Experts ask board members to plan for employees

The boards of directors have an important role to play in protecting the employees in the organisations they are asked to supervise.

Amos Bagumire, managing director ABS Consulting Group said the challenges brought about by COVID-19 means board members have key roles in ensuring the survival and sustainability of their organisations.

He made a presentation entitled: ‘The Role of Boards of Directors during the COVID-19 Pandemic & Beyond'.

This was during the 25th Institute of Certified Public Accountants of Uganda (ICPAU) annual seminar. ICPAU is the regulator of professional accountants.

The seminar took place at the Imperial Resort Beach Hotel, Entebbe.

The theme was ‘value creation and sustainability during and beyond the COVID-19 pandemic'.

"Corporate governance talks about how to run organisations efficiently and sustainability using resource available to make a fortune. Everyone is responsible for corporate governance in an Organisation."

He said there was a need for serious leaders in companies that can take them out of the crisis created by COVID-19.

"The leaders will reveal their potential, we will judge who is a good or bad leader. It is not time to cry but to think of what we need to do with the resources available. Look at potential, shape business processes to withstand the situation at hand".

"We need leadership with head, hearts and hands. The head is to envision the future, the heart is to inspire employees. Most leaders are rushing to send employees home. We might think we are solving the problem by reducing employment costs. But what situation are we creating in communities?"

Support employees

Bagumire said the large numbers of employees should be supported and reskilled. 

"We need to support talent and innovation, other than rush to send people home, reskill and use the talents".

He said employees sent home suffered mental health problems and need support.

He explained that good corporate governance is about delivering priorities, behaving with integrity, acting in the public interest and achieving objectives.

He said the closed cooperative bank in Uganda and many local commercial banks have suffered bad governance.

Bagumire added that Africa has many laws, policies but has many incidences of bad governance.

He said in many cases with bad corporate governance boards are asleep, they don't drive organisations.

"Some people put on the boards are politically affiliated, known in certain circles but not experienced and knowledgeable people. They rubber stamp, they don't carry fiduciary duties, they fight for their stomachs. They follow up on allowances, trips, it is a nightmare in the boards we see," Bagumire said.

He described the boards as gatherings of efficient people who become inefficient, they don't question management.

He said some CEOs see boards as a waste of time because they do not know the business and don't advise, some members come with too much power.

He said other CEOs said boards bring in politics; engage in many ineffective meetings that don't add value to organisations.

He added that some boards are myopic and don't work with CEOs.

He noted that some highly paid CEOs wield lots of powers over low earning board members.

He said that where board members earn less than CEOs, the board members seek favours from them.

"We are not lacking brilliant leaders and charismatic leaders. We lack authentic leaders, who lead from the heart, who are morally responsible, whose actions are acceptable by people."

He said many organisations don't reward the right things people do and the right behaviours.

He said managers promote relatives and people who are providing secrets to the bosses.

"Companies punish the right people; most leaders don't walk the talk".

He said good corporate governance requires that the board must ensure it has ethical leadership.

He said corporate governance must be an outcome, not an output measure.

Accountants

"Accountants are condemned for not adding value to organisations but only looking at profits. The human capital is being ignored. You strengthen controls but forget the employees," he said.

He noted that some boards do not understand the company strategies and management spends little time explaining them to employees.

"Budgets are not linked to the strategy, so the management and board are asleep on the areas of strategy.  A strategy is a living document, once we develop strategy; we should not wait for another five years.

We should keep monitoring whether the assumptions we made are still relevant.

 Why companies close

He said NOKIA CEO who suffered competition was quoted as saying:

"We did not do anything wrong, but the world changed so fast and the opponents are powerful.''

He said businesses will close because they do not improve, the world is changing fast and the opponents are becoming powerful.

He cited Toyota in Japan where every Friday afternoon employees don't work but spend time thinking. Their ideas are implemented for continuous improvement.

"Corporate governance is about Ubuntu principles. We can survive if we are together, I am because you are and you are because we are. Why are we driving selfish motives, why steal money for hospitals. Ubuntu made Africa strong."

"You cannot succeed in a failed, corrupt society; you cannot sleep when your neighbour is attacked. We have become selfish".

He crticised boards and management for presenting reports that people do not understand.

"People are interested in what value have you increased, how have you used resources, people do not understand complex reports".

Results

He said the board is supposed to focus on outcomes not counting sitting of six times in a year.

"Be involved in policy, issues of the red flag, watchdog, and avoid discussing too much and not achieving anything".

He tipped the boards to develop their agenda, shape meeting agendas, seek information they need and not what the management wants them to see.

He said board politics has made some boards ineffective.

"Lawyers by their nature argue in board rooms if you are the chairman how you will manage that. You need a good chairman who can promote a culture of good corporate dissent, promote teamwork, creating a climate of trust and respect."

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