Sundaymail EditorTHE primary purpose of a board of directors is to protect shareholders’ assets and ensure that they receive a decent return on their investment.
In some instances, directors might feel obliged to protect the employees first and then the shareholders second.
In general, the board is supposed to drive and be in control of the company.
From past auditing experience, I have learnt that some of the individuals that are trusted to run multi-million dollar companies do not inspire confidence at all.
One is tempted to compare such directors with commuter omnibus drivers who are reckless simply because they did not invest in the vehicle they are driving.
They also forget that it is the vehicle that generates the income they use to sustain their families.
Those in the world of finance acknowledge that what matters most are the numbers. I believe figures speak volumes about the performance of a company.
Some may blame the business environment that they operate in, but the truth of the matter is that the human resource plays an important role in the performance of companies.
If you have a board of directors who are self centred, not innovative and are appointed simply because of nepotism and favouritism, never expect that organisation to prosper.
A good board should be independent. By independent I mean it should comprise individuals who are not related in any manner, be it as family or friends.
Board members should be very free to express their honest views without fear of what the next person will think or feel. I have been following what has been happening at Rainbow Tourism Group.
The shareholders decided to shake up the board and the result has been surely rewarding if one is to consider their recent financial results, including positive rave reviews in the media of late. They came from a loss-making position to making profits and their revenues have increased.
The major reason for this was simply a good board of directors which understand that particular market.
In contrast, there are those whom, when appointed to a board, think of what benefits they are going to reap before they think of what they can do to improve the company.
It doesn’t make sense for one to expect a US$120 000 car when the company is making a US$5 million loss annually.
It is really sad when you have such directors. If you buy that expensive car and yet you are making a loss, you are simply stealing from your creditors. You are busy spending on flashy assets for your personal benefits at the expense of both creditors and employees.
I get so emotional when I encounter situations like these.
These are some of the key factors affecting the mainstream economy.
To give another example, I have been a PSMAS medical aid holder for many years and subscribing every month, but it simply pains me when doctors say “we are not accepting PSMAS” simply because of an incompetent board which valued personal gain over providing good services.
My question is why do we keep non-performing boards for long? Why should we put “our own” people in boards? What is the criteria of appointing the boards?
Some have masters’ degrees and PhD’s, but when it comes to performance they are simply useless.
As I said earlier, what matters are the numbers.
People are in business to make money and shareholders should be rewarded for their investment.
Some advisors fear telling their clients the truth because they fear the client may choose another audit and advisory company to work with.
I believe it is better for the directors to be offended by the truth, which can save their company, than flattering them so that you retain the client for future audits.
The reality is, in future there may be no company to audit as it may collapse. A good board should be results-driven and desist from useless, unending meeting all the time which produce nothing.
Zimbabweans enjoy meetings, conferences and workshops, but usually the results of most of these meetings amount to nothing.
Board members should have integrity, be passionate and have a mission to be committed to the company.
Differences may occur in companies, but surely if good corporate governance structures are in place, the differences will be resolved amicably and the company will progress.
I noted in the local media recently that most companies are crying foul that Econet is being unfair in terms of competition in the market.
I believe the market is free for all, and do not blame Econet for having an innovative and good board of directors.
They are where they are because they run the company with the agenda of growing it and making money.
There is a saying which goes, “Don’t hate the player, hate the game.”
If you are a board member, ask yourself what difference you are going to make and how your input is going to change the company for the better.
Do not just expect to get board fees without actually working for them.
Many Zimbabweans have lost their jobs because a few people run down companies for personal gain.
It is time to rebuild our nation and it begins with you.
Taurai Changwa is an articled accountant and ACCA finalist. He is managing director of SAFIC Consultancy. He writes in his personal capacity and can be contacted at [email protected] or visit Facebook page SAFIC Consultancy, or WhatsApp on 0772374784.
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