Business

What makes an effective board?

Published

6 years ago

July 19, 2019

THE landscape on which directors exercise their oversight responsibilities has shifted since the aftermath of the global financial crisis in 2008 and as a result of numerous corporate scandals that rocked the corporate world.
Directors are now exposed to personal risk and liability over and above their usual complex oversight responsibilities. Directorships are no longer for the faint-hearted, who might be there for the prestige the position holds.
To be a director you need to be courageous and prepared to go into battle as it were. One needs to be fully conversant with the operations of the enterprise. Directors should be ready to actively engage in virtually all aspects of an enterprise’s operations if they have to be truly effective. There are factors that the board should do and be aware of if it has to be effective.

For a board to be effective it has to transition through a four phase continuum from the “foundational” level to “developed”, then to “advanced” until it gets to “the strategic” level. Boards which are operating at the foundational level mainly focus on compliance.
Such boards are weak performers because they are trying to play it safe and are unwilling to take strong positions on issues, or make tough decisions, or play proactive operational roles. Whereas when a board is strategic the directors take appropriate risk to make significant contributions and lasting impact on enterprise value.

Most boards find themselves stuck on the foundational level without moving to being strategic because:

They lack clarity of roles of individual directors and the board as a whole. Role ambiguity results in slow decision-making and is one of the causes of unnecessary director conflicts.
There is no alignment and agreement on company strategy resulting in the board’s inability to prioritize strategic issues and rather the board ends up concentrating on operational rather than strategic issues.
Some boards have poor team dynamics which leads to power struggles. For a board to be effective it should be comprised of professional peers who respect each other and work well together as a team.
The composition of the board, if not done well, could end up being a serious impediment in the functioning of the board. The board needs new perspectives and skills if it has to tackle complex challenges that are encountered in this complex environment. Boards that lack the ability to objectively evaluate their makeup to determine if they have the right people and skills will not function effectively.
In most cases board composition is compromised in organizations where the founder dominates board discussions and therefore stifles all attempts to alter the composition of the board or suppresses attempts to change the way the company is to be run. High-performing boards ensure that they recruit new members with the right talent and those who are able to provide valuable strategic input.

Effective boards regularly review their own performances, individually and collectively. Typically the governance committee oversees the board members’ performance by assessing the members’ skills and the board as a whole in a number of wide ranging skills sets like legal, financial, marketing, long-range planning, and communication or leadership skills.

The process usually involves the committees evaluating themselves, as well as their peers, before assessing the board as an entity. The final evaluations are shared with the rest of the board and any weaknesses are addressed through board development programmes.
Highly effective boards have a culture of engagement built upon a commitment to inquiry where members ask the hard questions within the structure of the board meetings rather than publicly criticising board decisions after the fact.

Asking the hard questions, demonstrating periodic scepticism when merited, and even expressing strong and dissenting views are all appropriate and welcome elements of board-member engagement. To be able to ask the hard questions requires that the directors appreciate the business model and are also provided with information timely.
For boards to be effective they should uphold the basic fiduciary principles of the duty of care, loyalty, and obedience. Board members should be aware of what each principle requires of them as individual directors as well as part of the board as a whole, and how those principles relate to the work of serving on a governing body.

These principles should form part of the board’s orientation program. The principles call upon boards to recognize that they hold ultimate authority and should act both independently and prudently in making policy decisions and meeting their responsibilities and they should act in the best interest of the organisation and its mission and needs not the interests of any other party and or a board member’s personal interests.
If a board is to function effectively it needs to appoint an effective board chair who is able to steer the organisation through the dynamic, complex environment that is in a state of constant change.

A high-performing board requires a leader who can support and facilitate a model of strategic governance, develop an essential and candid relationship with the chief executive officer, one who has the respect of his or her board colleagues, and ensures that the full board is focused on issues that matter.
Boards that engage in strategic governance allocate a span of policy-making authority to standing committees while enabling the full board to focus on more strategic issues. Boards should trust that committees will do important work and have a substantial ability to present to the board action decisions and recommendations that are fully vetted. In that respect committee agendas should focus on issues that matter to the strategic direction of the organisation.

