Setting the right board culture

COMPANIES today have to adhere to a list of governance and control guidelines that are either mandatory or highly recommended as they reflect best corporate practices.

When it comes to board composition, almost all ensure their boards have an appropriate number of members, good committees and structures, members with sufficiently diverse competencies, and clear terms of reference, ethics and conflict-of- interest policies.

However, a closer look at the failures of boards at companies such as Enron, Tyco and Worldcom shows that dysfunction within the board was the catalyst for failure rather than the lack of corporate governance structures or best practices.

Importance of board culture

In other words, simply placing competent people of goodwill around a boardroom table will not necessarily result in an effective and functioning board. The hardware around which the board is built must be accompanied by an "operating system software" that ensures openness, shared values and collegiate behaviour of board members. No matter how well-composed a board is, it needs the right boar…