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Letters

LETTERS: Why our boards can’t absolve themselves from malpractices

Directors have many tools at their disposal they can use to stem malpractices in their organisations. file photo | nmg
Directors have many tools at their disposal they can use to stem malpractices in their organisations. file photo | nmg 

We are living in strange times when our corporate industry is being dogged by many challenges as is evident in a number of state and private corporations on their death beds.

Mismanagement is the root cause of all these predicaments, which needless to say, Board of directors(BOD) should not attempt to distance themselves from. And this is what I will attempt to illustrate.

First, inasmuch as the board is never involved in the day to day operations, suffice is to say that most of them are merited to their position by virtue of their expertise in various fields, which are also the basis of various sub-committees within the board.

Remember that most members consist of a group of active and former CEO’s in other organisations, therefore their level of responsibility is already tried and tested.

But when board meetings become ceremonial without any guidance from a special committee to handle certain aspects of operations, the element of policing senior management becomes compromised, which thus becomes a queue for the senior team to relent on their mandate and ‘mis-steer’ a company in full oblivion of the board.

Secondly, most organisations have an internal audit department, which has a direct link to the audit committee of the board. In an ideal situation the department will present its findings to the audit committee with or without the presence of the CEO, thus any suspicious activities must be reported here for appropriate remedy unless, of course if the committee is defunct or has been compromised.

Thirdly, it is nowadays the norm for most organisations to have a set of internal controls emanating from a fully fledged department headed by an Internal Security Head.

This head of the department is not only supposed to introduce policies that govern the lower cadre staff, but to also police his fellow colleagues which, he should do effectively unless and he is sailing in the same boat with the culprits.

It therefore comes as a surprising when such a manager holds their peace forever for fear of being victimised for playing their role.

Fourthly, independent audits are also a requirement especially for public listed companies. Management letters are usually a preamble to the expected results, which are presented to the board.

The board, therefore becomes fully aware of any, if not all exiting malpractices. Therefore this does not absolve it from the sins of its management team.

Finally, a determined board should take this as a trigger to set up a form of “steering committee” that will report to it operational issues. Note that apart from this group being the final dimension eye of the board, it can also act like a “think tank” of the organisation, which can be utilised to make case studies and policies or tasked with any other value adding activity in the company.

However, all is not lost. It is encouraging to see board chairs to organisations such as Kenya Re reporting that the sacking of its CEO recently was due to his decimal performance.

Already board members of the biggest referral hospital in the country are on the radar for obvious reasons and they should do the honorable thing and take responsibility for not playing their oversight role.

There is need for a paradigm shift in the way Kenyans carry on with their lives from basics in the family unit to the complexity of our politics. The conveyor belt lacking in all this is mentorship. Managements should spot talents in their organisations and play a mentorship role.

From my observation, I have established that a good number of efficient CEOs were staff who served in the company for a couple of decades, were mentored and therefore know their business inside out.

Peter Owino via Email

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