Being an effective director on the board of a company “is extremely hard work, not fun and games, or about acquiring status” warns Asue Ighodalo, a corporate lawyer who is the Chairman of Sterling Bank Plc, Chairman, Dangote Flour Plc, Chairman, Nigerian Economic Summit Group and sits on several other corporate and non-profit boards. He also teaches corporate governance and used to teach the “legal aspects of a director’s duties” at the Lagos Business School. One of the things he tells directors who attended this course, is that they risk going to jail “if they breach their duties or commit infractions.”
Ighodalo is among executives featured in a forthcoming book, 50 NIGERIA’S BOARDROOM LEADERS—Lessons on Corporate Governance and Strategy. His thoughts on boardroom leadership are contained in these points.
1. My parents taught me the benefits of hard work, integrity, character, strength and the fear of God. Qualities every director must possess. Becoming the lawyer that I am today happened because my father encouraged me to be a lawyer. My Bachelor’s degree was in Economics and I wanted to be a banker; my plan was to go on to obtain an MBA but Dad insisted that I should study law as that was more of ‘a focused profession’. I then studied Law at the London School of Economics after my Economics degree. Thereafter, I went to the Nigerian Law School where I had the opportunity of an externship at Chris Ogunbanjo & Co, a top corporate law firm. My experiences at the firm during my law school attachment changed the course of my professional career. I was privileged to be employed at the firm after Law School and I had the rare opportunity of working closely with Chief Chris Ogunbanjo. I learnt a lot from him professionally and personally. My experiences during my time at Chris Ogunbanjo & Co were invaluable. Chief trained his lawyers in a deliberate way and exposed them to the practice of corporate and commercial law at the highest levels. At the time, Chief also chaired the boards of many companies and I watched him operate running these boards. Chief is cerebral, meticulous and deliberate. Dr. Christopher Kolade, a great Nigerian public servant, diplomat and boardroom guru is also my “father” and mentor. He took me to the Lagos Business School to teach “the legal aspects of director’s duties”, as part of his Corporate Governance course. I learnt and keep learning from him every day. Corporate integrity, attention to detail, and diplomacy. I was also lucky to know and associate with, Mr. Felix Ohiwerei, and the late Chief Adeyemi Lawson, two boardroom giants. In recent years, I interacted closely inside and outside the boardroom with Messrs. Fola Adeola and Aliko Dangote. I learnt a lot from all of these boardroom players. These experiences made me a better corporate lawyer, more versed in corporate governance issues and a more efficient board member. Learning from the best and having excellent mentors is invaluable.
2. The board is the brain of the company. It is the controlling mind and will of the company. The board superintends the company. The board ensures that a company attains its strategic objectives, is properly governed and walks on the straight and narrow. The board provides the vision and strategy, and ensures the company achieves the objective for which it was formed. I am quite sad when I review the history of companies founded by Nigerians in the last 60 years. None of these companies managed to survive at the top for 50 years or even 30 years. It appears that Nigerian indigenous businesses do not sustain beyond one generation. All of the great indigenous business names we knew in Nigeria thirty or forty years ago have disappeared. None of them survived their founders. Part of the problem is that effective governance structures and succession processes were not put in place, to ensure that these businesses sustained. You had one man who served as the owner-founder-board, who had the vision, energy, strategy and ran the company. The minute that one man died, that was the end of the institution. With a good board and proper succession planning, the founder can retire without looking back and the company will continue to thrive because there would be transferred vision and goals, there would be effective corporate governance and shared operational sustainability. These are fundamental reasons why a business must have a proper and effective board.
3. As a corporate lawyer, I rely heavily on the Companies and Allied Matters Act (CAMA), Investment and Securities Act and other laws, regulations and precedents that touch and concern the work I do. I also have excellent, first class minds and colleagues in my law firm, Banwo & Ighodalo, who have contributed extensively to my achievement today. My economics and legal background confer a distinct advantage with regards to understanding the financials and operations of companies, the processes of governance and boardroom practices. I am adequately armed with the knowledge of the law and processes. I identify the issues, know the duties and responsibilities of directors, and what should obtain in the boardroom. I know my limits and I know my powers. That is the distinct advantage of being a director with a lawyer’s background. I also take advantage of every opportunity to attend formal trainings and director coaching courses. At the Lagos Business School, I taught company directors who attended the course what their duties are, what they need to pay attention to, I tutored them on the risk aspects of board membership, alerting them to the fact that they could be jailed if they breach their duties, or are negligent in the performance of their duties or do something wrong. Sadly, many directors are ignorant of this. They jump at the opportunity of becoming a board member thinking it’s good for their CVs, good for their egos and maybe good for making money without knowing what their responsibilities and liabilities are. Being a director is really serious business which requires diligence, dedication and continuing capacity enhancement.
4. One of the characteristics of a good director is that you must understand the business of the company, pay careful attention to information provided by management and ask incisive questions. You must be diligent, reading all your board papers. Board papers are meant to be read and well-digested. Since the work of board members includes overseeing the work of management, directors need to ask questions, interrogate, check, review and scrutinize everything that management has been doing, as it pertains to the health of the company. As a director, you are part of the thinking mind of the company. You need to strategize for the company, provide leadership, vision and ensure goals and targets are met.
5. Part of your role is to sense danger ahead. You need to look at risk issues that affect your company, whether external or internal. Another important function of the director is to ensure that the board has in place an efficient CEO selection and management succession planning process. I have had to learn some wholesome board habits: listening and paying careful attention to what people are saying, patience, humility, working well as a team, being professionally polite but also knowing when to be firm. These are attributes I learnt from my experiences over the years and from the people I have had the opportunity to work closely with. By the time I started leading the board, getting my colleagues to work well as a team wasn’t too difficult.
6. As chairman, I consider my most important role as being able to ensure a cohesive and effective board that leads the company in a profitable, healthy and positive growth direction. If the board is great, the company will be great; if the board is not effective, the company can never realise its full potential. If a board isn’t strong, dynamic, creative, disciplined, capable and competent, the company will not succeed and sustain. If the board is not knowledgeable, diligent and effective, it cannot function properly. When executives discern that their boards are not strong enough nor competent, they run rings around the board to the detriment of the organisation.
7. Board business is learnable. When I first became a director, I got books like Account Demystified, Accounting for Dummies, Finance for Dummies and I started learning. Then I spent some time with the executives, with a straightforward mission: Okay guys, tell me what the business of our company is. How well are we doing? What must we do to perform better and create sustaining value? I also learn about the industry in which the company operates and I study the leading companies in the industry worldwide and the company’s competitors in Nigeria. When I then became chairman, I repeated this process in even more detail: Okay, where are we? What are the issues? How do these issues affect us? What are the things we now must do to be best in class? I ensure that I understand what is going on at all times, I try to ask the right questions as often as necessary and insist on detailed responses, and I focus the minds of my board colleagues on the relevant issues. Do we have the right strategy? Do we have the right people to implement our strategy and are we operating effective systems?
However, to achieve any form of success you must have the special blessings and grace of the Almighty and an extremely supportive wife and family.