Business realities are constantly changing, and a company without an effective board to guide its strategy amidst the changes may become unsustainable. An effective board helps set the long-term vision and strategy for the company and ensures that the company is moving in the right direction. The board also ensures that the company is run ethically and that it holds the executive team accountable for their performance. A solid and experienced board can boost the credibility of the company with investors. Ultimately, the board aims to create shareholder value by growing the business and maximizing profits¹

An effective board isn’t just focused on strategy and oversight; it also plays a crucial role in identifying and managing potential risks before they escalate into serious issues. By keeping a close eye on both internal operations and external market trends, the board helps ensure the company maintains the right balance between pursuing growth and achieving long-term stability.

However, risk management is only one side of the coin. Board members often bring with them deep industry experience and wide-reaching networks, which can open doors to valuable opportunities, whether it involves forming strategic partnerships, exploring new markets, or accessing new sources of funding. Summarily, a well-connected and structured board can be a powerful catalyst for innovation and expansion, helping the business stay ahead of the curve.

Roles and responsibilities of the board

The different codes of corporate governance outline specific roles and responsibilities for board members in a company. All boards are required to have board charters that clearly state the director’s responsibilities as board members. Specific responsibilities of the board can be broken down into the following:

a.    Oversight on the company’s performance and alignment with its mission and goals.

b.    Fiduciary duty to act in the organization’s best interests at all times.

c.     Review business strategies and explore potential areas for improvement.

d.    Define the level of financial, operational, legal, and reputational risks that are acceptable for the company.

e.    Ensure the company complies with all laws and regulations that apply to its operation and industry².

Achieving an Efficient Board

Effective governance and oversight by the Board of Directors are fundamental to ensuring the achievement of the Company’s strategic goals and objectives, maintaining compliance with regulatory requirements, and fostering strong stakeholder relationships. A lot of factors contribute to board success, the first being that the board is well diverse in terms of its skills and expertise, the directors have a good understanding of their roles and responsibilities, the board is genuinely invested in the organization’s success, and the directors are willing to dedicate the time and effort required to fulfill their responsibilities.

For a board to be considered efficient and successful, the following should be put in place:

a. Succession planning system

A well-thought-out board succession plan is essential for the long-term sustainability and resilience of any organization. It provides a clear framework and set of policies to guide the appointment, transition, and replacement of board members, most notably the Managing Director or CEO.

However, succession planning goes far beyond simply naming a successor. A strong plan ensures continuity across the entire board, supports a cohesive leadership team, and helps maintain stability during periods of change. By proactively preparing for transitions, organizations can avoid disruptions in governance and keep board activities running smoothly, even during unexpected shifts. In doing so, the board remains aligned, focused, and ready to support the company’s strategic goals—no matter what the future holds³.

A well-structured and effectively implemented board succession process promotes seamless leadership transitions and ensures continuity at the board level. It minimizes disruptions arising from directors’ departures and facilitates the identification of candidates with the requisite skills and experience to address the board’s evolving needs and strategic priorities. An effective succession plan also enhances diversity, thereby strengthening the quality of decision-making through more inclusive deliberations, while providing for the induction and training of new directors and their integration into appropriate board committees.

It should be noted that succession planning is an ongoing process, and the plan should be reviewed and updated periodically to reflect the changes in the company’s needs, board composition and the broader business landscape⁴. To have a board succession plan, a list of possible candidates should be created, along with a skills gap analysis conducted, and the plan should address diverse concerns.

b. Board Size, Composition, and Structure

The board size of an organisation is the number of directors on the board of the organisation, which includes executive and non-executive directors. The size of a board is better determined by the size of a company; big corporations require larger board sizes, while small companies may require small boards, which allow for a blend of efficiency and ease of management. Studies have shown that small board size can improve the performance of an organisation because the benefits of larger boards of increased monitoring are outweighed by the poor communication and decision making of larger groups, and suggest an optimal board size between seven and nine directors⁵. Researchers also argue that a large board is slow in decision-making and time-wasting, and this causes communication problems and affects the firm’s performance negatively⁶. Other research shows that large board size improves company performance and enables the board to gather more information. However, guidance should be taken from legal requirements as well as regulatory mandates, as the Companies and Allied Matters Act (CAMA) 2020 provides that every company, excluding small companies, shall have a minimum of two directors⁷, and other regulatory provisions state the minimum number of directors required in their sector. The extent to which a board’s size influences a company’s operational capacity and strategic decisions marks the importance of striking an appropriate equilibrium tailored to an organization’s unique circumstances.

The structure of the board is also dependent on the operational needs of the business. Well-defined board committees, with specific roles and responsibilities contained in approved terms of reference, support the board’s ability to deal with pressing matters adeptly while providing comprehensive oversight for all facets of organisational activities. Establishing a robust board structure with clearly defined committees is essential for enhancing governance standards and meeting strategic goals.

