in any given situation if you are not aware of your boundaries your ‘proprioception’, as defined above, can be disrupted.
How does this relate to the universe of business risk? Through the application of best practice in risk management and governance of all organisations there must flow an environment within which to function effectively and efficiently. With the launch of King IV in November 2016 came the introduction of the Sector Supplements which give guidance to all governing bodies of most organisations as opposed to former perceptions of governance only applying to boards of directors on listed companies.
King IV gives guidance on governing body composition in Principle 7 as follows: “The governing body should comprise the appropriate balance of knowledge, skills, experience, diversity and independence for it to discharge its governance role and responsibilities objectively and effectively.”
In addition to the balance as defined in King IV there must be a clear understanding by the governing body as a collective and also by each individual governor of the role that each governor fulfills. This can be achieved by documenting all the relevant boundaries by way of a board charter and clearly defined policies and procedures. Many governing bodies vacillate between chaos and complacency; which is often really no more than between what they know and what they don’t know. If boundaries have not been set there is often permanent confusion and a lack of direction.
A formal governing body orientation program is essential for new appointees to become familiar with not only the activities of the organisation but also with the expectation of the specific role and the predefined boundaries within which it operates. It is advisable for the governing body as a collective to attend periodic orientation refresher workshops from time to time. With these governance structures in
place it becomes far easier to monitor and measure the performance and effectiveness of the governing body and therefore the performance of the organisation.
Camargue offers very simple but effective ways in which to assess the application of basic governance structures and although an organisation may appear to be operating efficiently it is always wise to remember the old saying; “What you learn when you already know everything is what really counts!”.