Share Ibukun Awosika, former chairman of First Bank of Nigeria, has emphasized the importance of effective governance in businesses, urging entrepreneurs to establish boards that challenge decisions and drive growth. Speaking at the Building Beyond You Conference, Awosika advised founders to determine what they want a board to achieve and identify individuals with the necessary expertise to support those objectives. This approach enables businesses to overcome founder dependence and attract investors.
Awosika noted that there is no universal revenue threshold for establishing a board, as the timing depends on the nature and stage of the company. She suggested that founders could initially establish an informal accountability group of two or three trusted people to challenge their decisions before transitioning to a formal board as the business develops. This informal group can provide valuable insights and help prepare the business for a formal board.
According to Awosika, the key to a successful board is not the number of directors but whether the board provides independent perspectives, expertise, and accountability. A board can comprise three, five, or seven members, depending on the company's needs. Awosika stressed that founders should prioritize building a board that adds value to the business, rather than simply appointing family members, friends, or investors.
Awosika advised founders to conduct a needs assessment to identify the skills and expertise required by the company, followed by an audit of the existing board to identify gaps. This approach, which she calls a "board audit," helps determine the profiles of candidates considered for board appointments. By focusing on skills, businesses can build a board that meets their needs and provides effective governance.
Awosika shared her experience serving as chair of an international company where financial institutions had nominated several finance professionals to the board. Although the board had strong members, its expertise was heavily concentrated in finance, leaving gaps in other areas needed by the business. This experience highlights the importance of building a diverse board with a range of skills and expertise.
Awosika also emphasized the importance of understanding fiduciary responsibilities and the legal obligations attached to board positions. She encouraged entrepreneurs to engage with the Institute of Directors of Nigeria and pursue governance training to ensure they build effective boards. By prioritizing governance, businesses can make informed decisions and drive growth.
Tara Fela-Durotoye, founder of House of Tara and convener of the conference, echoed Awosika's sentiments, emphasizing the importance of succession planning across all levels of an organization. According to Fela-Durotoye, being "irreplaceable" is a failure of leadership, and leaders should aim to be replaceable by empowering their teams to function independently.
Key points
- Effective governance is crucial for businesses to overcome founder dependence and attract investors.
- Entrepreneurs should prioritize building a board that adds value to the business, rather than simply appointing family members or friends.
- A diverse board with a range of skills and expertise is essential for making informed decisions and driving business growth.
