“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|
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|
|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|
|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|
|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]|
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 email@example.com or call 0414231136. Get value for money, and see your business clearly.
Copyright Mustapha B Mugisa, 2013. All rights reserved. You are free to share with appropriate attribution.