This is the most powerful piece of advice I have for any new CEO who wants to start their relationship off with the Board of Directors on a positive note: Streamline and improve your board pre-reading materials. Now that may sound as dull as dishwater but trust me, CEOs who take the time to create improvements in their board materials in their first year at the helm not only end up with raving boardroom fans, their board meetings are typically far more effective, micro-management is curtailed, board time and attention are more focused and often the board even makes better decisions as a result.
Most new CEOs simply adopt the same approach to board books as that taken by their predecessor – particularly those who were internal promotions: That’s the way we’ve always done it. And hey, no one seems to be complaining………….. In my work with nearly 200 boards over the past 26 years, roughly 70% identified board materials as an area for improvement even though most directors had never “made a fuss about it”. But once you started asking, they were tremendously frustrated and offered terrific suggestions that made a big difference! Unless your predecessor made a conscious and ongoing effort to enhance the board materials, there’s a good chance that this is low-hanging boardroom fruit that’s ripe
One of the main advantages of focusing in this area is that it’s almost entirely under the CEO’s control: Board materials are created by management. Most executives get little guidance or training on how to be effective in working with a board – they learn from watching their boss, picking up both good and bad habits along the way. If you don’t put your own stamp on the way your top team works with the board, they’ll simply continue in the pattern or your predecessor.
Most board presentations begin about a week before the presenting executive enters the boardroom – they start with the board materials. If they’re well-considered, succinct, highlight the key issues and tell a story the reader can readily follow, they leave a positive impression that builds confidence in the management team. But if they’re confusing, scattered or overwhelming, directors start to wonder about the capabilities of the person who put these together. It’s in your best interest as CEO to ensure that your management team come across as polished, smart, and thoughtful.
I’ve reviewed dozens of board books over the past 20 years – and while they’re all a bit different, three common problems emerge fairly often:
- Repurposing: Many busy executives take the materials they created to present this topic to executive management and send these out to the board, virtually unaltered. But a board is an entirely different audience than their colleagues on the executive team. Nearly all directors are savvy, accomplished businesspeople – but only a few members of any board are typically industry veterans, sometimes only one or two. When this occurs, the materials are laden with industry terminology and acronyms that would well-understood by those working at the company every day – but far less familiar to those who haven’t spent their career in this business. And the longer a board member’s tenure, often the less willing they are to “ask the dumb question” if they don’t understand a particular term or reference.
- Snowballing: An executive is asked a question in a board meeting that they hadn’t covered in their pre-reading materials – and don’t have the answer at hand. Embarrassed, they resolve to include this information in all their board packages going forward. At the next meeting, another question emerges that again, they hadn’t anticipated. They then vow to henceforth include this item going forward. And on it goes – as their board packages snowball, often to a tremendous size. While many executives will ask, “What’s the harm in including it?” recent research by Board Intelligence and ICSA: The Governance Institute answers that question: “The amount of time board members can effectively read and digest board papers is about four hours per meeting, irrespective of the length of the board pack. The longer the board papers, the more that goes unread.”
- Data Dumps: These are typically voluminous board books that offer charts, graphs, facts and bullet points with very little storyline. Directors are left to figure out for themselves what conclusions are to be drawn from this myriad of detail. Foard members end up “getting into the weeds” or focusing on issues that management doesn’t consider important or even germane. But who can blame them? Management has taken them there by loading up their board books with picayune details and failing to provide clarity about what all of this information means and the context of it relative to the company’s performance and operations.
Solving this problem typically involves a dispassionate review of the board materials, actionable director feedback that focuses on areas for improvement (and typically gets executive attention) and some other tactics like CEO letters and executive workshops that often yield noticeable results in a relatively short timeframe, earning the new CEO boardroom kudos and better meetings. These will more than offset the inevitable executive eye-rolling about having to invest a bit more time in their board packages; ultimately, its one of the best things you can do for the professional development of your senior team.
More information on this topic is found at Chapter Four (Building a Board-Worthy Executive Team) of New CEOs and Boards: How to Build a Great Board Relationship – and a Great Board, now available worldwide on Amazon. You can also visit our website to learn more about the resources we provide to CEOs and boards in this area: https://boardadvisor.net/our-services/board-worthy-executive-team/.
1 Chris Hodge, “The Hidden Cost of Board Meetings”, Board Intelligence (May 17, 2018). Accessed September 28, 2020, https://www.boardintelligence.com/blog/the-hidden-cost-of-board-meetings.