‘IF THE BOARD FAILS, IT CAN BE VOTED OUT’
So much has been written about Biodun Shobanjo, the advertising tsar who founded Insight Communications and changed the face of advertising in Nigeria. Shobanjo, the entrepreneur and ad man is well known, but what is not well known is the boardroom guru sitting atop the Troyka Holdings tree, viewing down the activities of his subsidiaries like Optimum Exposure, The Quadrant Companies, MediaCom, Media Perspective, Black Onyx, Hot Sauce, Halogen Securities, all exemplifying Shobanjo’s courage, determination, passion and entrepreneurial can-do spirit of one of Nigeria’s foremost business builders.
In our forthcoming book, 50 NIGERIA’S BOARDROOM LEADERS—Lessons On Corporate Governance and Strategy, Shobanjo shares his thoughts on boardroom leadership. From it, we extract these 7 takeaways.
- In a sense, the board is like governance, very much akin to the way a country is governed. Citizens desirous of good governance elect a government in place, starting with the president to governors down to legislators at different levels. Having voted at the polls, the electorates expect returns; they expect good governance and dividends of democracy. If after four years, elected politicians fail to deliver, the people can rightly say: “We don’t want this governor again.” They go back to the polls and vote out the ineffective leadership. The same thing happens in the business sector. Every 12 months, the board must report to the shareholders. Their performance determines whether those shareholders give a vote of confidence saying: “We want our board to continue.” It is as simple as that. It is not about, “I like Mr. A’s face as managing director. I like his face as chairman of board.” There is a covenant: “deliver us profit.” If the board fails to deliver on that covenant, there will be issues.
- Being appointed to the board is the greatest thing that can happen to anybody’s career. The board is the apex of the corporate ladder, the highest level you need to operate. Hence, ascending to executive directorship is a fitting denouement to a fulfilling career. A director should do his utmost to justify his inclusion on the board.
- I was 31 when I was invited to the board of Grant Advertising over four decades ago. I was handpicked from the lower rung and catapulted to the top of the ladder. Suddenly finding myself at the top, I must admit that I had no idea what I was supposed to do. I had to learn fast. At board meetings, I followed proceedings with rapt attention. Being on the board of Grant was for me a school. And indeed, I learnt valuable, albeit shocking lessons. My first shock came at a meeting where we deliberated on personal issues. Certain employees were to be fired from the company. Surprisingly, one of those shortlisted was the chairman’s sibling. The managers of the company said to the chairman: “Sorry, your brother is not contributing. He is not going to help us achieve our objectives. He has to leave.” The head of finance too was also to be fired. According to management, they were not good enough. To my consternation, the chairman did not hesitate. He did not bat an eye before he endorsed it. Ratified by the board, both men were sacked. As a 32-year-old, that was too much for me. I couldn’t understand. How can this happen? Couldn’t the chairman have used his influence to sway the decision and thus save his brother’s job? He didn’t do that. I did not forget the lesson: You take very hard decisions at that level. There is no room for sentiments. Invariably, what should be uppermost in the mind of everyone is the overall interest of the enterprise.
- The role of the board is to open the eyes and minds of management to the direction the company should go. Usually, the executive management briefs the board about how they intend to operate for the year. Set goals to be achieved for that calendar year are outlined, the details usually, covering all and everything, from personnel to capital injection. The board goes over the proposal with a fine toothcomb, and if satisfied, signs it off. That becomes the blueprint on which executive management operates. Subsequently, the board reviews the progress on a quarterly basis to ensure that executive management is on course, because at the end of 12 months, the company is going to face the shareholders. Then, it becomes a different ball game as the board, not management, comes under heat. Shareholders do not want to get bogged down in the details of what the company is doing. Having invested their money in the company, they expect results. Profits. Dividends. They do not take kindly to excuses. Occasionally, one hears of boards ousted by the Annual General Meeting because their companies had either grossly underperformed or gone under. When a company fails to make profit, shareholders’ estimation is that either the chairman is not capable enough or his colleagues on the board are not worth their onions. Therefore, they feel justified to constitute a new board and elect new chief executive officer.
- The board is not a place you invited just about anybody into. It is not a tea party. Boardroom business is serious business. The responsibility is huge. Therefore, an organisation cannot be too careful in its choice of directors, both executive and non-executive. What qualifies an individual to be invited to the board? A likely candidate is educationally prepared, is technically sound, his interpersonal skill is well-honed, his general comportment in and outside work is impeccable, possesses leadership skills.
- The effectiveness and efficiency of a board starts from its composition. In my view, the fact that someone has invested in a business should not be automatic guarantee that the individual must necessarily be a member of the company’s board. It’s a mistake a lot of people make.
- For a board to succeed there must be an alignment in members’ attitude and mentality towards the cause being pursued. Otherwise there might be a problem. For example, at Insight Communications, we have a solid creed: We do not put money first and above all. The reason we started Insight was not to enrich ourselves. In our business philosophy, money comes last. The principle resonates with the board. It pervades management down to the staff. We restrain ourselves from putting money in our pockets. Instead, we are putting it back in the business. It explains why we are able to do a lot of things we did. It was the money from the business we used to diversify so that 35 years after we now have multiple enterprises which all evolved out of Insight Communications. If the directors do not have congruent mentality to guide those who run the business to understand the enterprise’s reason for being, then it would be difficult to achieve set objectives.
