In this Seminar, you will learn the following topic areas:
Board Responsibility & Dynamics
Problem Statement: The greatest governance challenge highlighted in the interviews conducted by Accion was a lack of appreciation for the role of the board. As one respondent shared, “too many people are on boards for perks and prestige, and don’t feel responsible for or committed to the organization”. The mismatch between Director skillsets and the needs of the institution, little understanding of role or responsibilities, putting individual interests before those of the institution, and limited accountability has drastically impacted many boards’ ability to think strategically, provide oversight and bring about positive change. Even when some of these features are in place, Board dynamics are often a deterrent to good governance, stressing the need for boards to have a good composition, capable and experienced leadership, strong understanding of board responsibilities and sound foundation of governance structures and best practices.
- Clearly understand board and CEO responsibilities and authority to the company, to investors, to management, and to other stakeholders
- Recognize the importance of the board, regularly and explicitly discussing its role, understanding its responsibility for solvency, strategy and double-bottom line mission, and succession planning
- Apply practical techniques for navigating factions and power dynamics. Understand principles for balancing the board-executive relationship, how the board’s role in setting strategy interacts with management’s role in execution, how to consider execution risks, and how to monitor and provide guidance to management as the agreed strategy is implemented
- Understand in concept the conflict of interests that board members and CEOs may face
Strategy and Managing Sustainable Growth
Problem Statement: While growth is essential for any business, reaching scale is particularly important for MFIs targeting a low-income population to achieve their social goals and reach financial sustainability. One of a board’s most important roles is helping guide management in setting the strategic direction for the institution to implement smart growth. MFIs can face tremendous pressure to achieve excessive growth targets from many angles – whether it is a matter of survival for young institutions, management’s ambition to be the market leader or excessive profit expectations from investors – yet often don’t have the capacity to support rapid growth. Often boards lack the capacity to properly assess strategic options available in a rapidly changing environment. On a board dynamics level, it can be hard for board members to challenge rapid growth plans presented by CEOs with successful track records and supported by interested lenders and investors. As a result, the microfinance industry has seen numerous cases of “darling institutions” growing very quickly and then facing a serious portfolio crisis or even imploding as a result. Boards need to understand the risk factors of aggressive growth trajectories to inform their decisions on strategy and know how to monitor the execution of the growth plan and identify “early warning indicators” to ensure controls and systems are robust and effective, and “mid-course” corrections can be implemented in a timely fashion.
- Identify the strategy development processes and best practices of boards that have made successful strategic choices to establish the “10 year view”
- Analyze both internal capacity – specifically the risks and stresses associated with building staffing for growth – and external environmental challenges in setting growth strategy
- Recognize risks of rapid growth, identify “early warning signs” of unsustainable growth and understand why some traditional indicators (like PAR 30) may be lagging indicators
Problem Statement: Linkage with clients is a core function of effective governance—both to ensure products are responsive to client needs and aspirations as well as to ensure clients are treated fairly and transparently. While there are MFI boards that intentionally create client linkages and channels for the client voice to be heard (client visits, focus groups, grievance mechanisms, client representation etc.), these MFIs are the exception rather than the rule. Boards need to recognize the value in a client-centric business approach and know how to utilize channels and tools to understand and be attuned to their clients.
- Understand client centricity and the board’s role in driving a client centric strategy that incorporates client protection principles
- Recognize the business-case benefits of listening to clients early in the strategic development process through capturing client feedback to inform product development and reporting
- Identify available tools both for understanding clients and for social performance management
- Identify methods to incorporate the client voice in board conversation.