FINDING A REAL BOARD!

FINDING A REAL BOARD!

It was great to read in the Financial Review this week that Ben Gray, co-founder of private equity firm BGH, is seeking to have a quota of 50 percent of all Board members with real experience in the leadership and operation of businesses. He further advocates that, most preferably, this experience comes from within the same industry.  The article refers to this as a left field idea!  In my mind this could not be further from the truth.

Indeed, to my mind, and in my experience, the absence of proper skills at the Board or Director level is fundamental to business failure. While I do appreciate that Ben’s comments are aimed at larger organisations (potentially seeking equity investment), these concepts need to be focused on from the smallest of entities all the way up.

You don’t have to look too far in the business media these days for ongoing references to the levels of business failure and the underlying culture of phoenix activity.  Much of this failure is because … anyone can be a director.  Forget leadership and operational experience in the same industry, that would be superb, but at the grass roots level there is the absolute necessity for an individual to understand business, have an understanding of their role and the laws that govern it, not to mention an understanding of finance and have committed or obtained sufficient funds to do what they need to do to achieve what they plan.

Alas at the moment the Government’s stance on this is that anyone, including those who claim they merely ‘ordinarily reside’ in this country, without knowledge of our laws and practices, can still be directors.  I do not mean to single out this group, because there are many others with significant deficiencies in experience, education, knowledge, and a raft of other things who are all in the same boat.

Putting proper requirements on boards of all companies from the smallest to the largest will have a very substantive impact on how this country operates and how businesses in the future succeed.  It would also significantly reduce the insolvency practitioners’ workload … in a good way, that is.  But I dream!

You see … it’s not really out of left field, it’s that we consciously really don’t want to do it!