Effective boards should look at key challenges impacting the organisation through the risk dimension. Most boards use the enterprise risk management framework in their decision making process.
The process of assessing risk factors and making policy decisions based upon them allows boards to ask questions and make choices in collaboration with senior management in line with the level of risk tolerance that the organisation is prepared to carry.

These decisions can range between anything from investing in projects by accepting the upside risks of a bold initiative to that of mitigating threats or avoiding some initiatives that might run too high a risk to the business model. Most businesses have failed because they failed to proactivelymanage risks.
For boards to be able to deal with risk appropriately they need to be composed of high-quality individuals, who are outstanding in their respective fields so that they can understand certain complex trading systems within specific industries like financial sector, for instance.

Not understanding the business model properly due to a lack of relevant skills can result in the organisation incurring huge losses because members, out of ignorance, might overlook the warnings about the risks involved in the system.
Structures and processes constitute the essential factors that determine the effectiveness of the board. In terms of structures, the composition of the board contributes to effectiveness.
A well-managed board has diversity of opinion, experience, personality and gender. The independence of board members is also crucial. The effective function and the necessary number of board committees are to be taken into account as is the size of the board in making the board effective.

In terms of processes, there are many processes that are key in ensuring an effective board namely, the board evaluation processes, the strategy process, the risk process, the board induction and development process, the CEO and key managers succession processes, and the regulatory process.
There are barriers to having an effective board. These barriers need to be addressed if boards have to function well.

Some of these issues that can make the work of the board ineffective are:

Micromanaging less important matters
Ineffective nomination and governance committee
Failing to rotate and cross-train board members
The board staying too small
Hanging on to unproductive board members
Failing to have a strong strategic plan
Weak committee work and

Failing to do an orientation for new members

Board effectiveness comes about by ensuring that the issues discussed in this article are constantly sustained. It’s therefore very critical for boards to keep fine-tuning themselves towards better effectiveness. A systematic and continuous improvement along these issues is critical to ensure that the board remains effective.

Jakarasi is a business and financial strategist and a lecturer in business strategy, advanced performance management and entrepreneurship.
For assistance in implementing some of the concepts discussed in these articles please contact him on the following contacts: sjakarasi@gmail.com, call on +266 58881062 or WhatsApp +266 62110062.

Business

Take a Break from Summer

Published

1 month ago

December 18, 2024

The Post

Press release for KFC Lesotho

Date: Monday, 16 December 2024

Summer, what a wonderful time of year…

When influencing gets too much

When the news cycle gets too much

When the endless queues get too much

When the shopping chaos gets too much

When the unavailable transport gets too much

When the holiday work shifts get too much

When the lawn mowing gets too much

When the loud music gets too much

When the traffic gets too much

When the relentless schedule gets too much

When the heatwaves get too much

When the weather warnings get too much

When the suntan lines get too much

When the ever-growing laundry pile gets too much

When the festivities get too much

When the 2025 university applications get too much

When the guests overstaying their welcome gets too much

When the social media mayhem gets too much

When the out of sync traffic lights get too much

When the New Year resolutions get too much

When the travel expenses get too much

When reapplying sunscreen gets too much

When the packing and unpacking gets too much

When the photo-taking gets too much

When the flies get too much

When the pool maintenance gets too much

When the fully booked airlines get too much

When the mosquito bites get too much

When the fishing trips get too much

When the baking gets too much

When the road trip stops get too much

When the sand in the car gets too much

When the picnic ants get too much

When the papa and morogo get too much

When the braai smoke gets too much

When the television shows get too much

When the homemade cooking gets too much

When the hot car seats get too much

When the outdoor markets get too much

When the air-conditioning bills get too much

When the nature hikes get too much

When the garden-watering gets too much

When the hot sidewalks get too much

When the bike rides get too much

When the late nights get too much

When the impromptu trips get too much

When the 4×4 rides get too much

When the golf games get too much

When the ice cube trays get too much

When the late-night crickets get too much

When the entertaining gets too much

When the bumpy boat rides get too much

When the paddleboarding gets too much

When the public pool crowds get too much

When the lack of parking gets too much

When the summer internships get too much

When all you need is a breather

You have made it to the end. Take a break from summer with KFC Lesotho on Saturday, 21 December, a day to pause, refresh, and savour the start of holiday mode. Swing by KFC for a taste of summer and officially step into the holidays, recharged and ready. See you there!