The composition of a board of a company can easily affect the company’s long-term success. Board composition defines a board’s ability to steer the company's strategy and governance⁸. Board composition also addresses having a range of skills among board members to improve decision-making and strategic management. When varied backgrounds are brought to the board, such as finance, technology, operations, and legal expertise, they offer unique insights that help address complex challenges from multiple angles. This diversity of expertise and skills enables boards to understand market dynamics better, assess risks, and identify opportunities, ultimately fostering innovation and resilience. Maintaining a good balance of expertise and capabilities enhances corporate outcomes and contributes effectively towards risk management.

Diversity also encapsulates differences in age, gender, and ethnicity. Variation in age enriches a board composition as generational norms and ideas are updated periodically, and it enhances the inclusion of a wide range of insights, experiences, and viewpoints. A successful board should have a degree of gender balance, as this would enhance the sustainability of the board and ensure equal representation. Emphasizing diversity ensures that boards benefit from a wider array of perspectives, which contributes to improved decision-making capabilities and overall governance standards within organizations.⁹

Board composition also concerns issues related to board independence (including independence of board committees). Compared to an insider-dominated board, an outsider-dominated board is believed to be more vigilant in monitoring managerial behaviours and decision-making of the firm¹⁰.

In summary, a board made up of individuals with a broad mix of skills—such as legal, financial, and technological expertise, along with varied industry backgrounds, educational achievements, and diverse gender and ethnic representation- is often better positioned to navigate complex challenges. This diversity of thought and experience enables the board to offer well-rounded guidance and insights to executive management, enhancing decision-making and strengthening the organization’s overall leadership.

c. Board remuneration

CAMA 2020 provides that a company is not bound to pay remuneration to directors, but where the company agrees to pay remuneration to the directors in the general meeting, the directors shall be paid such remuneration out of the fund of the company¹¹. Directors should be paid out-of-pocket expenses incurred by them in the course of the company’s business.

Compensating board members appropriately is essential for building an effective and high-performing board. Competitive remuneration helps attract skilled and experienced individuals, encourages long-term commitment, and keeps directors motivated to contribute meaningfully. In today’s competitive landscape, companies aiming to bring top-tier talent to their boards must offer compensation that reflects the responsibilities and expectations of the role. Research also indicates that well-structured board remuneration is often linked to improved financial outcomes, highlighting its impact on overall organizational performance ¹². Board remuneration packages should also be constructed to ensure that directors are engaged and aligned with company objectives¹³. This means balancing fixed compensation with objective-based bonuses or stock options.

Developing an effective board remuneration structure is critical to the success of a business. An effective remuneration strategy not only helps secure experienced and skilled board members but also encourages them to actively contribute to the company’s strategic direction and seize growth opportunities. To ensure transparency and alignment with organizational goals, the board should establish a formal remuneration policy that outlines the structure, criteria, and conditions for compensation.

d. Board Evaluation

“Great governance is a journey, not a destination. Past performance is, as the saying goes, no guarantee of future success. The board that becomes self-satisfied is a board that may underperform its full potential and the organization’s needs” – Barry S. Bader

It is crucial for a company to assess the effectiveness of its board and its members, contributing to the overall success of the company. By regularly evaluating the board's performance, the company can identify areas for improvement, enhance collaboration, and ensure that the board is fulfilling its responsibilities effectively. 

The Nigerian Code of Corporate Governance (NCCG) 2018¹⁴ stipulates that annual Board evaluation should be conducted to assess the performance of each director, committees of the Board and the Board to ensure they are committed to their roles, work together and continue to contribute to the achievement of the Company’s objectives. The Central Bank of Nigeria (CBN) Code of Corporate Governance¹⁵ and Securities and Exchange Commission Code of Corporate Governance also makes provision for annual evaluation of board members.

The importance of periodic evaluation of the board can never be overemphasized; the performance and the sustainability of a Company is hinged on it. Regular board evaluations provide an opportunity to reflect on how effectively the board is fulfilling its responsibilities, including areas such as ethics, social impact, and environmental responsibility. These assessments help ensure the board's actions are in step with stakeholder expectations and broader societal values. The insights gained from these evaluations can directly inform strategic planning, equipping the board to better identify potential risks and opportunities. Ultimately, this process strengthens the board’s ability to guide the organization with agility and resilience in an ever-changing business environment¹⁶. 

A survey of over 200 companies’ boards conducted at the India School of Business reflects that the practice of frequent evaluation of boards led to positive payoffs for the companies and better board performance¹⁷. Comprehensive evaluations identify potential risks and weaknesses, prompting the board to implement effective mitigation strategies¹⁸. Regular evaluations enhance board accountability, leading to better performance and improved public trust. Evaluations also inform board decisions on recruiting, retaining, and developing executive talent, contributing to ahigh-performing organizational culture. It also assists in identifying the training needs of directors and the gaps in the information provided to the board.

