‘4 ways to ensure your board is well governed’
As one of GCC BDI’s governors, Khalid H. Al-Dabbagh, controller at Saudi Aramco, has worked closely with GCC BDI for a number of years.
He says, “The organisation has created networking opportunities amongst the directors in the region and created a knowledge sharing culture to benefit all board members.
“I have no doubt in the 10 years that GCC BDI has been in existence, the quality of board oversight, and understanding of governance and related responsibilities has improved significantly in the region.”
Here Mr Al-Dabbagh offers four tips for effective board governance:
1) Remember to represent all the shareholders
First and foremost, each board member needs to understand, and remember at all times, that they represent the shareholders. They need to take this responsibility very seriously and be prepared at all meetings to review and fully understand all the aspects of each agenda item being proposed so that they can fully discharge their fiduciary responsibility towards the shareholders.
2) Employ holistic perspectives
Each member needs to be comfortable with reviewing and questioning aspects that are outside of their background or professional experience. An engineer will have to review and question HR strategies and initiatives; finance professionals will have to provide input into operational matters and risks, and so on.
Board members need to be prepared to use knowledge and experience to understand all proposals being made, whether they are within or outside their main areas of expertise. They have been chosen to represent shareholders based on the overall perspective they can bring, and not just within the area that involves their business life.
3) Board independence
Each individual needs to be removed far enough from management (or management influence) to be able to question and challenge proposed items. This independence will allow them to effectively probe and question all aspects of what is being proposed and discussed at the board meeting. Having said this, this probing must be balanced with the experience and judgement to recognise and support ideas that will add value to the company in the long term.
4) Transparency and effective management succession planning
Board members, in my opinion, need to focus on the company’s strategy and risks, enforcement of appropriate ethical codes, ensure strict adherence to and compliance with financial reporting standards and regulatory requirements, advocate transparency and strong governance practices, focus on company safety matters, review and challenge the company’s operational achievements and associated KPIs.
They must ensure effectiveness and appropriateness of company’s strategic and business plans and last, but not least, ensure that there is an effective management succession planning process in place.
More about Khalid H. Al-Dabbagh
Khalid H. Al-Dabbagh has been the Financial Controller at Saudi Aramco since January 2012. As Controller, he is responsible for the oil giant’s worldwide accounting activities and the company’s annual financial report. He is currently the Chairman of the Saudi Aramco Trading Company Board Audit Committee and the King Abdullah Petroleum Studies and Research Centre Investment Management Company. Al-Dabbagh is a governor at the GCC Board Directors Institute.