Discover KFC’s Summer Delights!

KFC Summer Twisters: https://www.youtube.com/watch?v=LVlAX00WROU

KFC Summer Krushers: https://www.youtube.com/watch?v=QpCn-tFYrls

KFC Summer Buckets: https://www.youtube.com/watch?v=SbiOjRR58UA

End.

About KFC Africa

KFC has been in South Africa for over 53 years and has more than 1,300 stores across the country. The first KFC restaurant in South Africa opened in 1971 in Orange Grove, Johannesburg. KFC is the leading quick-service restaurant brand in South Africa with just under a third of market share, according to Brand Image Tracker. KFC serves more than 20 million customers a month and we work hard to ensure that no matter which of our restaurants they walk into, they will get that distinctive KFC flavour and have a great experience. KFC’s Original Recipe® Chicken was first made by Colonel Harland Sanders in 1940 when he perfected his secret recipe of 11 herbs and spices at his restaurant in Kentucky. Today, KFC is the world’s most popular chicken restaurant, still preparing our chicken with the Colonel’s secret recipe to his exact standards. Every KFC restaurant follows the same global processes and procedures to ensure that our customers get great-tasting food, every time.

KFC Lesotho socials:

Instagram – @kfclesotho – https://www.instagram.com/kfclesotho/

Facebook – KFC Lesotho – https://www.facebook.com/LesothoKFC

X – @KFC_Lesotho – https://x.com/KFC_Lesotho

Business

Demystifying death benefit nomination

Published

1 month ago

December 16, 2024

The Post

I recently attended a trustee training session, and it sparked a thousand of opinions and emotions to fellow trustees and principal officers.

It is remarkable how people approach their pension funds with a blend of care and chaos — carefully watching contributions grow but leaving the aftermath of their departure to luck and a roomful of trustees.

With the Pension Fund Act (PFA) 2024 in place, requiring members to fill out and update death benefit nomination forms annually, one would think the process is foolproof.

Yet, we find ourselves navigating the maze of member reluctance and the emotional minefield that comes with deciding who gets what.

The PFA 2024 makes an elegant appeal to order, asking pension fund members to take charge of their legacy by nominating beneficiaries.

But, instead of pens gliding over forms, there is hesitation, resistance, and in some cases, outright abstinence.

What should be a simple administrative act seems to invoke existential dread or, worse, familial politics.

When Nomination Feels Like Negotiation

One of the most notable trends is the discomfort married members feel at the mere suggestion of allocating 50% of their death benefit to a spouse.

For clarity, the PFA does not say they must — but logic and love might.

However, these conversations often spiral into arguments over “what ifs.”

What if the marriage does not last?

What if the spouse uses the money “irresponsibly”?

What if leaving an equal share to children or a secret favourite nephew makes more sense?

These “what ifs” often lead to another troubling “what if”: what if no nomination is made at all?

Emotions run high.

Sometimes, the process of completing the form turns into a reflection of unresolved family tensions, where the form itself becomes a battlefield for hypothetical posthumous power plays.

Trustees, meanwhile, are left to pick up the pieces, making discretionary decisions that almost always leave someone unhappy.

What the Law Actually Says

Let us address the elephant in the room.

The PFA does not dictate that anyone’s spouse, child, or distant cousin must receive a cent.

The law requires you to nominate beneficiaries but leaves the who and how much entirely up to you.

And yet, myths persist, leaving members to believe they are bound to make obligatory allocations.

This misunderstanding is not just inconvenient; it is entirely unnecessary.

The beauty of the PFA lies in its simplicity: nominate someone — anyone — so your trustees don’t have to piece together your
wishes based on tea leaves, distant

relatives, or that one time you mentioned something in passing to a colleague.

The Real Cost of Silence

If leaving decisions to trustees sounds romantic — think noble strangers making wise decisions — let me assure you, it’s not.

Trustees do their best with the tools they have, but without a completed nomination form, their decisions are guided by discretion rather than your explicit intentions.

And discretion, noble as it sounds, often breeds disputes.

Disgruntled beneficiaries are not just an unfortunate byproduct of silence; they are its loudest consequence.

Without clear instructions, your death benefits might fund lawsuits instead of legacies.