Effective evaluations ensure the board adapts to changing stakeholder expectations and societal needs, leading to improved organizational relevance and effectiveness. To further reiterate Barry S. Bader’s point (re: quote above), an underperforming Board can easily be identified through its self-satisfaction and lack of ability to assess its performance.

e. Board Operations

This refers to the existing components that make running board activities seamless. It encompasses the existence of Board and Board Committee Charters and adherence to them, the quality and effectiveness of board meetings, circulation of notices, agenda, reports, and implementation of decisions, approval metrics, conflicts disclosure and resolution, and the competency of the company secretary.

For a board to perform its duties excellently, covering all bases, it must be given the required tools to do so. Aboard should have its board charter at its inaugural board meeting. The charter should state the responsibilities of the board, the frequency of board meetings, quorum for meetings, and other necessary information. Depending on the size of the board, regulatory requirements, and company needs, a board should have the requisite committees to receive and dedicate time to review specific reports from Management before such reports are presented to the board. The NCCG 2018 recommends that boards should have committees responsible for audit, risk management, and governance¹⁹. These committees should have charters, otherwise known as terms of reference, that set out their responsibilities. These charters will guide the directors on the reports they are to review and other actions required of them.

To have an efficient Board meeting, notices should be sent to directors at most 14 days²⁰ before the scheduled date for the meeting. The notice should contain the agenda for the meeting alongside the reports to be reviewed at the meeting. The date, time, and venue of the meeting should also be clearly stated. The board should have an efficient company secretary who will note major decisions taken at the meeting, send out action items to the Management within two days of the meeting, and send minutes. To ensure seamless facilitation of the meeting proceedings, the company secretary should have a pre-meeting with the Chairman of the Board to discuss and note important agenda items to emphasize at the meeting.

Also, conflicts of interest disclosure should be an agenda item to be disclosed at every meeting. Directors should note if they have any conflicting interests in the matters being presented to the Board for review and approval, so they can recuse themselves when such matters are being discussed.

f. Board dynamics

The dynamics of a board refer to how board members interact with one another, the relationship between them, the ability to manage conflict, the power dynamics and the diversity of personalities. Basically, the synergy of the directors and the oneness of the board in spite of the directors’ diversities.

Board dynamics assesses the attitudes, behaviour and chemistry of and between the directors. Attitudes can set the foundation for how a board operates and its effectiveness²¹. The mindset that board members bring into discussions can significantly impact how the board functions. A spirit of curiosity, for instance, can encourage thoughtful dialogue and open-minded collaboration. On the other hand, a negative or dismissive attitude can derail discussions and disrupt the flow of the meeting agenda.

Appointing the right set of people on the board is the first step to ensuring the right board dynamics²². The directors should have the right skills and mindset with similar objectives for achieving the business goals of the company. The board should consist of directors who play harmonious roles and maintain peace, as well as directors who like to play the devil’s advocate²³, bringing dissenting views to board discussions. Board leadership should be neutral and inclusive. The Chair should avoid sharing personal opinions too early or attempting to dominate discussions. Instead, they should encourage participation from all members, allowing everyone to voice their thoughts and concerns openly.

g. Annual Board Goals/Annual Board Plan

An annual Board goals/ board plan is a strategic roadmap guiding the Board of Directors and their committees through the year with purpose and precision. Clear goals provide meaningful direction and a basis for developing work plans and operational budgets. At its core, an Annual Board Goal is the work plan of the board; it is a document that outlines what the board will achieve, by when, and who will be responsible for each piece. These goals are not arbitrary. They reflect the organization’s strategic priorities, anchoring the board’s activities around the most critical issues for success. These goals are mostly operational, focusing on audit, financial reporting, governance, human resources, risk management and compliance, as well as ESG and sustainability initiatives.

Every goal includes timelines and responsibilities such that everyone knows what is expected. This level of accountability ensures progress, not just promises. One of the most powerful aspects of an annual board plan is how it aligns committee-level work with the board’s broader goals. When each committee knows how its work contributes to the organization's vision, effort becomes coordinated and outcomes become scalable.

The development and execution of the annual board plan is coordinated between the Company Secretary, the Chairman, and the Managing Director²⁴. Together, they ensure that the plan is thoughtfully aligned with the company’s strategic vision, inclusive of all critical board reports and reviews, and delivered with discipline and consistency throughout the year.

