Question

         QUESTION 1

The board of Kaa Sui Berhad has recently grown in size and the Chairman, Tan Sri Dr Ponett Sanwangtrang, is considering how to enhance its effectiveness, particularly in terms of decision-making. Kaa Sui operates in a highly technical field, so board decisions can be delayed due to a significant volume of questions being raised at its meetings. These questions have to be referred to the relevant technical team within Kaa Sui or to external advisors who have assisted in the research and development of the technology. Many of the directors have also highlighted that the volume and complexity of the board papers is an issue and that there is insufficient time to fully digest the information prior to meetings.

Tan Sri Dr Ponett Sanwantrang would like to be advised on addressing these issues and how he, as Chairman, and you, as an advisor, can contribute directly to improving the effectiveness of the board.

Required

Discuss the factors that can affect decision-making and board effectiveness.

(b) Explain how Kaa Sui and its board can overcome the issues it is experiencing, discussing the specific contributions that you and Tan Sri Dr Ponett Sanwangtrang can make to this process of improvement.

Answer 1

BOARD EFFECTIVENES & DECISION MAKING

The definition of “Board Effectiveness” has been changing over time. With the ways of working of businesses changing and introduction of technology enhancements at an exponential pace, the role of boards is becoming even more complex. Moreover, there are no clear linkages between board effectiveness and company performance.

Researchers have highlighted over time that the behavioural dynamics plays an important role in making of a good, bad or great board. There are various models which are useful in analysing decision making and board effectiveness-

        

Increased demand to Change from top to bottom leads to Incremental Gains from Change

OVERCOMING THE ISSUES

Kaa Sui Berhad as many other organisations in the world is undergoing massive induttry change. Being in the technology sector, the changes have come in huge leapos and bounds. The board has to undergo several systematic changes to increase effectiveness of its board. Before moving to the solutions, an in depth understanding of the problems/issues at hand is very critical.

ISSUES PERTAINING TO KAA SUI BERHAD

• Huge growth in Size- The structural change in the board of undergoing increase in its size.

• High volumes of Technical queries-The high volumes of quesrries discussed in the board meetings signals to the issues pertaining to the Agenda Planning of the meetings.

• Complexity of papers-The issue of complexity of board papers is an amalgamation of meeting duration as well as lack of diversity in the selection process of the board members.

• Lacks of time for preparation for meetings-The issue relates to the meeting planning bracket of the overall process.

IMPROVING EFFECTIVENESS AT KAA SUI BERHAD

The various issues at Kaa Sui Berhad involve challenges mainly in Meetings and Structure Prt of the model. Although there are no strict measures which can bring about the changes overnight, but a few pointers pertaining to changes in the working can help in the long term.

• Diversity in Board Member Selection-Kaa Sui, being in technical domain has increased the size of the board but not its diversity, Kaa Sui has to reshuffle the board with inclusion of members from legal, core technology domain for its better working and effectiveness.

• Meeting Agenda & planning-Kaa Sui has to do a review of its meeting planning part specifically of the timeline of both the ore meeting as well as duration of the meeting. The members should be given early notice of the meeting along with the detail agenda of the meeting.

• Behavioural Changes-The company has to look to bring behavioural changes towards making the overall structural changes towards an in built approach in the meetings. The frequency of meetings could be increased to address more queries.

  In addition to above suggestions and approach suggested, an important annual meeting of assessment of board should be fixed to analyse the overall effectiveness of the board. A linking of the board effectiveness matrix should be done and in turn measured along with its correlation with company performance.

CONDUCTING ANNUALBOAED ASSSESSMENTS

Conducting board effectiveness assessment meetings on an annual basis helps in making the decision process and corporate governance. The process of the assessment meetings is also an important parameter to make better board decisions. Not only Below are the five principles for making the meetings more productive and in turn enhancing the decision making process-

• Board should set clear cut objectives for the assessment.

• There should be a board leader who derives the overall process of the meeting and decision making.

• The process of assessment should incorporate suggestions and prospective from some senior level executives and managers who are in regular interactions with the board members.

• Parameters of the assessment should be well defined and should include factors which go beyond compliance issues.

• The directors should take constructive approach towards resolving the issues at hand.