allAfrica.com: Ghana: The Roles of Public Boards (Page 1 of 2)

There are currently serious debates going on about the sale of 70% shares of Ghana Telecom (GT) to Vodafone, UK. The debate is all centered on the government's actions to depart its share of 70%, saying that this is too high for the money being exchanged for.

Whilst I support the sale of GT, I also blame the government of contributing to the problems that might have led to the sale of GT.

PROBLEMS The whole problem is attributed to some lapses in taking serious measures about the way state organizations are being managed. The state organizations are being mismanaged because of people appointed as Chief Executives and Board Directors in these organizations. Let us take an example to buttress these points, on the performance of state organizations.

On Tuesday February 19, edition of the Daily Graphic front page headline, "Graphic & GOIL are Tops" Finance Minister Mr. Baah-Wiredu declares. This is not the first time it has come into the public domain that the State Own Enterprises (SOEs) are not performing. If the Minister's message is clear, then its sad news for Ghana. Only two (2) out of 29 SOE's 6% doing well? It's really sad! These SOEs are supposed to generate more revenues, cut down expenditures, and make profits to declare dividends for the Government, so that ordinary poor workers taxes are reduced, but what do we see, poor performance and excuses due to mismanagement. I can say that, these can be contributed to the roles of various Boards of Directors serving in these Public institutions and their 'negative' impact on the socio-economic developments of the country, Ghana to be specific.

About a year or so ago, and in the morning programme of Peace FM radio, Kokruokoo, the presenter asked Dr. Barfour Agyeman Duah of Centre for Democratic Development (CDD) his views on the roles of the Public Boards some time back. The analysis and comments, made by the learned Professor, were excellent, that I wish to add more to his ideas for the consumption of the government.

In an article published in the Chronicle paper three years ago by me, titled "Roles of Current CEO's Their Impact on Economic developments of Ghana", I emphasized that "In modern day management control systems and good governance, corporate strategies are not left to the CEOs to play with. They are structured and implemented by the Board of Directors".

THE ROLE OF PUBLIC BOARDS

In this paper, I would like to define the role of Public Boards, their composition in advanced countries which allow them to play a greater meaningful role in corporate strategy formulation, implementation, and compare it with what exists in Ghana our motherland. The effects of the negative roles of these Boards in the society and the impact on the economic developments of the country will also be analysed. Lastly, useful suggestions would be made so that the corporate governance of this country as far as these institutions are concerned would live up to expectation.

The principal role of any member of public board of Directors in any organisation is to control the excesses of the existing Chief Executive Officer (CEO). In a working paper of Henley Management College, UK, prepared by Keith Gay, nineteen years ago, Aris, S.(1986) in the Economist Intelligence Unit Special Report No. 244, London Economist Publications, he suggested that, the principal reasons why companies required for the appointment of Boards of Directors were the following:

· To see issues in their totality and to offer a wider perspective than the serving executive directors, who are often preoccupied with their line management responsibilities;

· To provide information about the outside world that might otherwise not be available;

· By focusing attention on long term, forward looking strategic questions to encourage the Chairman and the board to act as a board and not as a day to day management committee;

· To bring specific knowledge, know-how and professional expertise into the board room;

· To facilitate the business by providing contracts with customers, sources of finance or government or with other commercial organizations at home and abroad;

· To provide a counter balance to the Executive Directors;

· To act as independent scrutinizers of the company's overall performance and to act as watchdogs on behalf of the shareholders as members of audit and remuneration committees;

· To act as a referee in cases of conflict, either inside the board or where, as in some takeover situations, the interest of the directors and shareholders are opposed; and

· To fire the Chairman, if necessary. These are nine reasons with which few would take issue: together, they encompass a generally accepted view of the Board of Director's role. In the above nine points, it could be observed that, the first five reasons seem to focus on the positive, business-creating aspects of the Board's role in that company, whilst the last four dwell on position of the Board in governance and conflict resolutions between the company's Chief Executive and the stakeholders of the company, and act as an advisory or service aspects role, rather than be the watchdog or controlling aspects.

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