Completing the Board with the CIO

What is the Board of Directors actually for? That is a question often asked, although perhaps more often in a whisper in the pub rather than out loud or in a public forum. Most dictionary definitions will use a word like ‘oversee’ to describe its role in the organisation and recognise that members may be elected by shareholders or appointed by the Board itself. Clearly, the Board of a commercial organisation will have a role that is different in many respects from that of a Board (or Council or whatever it might be called) in a state or institutional body or charity, for example. Both will share the oversight element in respect of the general behaviour of the organisation and the appropriateness of its activities. Both will act as the tie-breaker in the event of a conflict between senior management in respect of a strategic decision affecting the whole organisation.

Mandated
But all management experts and authors agree that the Board of a commercial enterprise today has a more active and direct leadership role than is mandated in other types of non-profit organisation. Or indeed, many would say, more active than has been traditional in the past in this and other business cultures. One good reason for this is risk management in an era with regular extension of the range of regulatory compliance for which state and other regulatory bodies hold the Board responsible. There are also potentially awkward little things like directors’ fiduciary responsibilities and the really tricky thing in Irish law of directors’ personal liabilities. Step offside and you could lose a lot more than your modest director’s fees.

Only the CIO and the ICT team can professionally judge how and how well some new piece of tech could fit into the existing infrastructure and systems and at what cost in systems modification as well as investment

 

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There is also the salient point that the Board is responsible to the shareholders. Companies, whether public or private, are not democracies. Lively proceedings at AGMs, recounted with some glee by media, illustrate the power of free speech in most western societies but not actual power. There are invariably larger blocs of shares held by families or financial institutions that will dominate decisions in terms of majority or even casting votes. An alternative is shareholdings that are so widely held that public and media discussions of the affairs of the enterprise can seduce a high proportion of those small shareholders to vote in certain ways. That becomes perilously close to politics and having to woo the unwashed. Ugh!

Or at any rate that might seem to some to be the prevailing attitude of Boards in all too many large publicly quoted enterprises. In smaller enterprises, the quiet powers sitting in judgement in the background can also be financial institutions, large family holdings in second and third generation enterprises or venture capital investors. Some are directly represented on the Board, others may be exerting influence through directors as their proxies, informally or in a specific relationship. Anyone with experience of sitting on a Board of Directors, especially appointed staff directors, will testify that there is often far more politics going on in that small body than is visible to the outsider. Some would, probably unfairly, reckon that many are more political than an Irish party cumann — or indeed a Cabinet.

Unfamiliar territory
The point here, as discerning readers of this column will have guessed by now, is that this is the milieu in which the CIO has to perform when appointed — he or she will very seldom be elected by shareholders — to the Board. It will be unfamiliar territory. The normal path of promotion to the top ICT job, will certainly have involved a degree of politics. That will invariably mean having good relations with senior peers and colleagues, notably the finance chief but also leaders of key functions such as marketing, production, distribution and of course the operations management and CEO. If the ICT department has a reputation for good sense and prudence with the CFO you are ahead of the curve. You would like to balance that with the CEO’s belief that you are a go-ahead, innovative and very capable guy (in the unisex sense). It would be helpful also if the other top managers generally thought of you as ‘a good guy’ because from each of their points of view you have been reasonable to deal with when their technology needs were being decided on and delivered.