Boards or boards of directors are collegiate bodies whose purpose is to represent and protect the interests of the shareholders of companies. In the case of state boards of directors, said interests are associated with the protection of public property and the interests of taxpayers. The role that the state board of directors must play is, therefore, of vital importance for the development and control of the public entity, especially when it acts as a mixed economy organization, an industrial and commercial company and / or a lending institution. of services_
Analyzing the case of the current situation within the electricity sector, companies try to be, within the new regulations that govern them, private and public organizations oriented towards productivity and competitiveness within the framework of an inescapable regulatory condition. In such circumstances, entities or companies in this sector should have not only high-quality technical and managerial staff, but also boards of directors that provide new knowledge and better experiences on operating processes, markets, products or financial exchanges. (That is, it is what some author called “cross fertilization” between different individual experiences within an organization).
The fact of belonging to a board of directors of the public or private sector constitutes, in addition to a qualified professional dignity, a legal responsibility and inseparable obligations to the exercise of said position. Although in this country there are confusing and diverse perceptions about the functions and importance of the boards of directors, especially in those of the public sector, this document tries to shed some light on this.
Board Functions
Very often, there are no clearly defined functions on the role of those who belong to the board of directors: the first hesitation lies in the names of "director" or "director" with which we are not familiar. The second lack of definition consists in believing that it is the president or manager of the entity, who should assume the main role and that the directors of the Board should be subordinate to its leading role. As for the first, it will be a matter of time to accept such names; as for the second, it is a characteristic of the personality of each one, to assume with the tasks: when the directive boards do not have clearly defined functions, the behavior of their members is relatively passive and little productive.
If the directors only have time to go to the meetings, and little space to study and analyze in depth the important problems that are brought to them, their role will be deficient in such groups.
It would not be fair for time to conspire against the responsibilities of the directors: if this were so, and to the detriment of the quality of the members who are usually elected to occupy these positions, virtually all power would be concentrated in the administration of the company. For this reason it is necessary to define some general tasks that serve as a reference standard for the work of the boards.
Some functions of the boards of directors, in a survey carried out by Jay W. Lorschen of North American companies, which today serves as a reference in the present context, indicate that there have been at least these main activities: reporting on the conditions of the environment, advise and advise management, evaluate the performance of the entity (including strategic decisions) and also, we add, ensure the development of the management team.
1. Information About the Environment
Due to their positions in other companies or institutions, or due to their relationships within the same government when it comes to public entities, directors are an invaluable source of information regarding the business environment where they work. This information, which is to serve the entity, covers issues of an economic and political nature, but also valuable data on certain market conditions, on potential customers, the activities of competitors or the entry of new technologies into the sector.
For example, given the globalization of markets and science, it should be the responsibility of the board of directors to analyze changes in financial policies and technological advances, consistent with the risks faced by the company. All shareholding aspects will be the responsibility of the board precisely because of the ability to keep abreast of changes in the economic environment.
2. Council and Advice
Most presidents or managers generally recognize that the participation of directors in the management of companies or entities is generally advisory in nature and not decisive. Management directs and controls the company, but the board of directors advises management to the extent that it requires. Due to the relative and sometimes little dedication that the directors have around the different aspects of the entity, their advice is not the type that requires deep and complex analysis. However, boards of directors have been specially made to management in solving legal and ethical problems that entities or companies often face. In the current circumstances of the country, the ethical-legal field is of capital importance and, although it is extremely critical and complex,claims objective and balanced options on the part of the boards in order to reduce the contingencies and damages in which management may fall_ In the survey mentioned above, the director of a company gave a clear explanation to this function when he said: “Our work The main thing, as directors, is to monitor the company's compliance with laws and ethical principles. But, although we discuss problems and offer solutions within the board, it is the management that makes the final decisions_It consists of monitoring the compliance with laws and ethical principles by the company. But, although we discuss problems and offer solutions within the board, it is the management that makes the final decisions_It consists of monitoring the compliance with laws and ethical principles by the company. But, although we discuss problems and offer solutions within the board, it is the management that makes the final decisions_
3. Evaluation of the Enforcement
The third main function of the board of directors consists of evaluating the executives of the entity and its subsidiaries, where they exist. It highlights financial matters, the profit and loss statement, the budget and its regular execution, the cash statement, and especially the main management indicators that have been established for the entity.