Conclusion

In today’s complex governance landscape, board success doesn’t happen by chance; it is built on a foundation of intentional, strategic focus across several key pillars. From robust succession planning that ensures leadership continuity to well-defined board operations that support efficiency and clarity, each element plays a vital role. Strong board dynamics foster healthy debate and trust, while regular board evaluations provide the insights needed for continuous improvement. The effectiveness of a board is also shaped by its size, structure, and composition, aligning with the organization’s needs and strategic goals. Finally, fair and transparent board remuneration reinforces accountability and attracts top talent. Together, these pillars create a high-performing board capable of steering organizations with vision, resilience, and integrity.

Frequently Asked Question

Q1: What are the key pillars of board success?

‍A: The pillars of board success include succession planning, board size and composition, fair remuneration, regular board evaluations, effective operations, strong board dynamics, and annual board goals.

Q2: Why is succession planning important for boards?‍

A: Succession planning ensures leadership continuity, minimizes disruption, and helps maintain governance stability during executive transitions.

Q3: How does board diversity contribute to success?

‍A: Diversity in age, gender, skills, and experience brings multiple perspectives, improves decision-making, and strengthens resilience against risks.

Q4: What role does board evaluation play in governance?

‍A: Regular board evaluations help identify strengths, gaps, and training needs, ensuring directors remain effective and aligned with the company’s strategy.

Q5: How do strong board dynamics improve performance?

‍A: Healthy board dynamics encourage collaboration, constructive debate, and trust among directors, improving decision-making and organizational outcomes.

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REFERENCES

[1] D. Byrne. What is the board’s role regarding strategy? Corporate Governance Institute.

[2] G. Guy. Board Member Positions: Titles, Roles, and Responsibilities. On Board. October 10, 2024

[3] F. Aberg. The Importance of Strategic Board Succession Planning. Nordic minds Blog. September 25, 2023.

[4] K. Farnham. Board succession planning: Identifying & developing future board leaders. Diligent. October 10, 2024.

[5] EL-Maude, J. Gambo, Bawa, A. Bello, S. A. Rimamshung. Effect of Board Size, Board Composition and Board Meetings on Financial Performance of Listed Consumer Goods in Nigeria. International Business Research. Volume11; No. 6. May 9, 2018.

[6] H. Abdulkarim, U. Isah, A. Yusuf. Board Composition, Board Size and Market Value of Listed Industrial Goods Companies in Nigeria. International Journal of Research and Innovation in Social Science (IJRISS). Volume 4; Issue 7. December 2020.

[7] Section 272 (1) of the Companies and Allied Matters Act 2020.

[8] A. Kryem. The 2025 Guide to Board Composition [Types, Roles, Strategies]. Governance at Work.

[9] A. Kryem. The 2025 Guide to Board Composition [Types, Roles, Strategies]. Governance at Work.

[10] EL-Maude, J. Gambo, Bawa, A. Bello, S. A. Rimamshung. Effect of Board Size, Board Composition and Board Meetings on Financial Performance of Listed Consumer Goods in Nigeria. International Business Research; Vol. 11, No. 6; May 9, 2018.

[11] Section 293 of the Companies and Allied Matters Act2020.

[12] A.D. Ahmed. H. Abdulkarim. Directors' Remuneration and Financial Performance: Moderating Role of Board Attributes of Listed Insurance Companies in Nigeria. Journal of International Trade and Economic Development · December 2020.

[13] M. khader. How Board Remuneration impacts company success. Middle East Institute of Directors.

[14] Principle 14 of the Nigerian Code of Corporate Governance 2018.

[15] Clause 2.8 of the CBN Code of Corporate Governance for Microfinance Banks in Nigeria 2018.

[16] Banwo & Ighodalo. Building A Resilient Future: Leveraging Board Evaluation for Enhanced Performance and Sustainability. February 21 2024.

[17] H. Rai chandani. Corporate Governance Overcoming Problems in Evaluating Boards - Lessons from Indian Exemplars. A dissertation presented in partial fulfilment of the requirements for the degree of Executive Fellow in Management at Indian School of Business. July 2022.

[18] E. F. Akonor, P. A. Boateng, A. Gyabea, S. Adei, C. A. Boateng. Board Evaluation and Organizational Performance. International Journal of Research and Innovation in Social Science. Volume 8. Issue 2. February2024.

[19] Principle 11 of the Nigerian Code of Corporate Governance 2018.

[20] Section 292 (2) of the Companies and Allied Matters Act 2020.

[21] B. Rosne and M. Bujino. Timeless principles of board dynamics. Harvard Law School Forum on Corporate Governance. October 20 2024.

[22] R. Barker.. Board Dynamics: A key driver of business performance. Institute of Directors. March 4 2024.

[23] R. Barker.. Board Dynamics: A key driver of business performance. Institute of Directors. March 4 2024.

[24] Principle 8.6.3 of the Nigerian Code of Corporate Governance 2018.