Sundaymail Editor
Dr Newton Demba
OVER the years, I have had the privilege of working with numerous boards and leadership teams across a number of sectors and have often encountered situations where boards overstep their boundaries, leading to a phenomenon known as board overreach.
In this article, we will explore what board overreach is, its causes, harmful effects and most importantly, how it can be corrected.
What is board overreach?
Board overreach occurs when a board of directors exceeds its authority and interferes with the day-to-day operations of an organisation, undermining the role of management and the CEO. This can have serious consequences, including undermining the authority and confidence of the CEO and management team, leading to inefficient decision-making and a lack of accountability.
There are several ways in which board overreach can manifest.
One common example is operational interference, where the board becomes overly involved in the day-to-day operations of the organisation.
This can include micromanaging, where the board attempts to manage budgets, oversee projects or direct staff.
It can also include overstepping boundaries, where the board assumes responsibilities that are not within its purview, such as managing stakeholder relationships or overseeing compliance.
Another example of board overreach is strategic interference, where the board imposes its own strategic vision on the organisation, rather than allowing management to develop and implement strategy.
This can include dictating strategy, where the board attempts to impose its own strategic goals and objectives on the organisation.
It can also include over-emphasising short-term gains, where the board prioritises short-term financial gains over long-term sustainability and growth.
Governance interference is another form of board overreach, where the board assumes responsibilities that are not within its governance role.
This can include overstepping governance boundaries, where the board attempts to manage risk or oversee audit. It can also include interfering with committee work, where the board attempts to direct the work of committees, such as the audit committee or compensation committee.
What causes this?
Several factors can contribute to board overreach, including a lack of clear roles and responsibilities, inexperienced or untrained board members, CEO or management weaknesses, and crisis or pressure situations.
When boards are unclear about their roles and responsibilities, they may be more likely to overstep their boundaries and interfere with the day-to-day operations of the organisation.
Inexperienced or untrained board members may also be more likely to engage in overreach, as they may not fully understand the boundaries of their role.
CEO or management weaknesses can also create a power vacuum that invites board overreach. When the board perceives that the CEO or management team is not capable of leading the organisation effectively, they may feel compelled to step in and assume responsibilities that are not theirs.
Harmful effects
Board overreach can have serious consequences.
One of the most significant effects is the undermining of management authority.
When a board overreaches, it can erode the authority and confidence of the CEO and management team. This can lead to a lack of clarity and direction, as the management team may feel uncertain about their roles and responsibilities.
Another consequence of board overreach is inefficient decision-making.
When boards become bogged down in operational details, decision-making can become slow and cumbersome.
This can lead to missed opportunities and a lack of responsiveness to changing circumstances.
Board overreach can also lead to a lack of accountability.
When the lines of accountability are blurred, it can become unclear who is responsible for key decisions and outcomes.
This can lead to a lack of transparency and a lack of trust among stakeholders.
Finally, board overreach can damage the relationship between the CEO and the board. When a board overreaches, it can lead to mistrust and communication breakdowns. This can create a toxic dynamic, where the CEO and the board are working at cross-purposes rather than collaboratively.
Correcting board overreach
To correct board overreach, it is essential to establish clear roles and responsibilities.
This involves developing a clear understanding of the roles and responsibilities of the board, CEO and management team. By doing so, each party can understand their specific duties and avoid overstepping their boundaries.
Providing training and development opportunities to board members is also crucial.
This ensures that board members understand their role and responsibilities and are equipped with the necessary skills and knowledge to perform their duties effectively.
Setting clear boundaries and expectations for board involvement in operational decisions is also important.
This helps to prevent board members from becoming too involved in day-to-day operations and ensures that the management team is able to perform their duties without undue interference.
Fostering a culture of trust and respect between the board, CEO and management team is also vital.
When each party trusts and respects each other, they are more likely to work collaboratively and avoid overreach.
Finally, regularly evaluating and assessing the board’s performance is essential. This involves providing feedback to ensure that overreach is not occurring and making adjustments as necessary. By taking these steps, organisations can help prevent board overreach and ensure effective governance.
So, board overreach is a serious issue that can have far-reaching consequences for an organisation.
By understanding the causes and effects of board overreach, and taking steps to correct it, boards can ensure that they are providing effective governance and oversight, while also respecting the boundaries of their role.
Newton Demba is a management consultant and an adjunct lecturer at the University of Zimbabwe in the Faculty of Business Management Sciences and Economics. He writes in his personal capacity. For feedback; [email protected] or +263784166296
Bongani Ndlovu
Online Reporter