Boards struggle in disciplining senior managers

Many boards have cost organisations a lot of money due to failure to manage executive team discipline and it is even worse when it comes to unlawful dismissal.

When a board of directors is appointed, while it is true the members are appointed for their various skills and experience, it is important to have the board trained in management of the executive team, particularly on how to handle discipline and performance issues.

Those members of the board who are appointed into the human resources and remuneration committee have to be given more detailed training on what their work involves and key pieces that make up executive discipline management. Organisations must not assume that because individuals have sat or sit in other boards, the experience they have is adequate as each organisation has its own unique character and challenges.

The starting point for any body to effectively manage the Chief Executive and his executive team is going through each member of the executive team’s employment contract and quality check it for legality, establish what the board can do and what the board is limited from doing on the contract.

Further, the board should look at how effective do the contracts speak to the strategic direction of the organisation and also establish whether there are areas requiring further review and negotiating amendments with executives. The board must also be clear on areas of executive contracts that cannot be tempered with as they go to the root of the relationship.

On compensation management, the board cannot manage compensation on salary survey alone. The salary surveys must sit on a solid remuneration charter. The problem however is that most boards do not run with solid remuneration charters and as such when disputes arise with executive management, the executive management has an upper hand and the board has nothing to hold on to.

Executive management contracts must be quality checked by company lawyers, further they must be subjected to scrutiny by an expert labour lawyer or labour consultant who are familiar with intricacies of the working environment. History has shown many executives in cases of dispute successfully dribbling around employment contracts that were thought to be water tight by lawyers from a legal perspective but which are porous from a labour relations expert perspective.

The next thing is that the board of directors must sell the strategic direction they want to take the organisation to. The board must also ensure that the executive team members are sold to the strategic direction and commit to make things happen. That way, disciplinary cases involving senior management are reduced. However, even when all these things are done well, there are occasions where misconduct occurs or there is a need to part with the CEO or some of the senior managers for reasons other than misconduct.

When the board wants to dismiss or discipline a member of the executive team, they must decide on the strategic discipline options available, for example, the chairman could call the individual, close the door and read the “Riot Act”. This is whereby the board chairman verbally talks to the individual about the misdemeanour and warns that if there’s no change, formal disciplinary action will be taken.

Whatever is discussed remains confidential between the board member and the chairman, although the chairman can update his colleagues on what he has done. Or alternatively the board can opt for an administrative inquiry and bring the offending executive for counselling and move forward. Another option is the board’s option for a mutual separation as guided by realities on the ground. Retrenchment also remains available as another option.

Unfortunately, many of the boards never explore the use of these options when things go wrong or when there is pressure from the shareholder.

They quickly rush to suspension and dismissal which becomes problematic. Before the board decides on dismissal, all board members must apply their minds and be clear that they are engaging in an act of asset disposal. Every senior manager in the organisation is an expensive asset carrying a wealth of experience and knowledge which should be weighed against disposal.

Very often, boards have dismissed executives who go and shine in the next organisation the next day, putting to question the wisdom of dismissing the executive.

Once a decision to dismiss an executive has been taken, the board must be satisfied that the decision is guided by appropriate reasons that are in the interests of the shareholder and his business. The boards must establish which code of conduct be applicable, whether the offence attracts a warning or dismissal and who should administer the discipline.

Those appointed to handle discipline must be trained in discipline law, must qualify to discipline as guided by the code of conduct and the process by religiously following the law and contaminated individuals must not participate.
The problem with many boards is that they start the disciplinary process, mess up everything and by the time they engage lawyers or consultants to guide them, the damage has already been done and can no longer be reversed.

When lawyers pick fatal errors in the board’s case, it is prudent for the board to reinstate the person and start the process afresh or negotiate an out of court settlement.

In conclusion, this is a very wide subject which in short requires the board members to be trained in their people management role if they are to achieve results and manage discipline effectively.-chronicle.co.zw