Given the rise of the methodology of strategic planning, in our opinion there is today a need for boards of directors to take care of following up on the mission, objectives and strategies of the entity or company_. Management proposes strategies and action plans, but it is the board that is responsible for monitoring the expected results. From our personal point of view, we affirm that the examination of the financial statements are from the past and nothing can be done with them, but to validate the testimony of what happened. Instead, the strategic plans established for the future will be the company's performance guideline and the framework of decisions that will truly affect the development of the entity from now on:These presentations should make up the bulk of a board's time if the benefit of managerial talent is to be expressed as a profitable force toward improvement and excellence.
4. Development of the Management Team
The development of human resources at the highest level of the entity is one of the greatest responsibilities of the board of directors. This function does not imply abandoning the whole set of personnel policies and especially the vigilance of a correct administration of the collective agreements where they exist. But it is at the managerial level where the interest of the directors should be put, ensuring that at this level there is teamwork (which is different from work teams), motivation to executives, leadership promotion, stimulation of creativity, and development of communication and negotiation skills. Any management talent development plan should be welcome, insofar as it represents a general attitude of the entity for dealing with these same tasks in the rest of the organization.The technical selection of the personnel, the respect to the rules of the administrative career and to the other legal statutes that are enforceable for the public company, are questions that must be persistent in the spirit of the board directors at every opportunity. It does not escape anyone that managers have analytical support in the technical capabilities of the company's high-level executives, but it is up to them, the managers, to decide the best solution alternatives that facilitate the decision-making of the same together.It does not escape anyone that managers have analytical support in the technical capabilities of the company's high-level executives, but it is up to them, the managers, to decide the best solution alternatives that facilitate the decision-making of the same together.It does not escape anyone that managers have analytical support in the technical capabilities of the company's high-level executives, but it is up to them, the managers, to decide the best solution alternatives that facilitate the decision-making of the same together.
For the above reasons, having the most suitable and qualified people within the company is to anticipate a high quality in the decisions of those directors of the board of directors and a forecast for the potential problems that may occur. This recommendation goes beyond the crony options that are often given to fill such collegial management positions.
Final Recommendations
We said that belonging to boards is renowned, but we must also insist that it implies assuming responsibilities_. Let's see some practical recommendations that exist in this regard:
a) By mandate of the Commercial Code, appointments should not be accepted in more than five individual boards of directors; however, for the official sector, this prohibition is only expressly defined for public employees, who may not receive remuneration for more than two boards of which they are part (art. 26, D. 3130-68); Although there is no standard for those who do not receive remuneration, we believe that the interpretation of the Commercial Code should be followed;
b) a director probably needs to dedicate to a company between 15 and 20 working days per year; In accordance with the guideline that "a day is spent planning a day", it is necessary that each director knows the agenda of each meeting in advance to make a better contribution to it;
c) it is convenient to know if one is a numerical substitute (which means that in the absence of one of the elected, the replacement must be done by the one that follows him on the list), or a personal substitute (which consists in choosing each principal a substitute determined) and thus be able to define with its principal the position in front of a certain agenda;
d) in accordance with our legislation, acceptance at a meeting implies the condition of administrator of the company and, therefore, the responsibilities individually or collectively affect even its assets when willful or willful damages are caused;
e) If the directors tolerate, order or cover up falsehoods committed in the balance sheets, they may incur the crime of ideological falsehood of a private or public document. For example, when a company goes bankrupt and no accounting books have been kept, this would imprison its administrators for up to two years;
f) it is the duty of the manager of any board of directors to keep loyalty and professional secrecy in all matters related to the performance of their duties; the fact that you have access to privileged information, makes this discretion necessary under penalty of legal sanctions provided for in Colombian law (article 18, Decree 128-76);
g) some rules must be observed with care and managers worry about their compliance: for example, a recent ruling, confirmed by the Superior Court of Antioquia, “declared the inefficiency of some determinations made by a board of directors on the grounds that one of its members was not called to the meetings ”_
h) Finally, and in the same sense as above, it is essential that the officers of official boards of directors carefully study the terms of Decree 128 of 1976, which establishes the “statute of disabilities, incompatibilities and responsibilities of the members of the boards of directors of the decentralized entities and their legal representatives ”. This statute regulates almost all the aspects derived from the presentation in public boards of directors and is the main legal framework of all this dignity.
