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Home arrow Economics arrow Boards of directors of state-owned enterprises : an overview of national practices.


As in the private sector, the expectations of SOE boards seem to grow inexorably. The most visible manifestation is the increase in the workload and the time commitment that board members face. The workload of a board member is a reflection of both the number and complexity of issues that it needs to consider. Today, boards must consider increasingly difficult technical issues including risk and risk management, financial instruments, financial reporting, systems of control, etc. Other issues may be less technical but challenging from a conceptual perspective such as corporate social responsibility. Furthermore, boards are increasingly expected to look to the future and anticipate events.

Board members can now expect to work from 10 to 25 days per year, and the expectations of board chairs are much higher. Depending on the size of the company, a chair can expect his/her time commitment to run from 40 to 90 days of service per year (OECD, 2008), and where special circumstances (such as a crisis) exist this may be even more. Only a few countries have developed or are developing specific guidelines for how the work of SOE boards should be conducted. The only requirement usually established by the Company Law or in specific SOE related legislation, concerns the obligation for minutes of board meetings and the number of meetings to be held per month or year, which varies from twice a month in Turkey to once a year in Austria.

The level of organisation of the board will also affect work load and therefore efficiency. As such an important aspect in keeping the work load reasonable is to ensure that board meetings are set well in advance, with a clear agenda and with set dates (much of this relies on the Chair of the board as discussed below) (OECD, 2008). Boardroom efficiency is also reflected in the level of preparedness of directors. For example the board can contribute their perspectives to the discussion base on their experiences, but this should also be coupled with adequate knowledge of the company's business and the conditions in which it operations. The workload expectations for board members should also factor in time invested in researching the industry of the company, how it operates, how it makes money, any specific non-commercial objectives that it be required to undertaking, in addition to understanding its competitors (OECD, 2008).

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