Board member’s guide to understanding your business effectively

“To be an exceptional board member, know the details first”, Mustapha B. Mugisa, 2013. “Average leaders place blame, exceptional leaders take it.” Craig Valentine.

“To be an exceptional board member, know the details first”, Mustapha B. Mugisa, 2013.

“Average leaders place blame, exceptional leaders take it.” Craig Valentine. Hey, they take it even when it is not their fault!

Conference speakers and lecturers have taught today’s leaders, wrongly, that as a top manager or a board member, you don’t need to know the details of your business. That is the worst business advice people who have not managed any business will tell you.

You have a board member who lacks the critical skills about the business. Most of today’s board members are too busy to understand even how the business makes money, including the critical processes that must be supported to remain resilience.

While making a presentation to Board of Directors of one of the financial institutions, a Board member explained: “if I spend my time in understanding the details, what shall be the work of the MD or the junior staff. I want to focus on the bigger picture. As board, our work is to ensure going concern. As long as the business opens, other things are secondary.”

His point is valid, only after having understood the details.

Take the case of a bank for example, system down time, due to load shedding may appear as a small detail. However, if on a daily basis, people cannot access their money because the banking system is off due to some technicality, it is the Board business to know such details. It is until the details are clearly understood and fixed by the Board, then they can focus on the bigger picture.

I have found that the value added by majority of the Boards is minimal because they have no time to review and understand the business.

The following write-up is critical for you, if you are a joining a company as a new staff or Board member. As a new joiner, error on reading internal audit reports or any independent business review reports. The due diligence or independent business review involves analysis of the entire organization, without leaving any stone unturned.

The following guide may help you look out for critical details to give you a good picture of the business so that you add value. Avoid being on the board or working for a company you don’t understand very well. Of course, if you are there for convenience and livelihood, you may have no guts to seek for critical information. Otherwise, you will find Board members blaming management and vice versa. That is a sign of incompetence.

Below is a template for you. If you obtain and review the following information, you will understand the business well and be valuable as a Board member or senior staff.

____________________________________________

[business name] Due Diligence at the request of [insert client name]

Required documents for review| To do a thorough DD or IBR, get this information from the target.

[Insert the date of requesting for the information]

List of required information for the review by Summit Consulting Ltd: all information requested on [insert the date you requested the information]

*Required documents*	*Date requested*	*Date provided*
Right Direction 1. Strategic and corporate plan documents, and the [TARGET COMPANY] budget to support the strategy
2. List of laws/ regulatory requirements [TARGET COMPANY] complies with
3. [TARGET COMPANY] strategy for client management i.e. acquisition and retention
Human Resources
4. Organization chart for [TARGET COMPANY]
5. Job descriptions of all middle and senior management level staff (soft or hardcopy)
6. Copies of approved payroll for past one year (specify the year)
7. Personnel files for selected staff (from payroll)
8. HR policies and procedures manual
9. Copy of the [TARGET COMPANY] succession plan (covering recruitment, training and exit)
10. CVs of ALL technical staff (in respect to key aspects of the business like IT, creativity, operations and finance, and top leadership)
11. Details of [TARGET COMPANY] board members and dates of appointment
Internal process
12. Copy of the [TARGET COMPANY] finance policies and procedures manual
13. Copy of management report (explaining all incomes and expenditure) for 2012/13
14. Top 20 [TARGET COMPANY] clients by revenue per year from 2011 to date
15. List of all [TARGET COMPANY] bank accounts and their signatories and mandate
16. List of all suppliers paid Ugx. 50 million [depends on the size of the company, consider materiality] and above in 2012/13 (soft copy)
17. [TARGET COMPANY] comprehensive fixed asset register
18. List of all [critical staff] and their recruitment criteria
19. Performance appraisal for [year preceding review year], if any give a sample of explaining the process
Finance management
20. Actual vs budget for 2012/13; showing a list of all incomes and expenditures & variance
21. Record keeping/ archiving policy/ processes [if documented]
22. All tax compliance information (see appendix 1) below
23. Financial projections for the next 3 to 5 years [to focus on the going concern]
Legal/ compliance 24. Articles and memorandum of association
25. Evidence of NSSF, URA and KCCA registration and compliance [list all laws that the business must comply to; and get evidence of such compliance]
26. Any testimonial from five satisfied clients present or past
27. Details of all legal cases (past and present) for the last five years
28. Returns at the registry of companies
29. Any legal contracts currently in place
Right People (Skills Development)
30. Any in-house training material that have been specifically developed for senior & middle management in the [the key area of your business focus]
31. Professional development policies/ plan for staff
Right People (Quality control and value addition) 32. Quality control policy
33. Sample of client work flow processes
34. Copy of current year’s work schedule for staff and client relationship mgt strategy
35. Auditors reports (internal and external) for the past 2 years
36. Signed copies of staff meetings for the last 12 months. All provide minutes of board/ senior management meetings, if any
Properly Equipped (Tools & Technology) 37. Copy of listing of all software tools in use within [TARGET COMPANY]; & evidence of licences
38. [TARGET COMPANY] IT asset register, showing clearly assets (software and hardware) in use at [TARGET COMPANY] at all areas
39. Details of all fraud cases or staff disciplinary cases, if any, reported within [TARGET COMPANY] in the last 5 years [increase scope depending on the reliance of such information by client]
40. Copy of ICT security policies and procedures, social media policies, BYOD policies, etc
41. CVs and current occupations of all [TARGET COMPANY] directors
Properly Equipped (Knowledge Management) 42. [TARGET COMPANY] press reports/marketing collaterals in use as promotion tools or otherwise
43. List of all articles written by [TARGET COMPANY] staff in the press, as well as written about [TARGET COMPANY] staff
44. Copies of reports presented to the Board meeting for the last two years
Other (best practices) 45. (i) Copy of fraud policy; (ii) Copy of whistle-blowers policy
46. [TARGET COMPANY] telephone extension list, showing mobile and email contacts for all staff by department/ directorate
47. Any other report or document management may deem necessary for our review

To give any other information in confidence, please visit https://www.ethicline.org a product of Summit Consulting Ltd.

And more information on taxation. If you need for information on tax due diligence or top management due diligence, call me.

NB: To promote transparency, visit https://www.ethicsline.org or www.summitcl.com| If you need a due diligence work done on your business, email premium@summitcl.com or call 0414231136. Get value for money, and see your business clearly.