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When is it time to leave a Board

Habida joined the board of the Burnley Policy Institute (BPI) as an independent non-executive director. BPI, a non-governmental organization, was created to provide well-funded academic research in agricultural best practices to influence government agricultural policy. Habida was asked to join the audit committee of the board due to her accounting background. At one of the committee meetings she attended, Anthony, the BPI finance manager, tabled the quarterly accounts and Habida noted that the US Dollar current account was sitting flush with cash. “Why don’t we place these funds into a fixed deposit instead of letting them lie idle in the current account?” she posed to Anthony. Anthony didn’t miss a heartbeat. “These are funds that we received from a donor and our donors are very strict that their funds need to be utilized strictly for programmatic activities and not to be placed in deposits to earn interest.” Habida was taken aback at the missed opportunity to leverage on sweating a liquid asset, but understood that a donor-funded organization like BPI had to abide by the rules set by those who gave it critical funding.

Two quarterly meetings later, Anthony tabled the accounts and Habida noted that there was significant growth in the “interest earned” section of the income statement. As the discussion on the accounts wore on, she asked Anthony why this line item had grown. Anthony, always quick on the take, didn’t miss a heartbeat. “That is interest earned from some deposits that we placed at XYZ Bank.” Habida quickly glanced at Mary, the chair of the audit committee. Mary didn’t notice that Habida was nonplussed at Anthony’s response and waved at him to continue his presentation. “I’m sorry Mary, but I am a little confused,” Habida interjected. “A few months ago, Anthony here said that donors do not allow us to place funds in fixed deposits as we are supposed to put their funds into programmatic activities. So what is the source of these deposits at XYZ Bank since all our revenue is donor sourced?” This time, Anthony missed several heartbeats. Eventually he managed to croak out a fairly lame explanation about how the source of these deposits was from a donor that had not placed any restrictions. But Habida smelled blood in the water and followed through on her piranha instincts, asking Anthony what the deposit placement policy was, who approved which banks the deposits would be placed in and what were the actual interest rates paid.

Mary, noting Anthony’s obvious discomfort, turned to Angela, BPI’s executive director who had been quietly observing the heated exchange. Angela sighed loudly and leaned back on her chair. “Honestly, I don’t understand accounting and, quite frankly, I have never understood what Anthony does so I just leave him alone.” Habida took note of Angela’s laissez faire attitude and made a mental note to have a private word with Mary, the audit committee chair as well as the chairman of the board later.  She worried about the inconsistencies in Anthony’s answers which, in her experience, spoke to the possibility that Anthony may have been placing the institution’s funds in banks that were willing to “reward” him for such placements and these were not necessarily the most stable of financial institutions. A few months later, Habida resigned from the BPI board when it became apparent that there seemed to be no clear direction from the board chair as to how to handle a potential financial scandal in the making, in an institution where the chief executive had no qualms announcing to her head of finance that her ignorance of his work meant that she was happy to leave him alone. This is a one hundred per cent true story that happened here in Kenya, and one I have used several times when I am teaching corporate governance to directors. I use this story in the context of when should someone leave a board that they are sitting on? This story usually generates heated debate, as some students feel that Habida should have stayed on to try and fix the problem while others feel that the problem is insurmountable and Habida made the right decision to leave. As some pescatarian wonk once quoted, a fish rots from the head. The lack of a sense of urgency by the executive director to deal with a potentially rogue finance manager together with the board chair’s relaxed attitude about the executive director’s capacity to manage the finance manager made Habida extremely nervous and she worried about her own reputation as a director. About a year after Habida’s resignation from the board, Angela was forced to resign when a senior member of her team executed a bloodless coup after leading two staff strikes protesting against her incompetence. And BPI lived happily ever after. I think.

