Chief Ephraim Faloughi, chairman of Sovereign Trust Insurance and chairman of not less than half a dozen boards is a towering figure in insurance, finance, real estate and manufacturing. He is one man whose fingers, in his words “have been burnt severally in all sorts of businesses: telecoms, print media, all sorts of businesses, but I took the lessons in the bad episodes.” We learnt a lot while interviewing him for our forthcoming book, 50 NIGERIA’S BOARDROOM LEADERS—Lessons On Corporate Governance and Strategy. He starts by affirming the very thing that inspired this book: “If you are doing business in Nigeria, there is a lot to learn from other people. One of such education is the board. I also learnt from corporate governance.
As soon as I opened my business, I formed a board and brought other people on board. One of the people I admire, in terms of board leadership is Prof. Joe Irukwu, the man regarded as the father of insurance business in Nigeria. I learnt a lot from him at close range and from a distance. Another respected person in the industry is Sir Ogala Osoka. In the corporate world, you can’t do without knowing who Michael Omolayole is or Christopher Kolade or the late Gamaliel Onosode. When we were young men, these were the people we looked up to, the legends of boardroom.” In this piece, Faloughi itemizes 7 things you don’t want in a boardroom.
1. A good board must have like-minded people. Pray that you have like-minded people, otherwise, you will end up having a problematic board. Where you have like-minded people, all issues are discussed freely; when it is inevitable, they argue and debate and after the board meeting, they will still be in one accord, their ultimate objective still on course which is to ensure that the organisation succeeds. At times, we do have tension in the boardroom. Argument on the board is not personal, but some people take it seriously. When their views seem not to be taken, they turn themselves into enemies and resort to making things difficult for other directors or the chairman or the organisation. When a disagreement ensues, it calls for wisdom. A good chairman will always read the situation, read each member of the board, especially by their moods and, if he discerns they are on warpath, he quickly disarms them. Infighting has been the bane of boards in the corporate world.
2. Trouble starts for a chairman when he compromises his integrity with either the MD or management staff. There will be no room for venality in the board unless the chairman decides to sell himself to the MD. If he seeks to make deals, he cannot control anymore. Once he compromises himself, the problems will surely come. And when they come, he cannot put his foot down. Suffice to say that the chairman should be a moral authority. I was once on a board where the MD compromised all the other board members. I refused to be compromised. Eventually the whole structure failed. Failed woefully. When the chairman wants to supply the transport service of a company, what do you expect? He is bound to fail because he cannot deal with the MD when the time comes. Compromise. That is why some boards fail.
3. What makes a board strong is the group of people that constitute its membership: their professionalism, their integrity, their intellectual contributions to discussion, the candidness with which they air their views. Diversity is the grease that keeps the cogwheel of the board going. Diversity is important to the success of a board. If I am an Ijaw, why would I have only Ijaw people on the board? That is not right. From every part of this country, you will find people who are good on corporate governance, people who are intellectually fit, people that are good board material. There has to be a balance. Diversity shouldn’t be mistaken for quota system.
4. Where there is gender imbalance, it is not good for the board. Quite a number of women have made impressions on me on the board. The chairman of GT Bank is a woman. Osaretin Demuren had a successful career with the Central Bank of Nigeria where she rose to become the first female director in the apex bank. Today, she is chairman of GT Bank. We are all happy. It is good for the corporate organisation. That tells us capable women are out there who can equally bring to the table the same value that men bring. Women have certain merits in their favour than even their male counterparts. They listen to arguments. They give candid views. They pay attention to details. And women in positions in the corporate world are less corrupt. Quite a number of women have made impressions on me on the board. One of them is Evelyn Oputu. She is a brain box. In the corporate world she is good. She became the MD/CEO of Bank of Industry. So women are there. It is a lame excuse that they are difficult to find for board appointments.
5. You have no reason to be on a board if you cannot add value. Boards seek directors who can add value to the company. To that extent, we scout for the best hands. Who is he? What is his background? What has he done? What has he achieved? More importantly, what is he bringing to the table businesswise? We don’t want dormant directors who would bring nothing to the future growth of the company. Some boards do have them: directors who cannot contribute anything in terms of bringing in business. Gone are the days when directors just come in to collect allowances.
6. There is hardly room or reason for the chairman to be imperial. The corporate governance code has taken care of that. The chairman of a board should never be an executive of the structure. The new corporate structure does not allow dual position of chairman-CEO. The chairman-CEO model, however, is common in America. But we shouldn’t forget that the structure in America is quite open and decent. As the leader of the board, the chairman must be seen to carry along all the members, not least the MD. For good reasons. It is not every issue or subject that will come to the board for deliberation because a meeting cannot be called at short notice for each and every issue. That is why it is imperative that any given time, the MD/CEO must always liaise with the chairman of the board.
7. The chairman and his MD should be close. They cannot afford to be at variance. That does not mean that the chairman cannot exert his control when necessary. For example, the chairman should call his MD to order when he is derailing. I do that always. If I find out something is going awry, I would call him to say: “This is what I am hearing. This is what is happening. Can you look into it?” The MD gives me feedback. Any organisation where the chairman and the MD are at discord is hanging on a precipice. With corporate governance codes, the board is like a ship that is on course. The boardroom of today is hardly in need of any radical change to its structure or philosophy. The guiding precept for every director is “don’t compromise yourself.” It is expected of every board member to be honest and dedicated to the structure. If you can’t, get out!