Mother Board of a Company

There is a lesson for Companies inside a CPU of a computer. Borrowing a term from the world of computers, mother board is the main thing. It has the vision, the plan and the capability to keep all important functions of the machine attached to it, ensuring all parts work in close tandem. It is the main element of a central processing unit. Everything in a computer works well only if the mother board works well. It is a simple plate made of a good metal and has a clear (circuit) plan based on the vision of its creator. Yet, when a part of the mother board gets corrupted, it impacts the entire efficiency and performance. Conversely, if a particular part has a malfunction, the cause could be in the mother board. If the mother board fails, the computer is bound to fail.

So true for the Companies as well!

It is the Board of the Company that works silently behind the efficiency and performance. A few wise good men and women made of stronger metal, create and ensure the execution of policies, keep an eye on the growth and welfare of all stakeholders, ensure compliances and adherence of Company’s role as a part of society in general. A good Board is a lighthouse guiding the Company through any storm. Unfortunately, like mother boards in a computer, the company Boards can get corrupt too. And they often do.

This corruption need not be understood as the word is taken in general. A Board can be ‘corrupted’ on vision, farsight and focus. A Board that does not protect the interests of minority shareholders, employees and other small stakeholders is a malfunctioning board. The reasons for such corruption can be many and may include the very composition of the Board. Each Board member has a definite role and responsibility. If the members do well on his/her responsibility, all stakeholders will do well. But the actual experience is often different from such idealism. Often the Board is composed of men and women who can feed to the selfish aspirations and goals of the majority shareholder. Often, it is at the cost of minority shareholder and other stakeholders. It is important that the Company has board members with the credibility, experience and competence to manage their responsibilities well.

The government and regulators try their best to ensure that Companies deliver on their responsibilities. They have made some of these responsibilities as mandatory for the Boards so that there is no window to escape. Almost all these mandatory responsibilities should have been executed voluntarily by the Companies anyways. Never mind that, we are all living in an imperfect world.

The Board of Directors has a job to do. The job is of a lighthouse that guides the Company in weathering storms that challenge the business, vision, conscience or its role in the society.  This may call for taking tough decisions at times. And as an Indian leader mentioned in some different context, “There never is a good time for tough decisions. You have to pick courage and do it. Governance is about taking tough, even unpopular, decisions”. So true for the Companies.

Guess the strength of the Mother Board does not depend solely on its metal & soldering, but also on the vision of its creator.