Pallavi.chakravorty@timesgroup.com

Agood team of directors is oftenthe biggest guiding factor for anyorganisation. Their role is critical

to the company’s future and theiradvice key to its wellbeing. So, how dowe define a perfect board or a greatboard? Are there any set parameterson which their performance can bebenchmarked? There cannot be anyone answer to that.

The third roundtable of India’s BestBoards was all about discussing howcan a Board be more effective, whatshould be its duties, and what shouldbe its structure. “The way a Boardmember is hired really effects thestructure of the board. Globally, there isa structured interview process forhiring members, while in India one justgets a call from the Chairman to sit ona company’s board,” said Vinita Bali,Chairman, GAIN as she triggered areally heated debate.

“The Board also consists of non-independent directors who representshareholders, so it gets curtailed bywhat really are the objectives of theshareholder. Also, the nominateddirector has to take care of theexpectations of the person whom herepresents,” added Krishnan Ganesh,Co-founder and Chairman, PorteaMedical. What about family-runbusinesses, which have dominant

promoters? Family members are partof boards and run businesses even ifthey may not be the best fit to do so.Does the NRC even have a process ofinterviewing a family member beforehe joins as an executive role?

The discussion then moved on todefining the key responsibilities of theboard. Apartfrom the threekey duties ofselecting theleadershipteam and theCEO, ensuringyou have theright strategy, and that you have theright governance for the company, theBoard is also supposed to ensure thatshareholders get rewarded for themoney they have put in the company.“Boards have to change just fromcompliance to how you are makingorganisations more competitive. Howdo I create other fundamentalfoundation elements that constitute acompany?”, said KrishnakumarNatarajan, Co-founder and ExecutiveChairman, Mindtree.

What about a diverse Board? Doesdiversity make it more effective? Yes,agreed most experts. “A diverse Boardis critical to the company and decidesits success particularly in today’s dayand age and through its changinglifecycle. It’s important to get variousperspectives of the industry in,” said

Vishal Bali, Co-founder and Chairman,Medwell Ventures. “If all decisions aretaken unanimously, I would saysomething is wrong with the Board,”added Ganesh.

Arvind Mediratta, MD & CEO, MetroCash & Carry, had a slightly differentview. “Companies these days are hiring

CEOs, whodon’tnecessarilybelong to thatsector. So fora board whichis not involvedin the day-to-

day operations, it is important to havesomeone from the same industry,” hesaid. “Also, if you want a Boardmember to do justice to the position,how many boards should they sit on?There should be a cap on that.” he said.

If we are talking about compositionand structure, there has to be a way toevaluate that as well. “The evolution ofthe organisation and the category, bothplay a role in the kind of boards youneed to have. The board should seethat acts of commission such as frauds,etc. don’t happen. Acts of omission areimportant too, but the managementmay not be focusing on them, forexample, sustainability,” said SusheelBalakrishnan, Managing Partner, 720Transform Consulting.

Apart from best practices,sometimes there is a lot of learning

from bad practices as well. Whathappens when there is a companyfraud? Is the board in a position to stopthat or act as a whistleblower?Absolutely, said Prasad Kumar,Founder, Human EndeavourAssociates, assertively. “Characterbefore competence is very critical. Eventhe snazziest of board memberssometimes can’t even squeak in frontof a dominating chairman. It is to dowith the kind of personality you haveand whether you have a backbone. It isthose moments of truth that build theculture of the organisation.”

Richard Rekhy, Board Member,KPMG Lower Gulf, blamed thedominant CEO for a Board’s non-performance. “When you have adominant CEO who roughrideseveryone and does what he does, theBoard has little or no role to play afterthat. Whenever there is a fraud, theauditor gets crucified, I am not sayinghe shouldn’t be, but what about theperson who committed the fraud?”, heasked. Shekar Viswanathan, ViceChairman and Wholetime Director,Toyota Kirloskar Motors, agreed. “Towhat extent the Board interacts withthe auditors also needs to beascertained. The Board needs toengage with the auditors andfundamentally understand one thing —accounts is the responsibility of themanagement as well as the Board.”

Moving on from collectiveresponsibility to individual duties, whatreally should each and every Boardmember practise? Our veryenthusiastic and vocal panel eruptedon this. “There is something calledwork ethics and professional ethics,and we know many Board memberswho do little to really understand thecompany they are members of. Onglobal boards, members are paid welland no one can attend a meeting ifthey haven’t read the papers. So, in away the Board also creates the cultureof the company,” said Vinita Bali.

“I would like to recommendindividual governance rather thancorporate governance, if each one ofus governs ourselves well in the rightdirection, Boards would be what wewant them to be,” said Sandeep Maini,Chairman, Maini Group. “As a practice, Irequest companies to allow me toattend three of their board meetings asa silent director. It helps me decide if Iam competent enough to add value tothe Board, and whether my views willbe taken in a non-judgmental mannerby the other members,” he said.