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Twitter: @carolmusyoka

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Horse Whispering for Dummies

[vc_row][vc_column width=”2/3″][vc_column_text]Several years ago when I was still working in the banking industry, the finance manager at one of our key corporate customers put me to a challenge. Achieng* had taken up horse riding as a hobby and requested if I would join her one Saturday morning to ride together. Now you must understand that the only thing I could ride in those days was a bicycle, and not that well anyway. A 600-kilogram beast was a whole other kettle of fish. But I couldn’t appear to be cowardly in front of the person who decided if hundreds of millions of pivotal deposits would find a home in my banking employer so I decided to bite the equestrian bullet as it were. I arrived bright and early at the horse riding school in Karen only to find Simiyu*, a relationship manager from the competitor bank that was also jostling for the same deposits. Simiyu slouched rather unapologetically against Achieng’s car, casually looking me over as I arrived expectantly for what until that moment had been anticipated as the marketing experience of my life. Well that blew the wind out of my sails faster than you can throw a saddle on a horse. I was actually quite petrified at the thought of placing my entire life on the back of a highly intelligent beast but I was willing to do it for Achieng. Lesson One: The customer is (not exactly) always right, even when they ask you to do the impossible.

Needless to say, it was one of the worst experiences of my life. I had to put my game face on for an hour of sheer, unadulterated terror as I clenched all the muscles between my gluteus maximus down to my Achilles in a bid not to fall off the horse. Actually I’m surprised the poor animal didn’t die from a collapsed ribcage with all the pressure I was applying. Simiyu, on the other hand, was as smug as a bug in a rug. While my horse had to be led during the entire hour of the ride, Simiyu managed to get control of the reins and with his back ramrod straight and fully relaxed, walk his horse next to Achieng the entire time while engrossed in a deep conversation about the wonderful world of banking opportunities at his bank. The ride came to a torturous end as did my hopes of winning the hundreds of millions of deposits in question. Or so I thought. Achieng was determined to see me succeed at this horse-riding thing that she enjoyed so she convinced me to bring my four-year-old daughter for our next riding date as “She will most definitely enjoy it!” Having been beaten hands down by Simiyu, I thought this would be an opportunity to force a repeat performance in future if I vigorously practiced in between. Lesson number two: Sometimes you have to lose a battle, but live to fight the war another day.

My daughter took to riding like water to a duck. But who wouldn’t? The children’s riding ponies were only about half an inch from the ground. Alright, I exaggerate. But they were the most gentle, mild mannered animals and, were it not for my ample girth at the time, I would have insisted on riding one myself instead of the seven foot tall, gleaming eyed, sinewy colossus that the horse riding school insisted I ride. I signed both of us up for ten lessons since I wanted to contrive a repeat performance with Simiyu where I would move my horse from a trot to a canter to a full on gallop in the space of 5 minutes, (in horse-riding-for-students-speak that is the equivalent to zero to 150 kph in 2 minutes). Horses are highly intelligent animals, very intuitive and completely attuned to the mood of the rider. With that being drummed into me by the trainer, whenever I approached the animal my nerves would always be in shambles by the time I was getting on top of the horse. To cut a long story short when I tried to mount the horse at lesson number 3, I placed my hand on her rump instead of on the saddle and she proceeded to throw me off faster than I could say Bob’s my uncle. It didn’t help that as I flew mid air I let out a shriek of such magnificent proportions that it brought all the four year old kids who were there for their lessons – daughter included- to a complete and horrified standstill. Thankfully, the only thing that was fractured in six places was my pride. I never went back to that horse riding school again. Simiyu, in my view, won that round. Lesson number three: Hubris is a conniving, two timing seducer.

Last month I was in Johannesburg for a client’s training session part of which included learning leadership lessons from managing horses. It had been at least ten years since my botched attempt at trying to do anything of an equine nature and I felt that this would perhaps be the opportunity to deal with my fears. The sessions required participants to learn how to lead a horse while walking beside it and, later on, to lead a horse through an obstacle course using only voice commands and hands loosely clutching the horse’s reins. Let me remind you, those beasts are a minimum of seven feet tall and 600 kilos of independent thinking. But I didn’t have the pressure of a competitor or a client in the back of my mind, just a dogged determination to learn to control something bigger but less intelligent than me. I did it. Without getting on the back of a horse. Lesson number four: Some horses need you to command and control them while some need you to collaborate and influence. Whatever the case, you need to white out the competitive noise around you and just focus on getting the job done.

*Not their real names.

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Twitter: @carolmusyoka[/vc_column_text][/vc_column][vc_column width=”1/3″][/vc_column][/vc_row]