Is that truly the financial wisdom you have cultivated over a lifetime of disciplined contributions?

Completing the Form: The Act of Taking Control

Filling out the nomination form isn’t just compliance; it is an act of empowerment.

It’s the financial equivalent of saying, “I trust myself to make the best decisions for my loved ones.”

It’s an opportunity to assert control over your life’s earnings and ensure they benefit those you deem most deserving.

Let us put it plainly: by completing this form, you eliminate guesswork, prevent disputes, and protect your loved ones from unnecessary turmoil.

You also spare trustees from playing Solomon with your assets — a responsibility they never asked for but inherit when you opt for avoidance.

It is not that deep!

For all the effort we pour into overthinking, let’s consider the alternative — actually completing the form.

You’ve already made harder decisions, like choosing between investment portfolios or deciding on your retirement age.

Writing down a name or two, alongside their allocations, is, comparatively, a walk in the park.

And for those of you abstaining because “it’s complicated,” let us reflect: is it more complicated than the potential legal battles, heartache, and chaos that might follow your departure?

Or are we simply procrastinating because planning for death feels uncomfortably final?

Your Legacy, Your Way

At the heart of it all, filling out the nomination form isn’t about complying with a law or appeasing trustees.

It is about ensuring your legacy aligns with your wishes.

It is about giving your loved ones clarity and peace of mind when they need it most.

So, grab that pen.

Fill in that form.

It might not be the most exciting thing you do today, but it could very well be the most meaningful.

After all, if you’ve spent years building a financial future, why let your final act of planning be defined by inaction?

Teboho Makoetlane

Business

More US funding for development projects

Published

2 months ago

December 2, 2024

The Post

MASERU-THOMAS Hines, the US Embassy’s interim head, has applauded Lesotho for passing the Millennium Challenge Corporation (MCC)’s scorecard, paving way for continued development funding.

The MCC is providing assistance to Lesotho to strengthen good governance, economic freedom and investments in the country, managed by the Millennium Challenge Account (MCA-Lesotho Compact II).

The MCC donated US$300 million (approximately M5.4 billion) for health and horticulture development.

For the country to qualify, it had to pass the MCC’s scorecards.

Hines told Prime Minister Sam Matekane on Tuesday at the State House that the good news is that Lesotho passed, although there are some other things the country has to improve.

For this year, the passing indicators are girls’ primary education completion rate, natural resource protection, land rights and access and fiscal policy.

Indicators that slipped below the pass rate are government effectiveness and freedom of information.

“Of MCC’s 76 scorecards, only 26 countries passed while 50 did not and the good news is that Lesotho once again passed the scorecard,” Hines said.

He said not only did Lesotho pass but it has also improved from passing 15 indicators last year to 17 of 20 indicators this year.

Hines said the accomplishment reflects Matekane and his government’s commitment to strengthening democratic governance and fostering prosperity.

“Noting the decline in control of corruption indicator, we seek avenues to do more together with Lesotho to combat corruption,” he said.

“Not only does regression in this area put Lesotho at risk of failing the scorecard we also know the corrosive impact of corruption on the economy and society.”

He said they seek to maximise the compact’s ability to ensure greater access to quality healthcare.

Matekane said the scorecards assess the government’s performance in key areas throughout the year to determine the continuing eligibility regarding MCC compact funding.

He said last year he urged the cabinet to build on the momentum from 15 out of 20 indicators.

“Let me take this opportunity to celebrate our sustained achievement of passing 17 out of 20 indicators which is a 10 percent increase from last year,” Matekane said.

“Specifically, I committed last year to ensure that Lesotho will submit data to support the assessment of girl’s primary education completion rate,” he said.

He said he was pleased with the progress overall and on gender parity in education and they aim to achieve better results next year.

In addition to this, he said, there is still a lot of work to be done, especially around trade policy, government effectiveness and particularly the freedom of information with a notable decline from 83 percent down to 43 percent.

“Our commitment to control and eliminate corruption remains steadfast. We are working tirelessly to expose corrupt activities, keeping the public sector honest and accountable,” he said.

“The commitment we have made of investing in our people has never wavered over the years and the government is also focused on improving access to quality health services to every Mosotho regardless of their background and location,” he said.

Moipone Makhoalinyane