Camaraderie between the memberswas mooted as the concluding thoughtof the discussion. “Offsite strategyretreats of the Board should beorganised wherein the members get tospend some quality timeunderstanding and challenging eachother,” said Prasad Kumar. AddedVishal Bali: “If exchange of thoughtsdoesn’t happen between Boardmembers, they can never take thecompany towards a singular strategybecause they have never imbibed whatthe future of this company should be.”

“If the Board among itself and withthe management is not in line with thesame purpose, then there is going tobe trouble,” Rituparna Chakraborty, Co-Founder and EVP, TeamLease, said, asthe concluding thought of the day.

ON POINT

Boards have to change from justcompliance to making organisations morecompetitive. Questions such as how I canpick the right person for the executive team or how doI create other foundation elements that constitute acompany, should find cognisance with the Board

KRISHNAKUMAR NATARAJAN

The evolution of the organisation andthe category, both play a key role in the

kind of Boards you need to have. The Boardshould ensure that acts of commission such as frauds,etc. don’t happen

Managing Partner, 720 Transform Consulting

SUSHEEL BALAKRISHNAN

I would like to recommend individualgovernance rather than corporate

governance for Boards. If each one of usgoverns oneself in the right direction, Boards

would be what we want them to be

Chairman, Maini Group

SANDEEP MAINI

Till the basic structure of how directorsget appointed to a Board is established,

there will not be any control on it. Careshould be taken that members should not be

from the same industry, otherwise you may just getclones and not a diverse Board

Board Member, KPMG Lower Gulf

RICHARD REKHY

Right Board for the right company is key.A Board should understand a company’sstrategy and also that if exchange ofthoughts doesn’t happen between members, itcan never take the company towards a singular strategy

Co-founder & Chairman, Medwell Ventures

VISHAL BALI

To what extent the Board interacts withthe auditors needs to be ascertained. TheBoard needs to fundamentally understandone thing — accounts is the responsibility of both, themanagement as well as the Board

Vice Chairman and Wholetime Director,Toyota Kirloskar Motors

SHEKAR VISWANATHAN

I have a different view regardingindustry knowledge. Companies thesedays hire CEOs who don’t necessarilybelong to that sector, so for a Board which isnot involved in the day-to-day operations, it isimportant to have someone from the same industry

MD & CEO, Metro Cash & Carry

ARVIND MEDIRATTA

I think agility and continuity in Boardsare interlinked. By agility, I mean the

ability of the Board to switch gears basedon a certain situation. When it should take

the management’s side and when it should advise adifferent path may decide the future of the company

Co-Founder & EVP, TeamLease

RITUPARNA CHAKRABORTY

Boards are supposed to drive corporategovernance, balance shareholders’ pointof view while taking decisions, and alsolook at risk management from the governancepoint of view. The question is, how?

Managing Partner, Amrop India

PREETY KUMAR

Character before competence is critical.Board members with the snazziest of CVscan’t even squeak in front of a dominatingchairman. It is these moments of truth thatbuild the culture of the organisation

Founder, Human Endeavour Associates

PRASAD KUMAR

When a Board constitutes ofindependent members, is it really

independent if the chairman invites peopleto join it? Shouldn’t it be done through anindependent process?

Chairman, Portea Medical; Promoter,BigBasket, Bluestone, and others

KRISHNAN GANESH

In case of global Boards, every year, atleast one Board member travels to the

country where the company has itsoperations and meets customers, etc. Does

any Board member on any Indian Board even knowwhat its customer looks like?

Chairman, GAIN

VINITA BALI

Co-Founder & Executive Chairman, MindTree

Process Partner

Institutionbuilding andstewardshipare key ele-ments of Boardresponsibility

Board membersshould deeplystudy agendapapers beforeattending meet-ings, show basicwork ethics

How independentis the Board is keyand it starts with astructured inter-view and hiringprocess for bring-ing a member onBoard as is thecase with globalBoards

KEY TAKEAWAYSSociometry of theBoard is key —members shouldbe encouraged andallowed time tospend together,engage and inter-act so that they getto know each otherand challenge eachother

Composition ofthe Board is criti-cal. Membersfrom differentindustries shouldbe made part ofa Board toensure diversity

WHAT MAKES AN EFFECTIVE BOARDA Board’s effectiveness is mostly determined by its composition,culture and character. But how do these parameters become theenablers for a perfect Board? An expert panel discusses

CONSUMER CONNECT INITIATIVE

Panellists of the Amrop-ET Best Boards roundtable discussion in Bangalore

A dominatingCEO or Chairmanshouldn’t stop aBoard memberfrom dissenting.A yes-board is acatastrophe for acompany