A closer look at the board review process:

A panoramic snapshot of power

In reviewing the performance of the board as a whole, it is important to first ask...

What is the underlying governance structure?

Answering this fundamental question will establish the governance power base of the enterprise and determine where ultimate power lies to change the governance structure.

Tricker asks: ‘Who controls the voting equity? Is there majority control? Do informal power blocks exist? What changes might occur over the strategic time horizon?’ (Corporate Governance: Principles, Policies, and Practices, 317).

In a widely held listed company, any blocks of voting shares that could or do influence corporate governance will be considered in detail. In a subsidiary or associate company, the expectations of the parent company must be taken into account.

Having established the existing governance structure, it is possible to consider whether the present relationships with the investors, owners and shareholders are satisfactory. How could they be improved? More importantly still, are there any possible changes in ownership on the horizon, and what might be the implications?

It is important to capture this broad view of the business before homing in on board specifics. When, in the next stage of the review, board structure, style and strategy are examined, they can be viewed in terms of their contribution to holistic business success.