Annexed
Article 26 of Decree 1050-68 establishes for the boards or directive councils (of public establishments and commercial and industrial companies of the State) the following functions:
a) formulate the general policy of the organization and the plans and programs that, in accordance with the rules prescribed by the Administrative Planning Department and the General Budget Directorate, must be proposed for incorporation into the sectoral plans and, through these, to general development plans;
b) adopt the statutes of the entity and any reform that is introduced to them and submit them to the approval of the Government. c) approve the budget of the respective body;
d) control the general operation of the organization and verify its conformity with the adopted policy, and
e) the others indicated by the law, the regulations or the respective statutes.
For its part, Decree 128 of 1976, in its article 2, thus indicates the duties of the members of the boards of directors of public establishments, commercial and industrial companies of the State and mixed economy companies (in which the Nation or its entities possess 90 percent or more of its share capital): “in addition to those indicated by other regulations, they are duties of the members of the boards or councils, and of the managers or directors:
1st. Respect, comply with and enforce the Constitution, laws and statutes of the entity;
2nd. Carry out their functions with efficiency and impartiality.
3rd. To keep in reserve the matters that they are aware of due to their functions and that by their nature should not be disclosed ”.
Working document prepared for the boards of directors of the energy-mining sector. First version 12.11.95.. Based on Jay W. Lorsch, Pawns or Potentates. Harvard Business School Press, 1989; KR Andrews, Coporate Strategy: A Vital Function of the Board. Harvard Business Review, Nov. Dec., 1980.
For the purposes of the Domiciliary Public Services Law, Law 142-94, a special legal category called “Public Services Companies” is established, which are companies subject to the regime of commercial and industrial companies when their owners do not want their capital to be represented in shares, and in what is not expressly stipulated will be governed by the rules of the Commercial Code for corporations. These companies can be of three classes: Official, when the Nation, the decentralized or territorial entities have 100 percent of the contributions: Mixed when the capital of the Nation, or the territorial or decentralized entities have contributions equal to or greater than 50%; and Private when its capital belongs mainly to individuals.
This function is very important today in the boards of directors of the public sector after the issuance of laws 190 and 200 of 1995 that regulate delicate situations on corruption and the disciplinary regime.
ML Mace, "The President and the Board of Directors". Harvard Business Administration Library, # 29, Mexico, 1974.
The performance indicator methodology, successfully proposed by the FEN for the electricity sector based on developments by the World Bank, can be expanded to establish, within companies, performance pacts by area (with indicators specific to each one), that serve the general purpose of improving the monitoring of strategic planning results.
One of such responsibilities is dealing with the ambiguity that arises: given that the discussion around Law 142-94 was polarized around two extreme positions, “State interventionism versus extreme neoliberalism, excluding sectors particularly interested as the common user ”, it is necessary to review each analysis in light of the common good. Cf.: Jairo León García, “Participation and Democracy in Law 142-94: Regime of Domiciliary Public Services”. In Technical Magazine an ISA publication, # 3, January-June 1995, pages 31 and ss.
"Together in the Cana", Dinero Magazine, March 1995, p. 102
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