Boards urged to operate open door policies

Accra, Nov. 27, GNA - Chief Executives, Board of Directors and Managing Directors, have been asked to operate open and free leadership systems that would improve their companies instead of pretending that problems did not exist.

"Boards", according to Mr Kwesi Osei, Director-General of the Social Security and National Insurance Trust (SSNIT)," must be very active in their roles in bringing about effective management and shareholder value maximization."

They should also ensure that they became agents of change not only to enhance shareholder value, but also to ensure that other stakeholders were protected in a win-win situation.

Mr Kwesi Osei, expressed these sentiments at a breakfast meeting organized by PriceWaterhouseCoopers (PWC), a worldwide management consulting group, for Chief executive Officers (CEOs), Managing Directors, Financial Directors, bankers and business management operators in Accra on Thursday.

The meeting, which took the form of a seminar, was on Business Regeneration and Optimised Exit Services for distressed companies.

He said it was regrettable that most Board of Directors attended meetings without adequate preparations and did not add much to the regeneration and turnaround of their companies.

"Most Board of Directors attend Board meetings when they have not gone through the papers prepared and so do not contribute much to discussions. They thus become liabilities for their companies."

Mr Osei urged them to seek early assistance for their institutions when it became obvious that they were in crisis.

"You do not need to engage in crisis denial as is the practice of some corporate institutions."

He called for a more consensual approach to developing prescriptions for ailing entities.

This, he said, could be derived from the development of the 'rescue culture' concepts, which had been developed and become formalized into frameworks that were seen as best practice in helping to facilitate rescue-based solutions.

He said in Sub-Saharan Africa, it was possible to produce workable solutions for companies facing financial hardship across both the private and public sectors.

Mr Osei noted, however, that there were cases where nothing could be done but for companies to fold up and stakeholders moved on.

"In other cases, once stakeholders have assessed all options, it may be that the optimal way forward is for business units to close so that precious resources can be better directed elsewhere into the core businesses within the country," Mr Osei added.

Mr Martin Whitehead, (PWC) Director for Africa and Middle East, said successfully solving the problem of non-core asset would stem the flow of cash supporting an ailing or non-core divisions and would liberate capital and resources to be redeployed more productively.

He said whether the business or subsidiaries need to be sold, closed or restructured depended on a wide range of considerations.

"These include how customer relationships can be protected, if there are regulatory barriers to closing a business or subsidiary, the likely impact on reputation, and if there are in-house management resources available to see the process through from start to finish."

He said for international businesses, "other factors are likely to add complexity and difficulty to an existing challenging situation."

Mr Felix Addo, a Senior Partner of PWC in Accra, said the Liquidation Act currently undergoing revision must be speeded up to ensure that the processes for liquidation were set clearer.

The Bill is currently before Parliament.