Benjamin Disraeli once said, “Most people die with their music still locked up inside of them”. Can we say the same for Boards of Directors? Do these awesome brain trusts of brilliant, accomplished people carefully selected to oversee an organization and help it to navigate difficult challenges – do they typically fulfill their true potential? In most cases they do not. This article will outline three concepts that can begin to unlock the potential of any board – including the one you’re chairing, serving on, or working with.
Making the most of your boardroom talent begins with an effective director orientation program – and many boards don’t have one. They typically whisk new directors through a series of meetings with the company’s top brass – a “drinking from a firehose” experience for most. There’s nothing wrong with having directors meet senior management one-on-one before they start working together in the boardroom; it’s a very good idea. But it’s hardly sufficient. Here are some fresh ideas that other boards have been adopting in recent years:
- Orientation Phase 2: After the new director has attended one or two meetings, consider a second phase of orientation. Some boards develop several phases, which are scheduled throughout the new director’s first year. Later components often include site visits, attendance at an industry conference and/or meeting with a major customer. Some boards also include a component where the new director spends time with people at the company working in the directors’ area of expertise – be that finance, tech or marketing. Understanding more fully what the company is doing in their subject matter area enables a new director to make more profound contributions when this topic arises during board meetings.
- New Director 360s: At the end of their first year, the new director receives feedback that’s gathered confidentially from their boardroom peers and senior management; I’ve even included external auditors and compensation consultants when the new board member serves on the Audit or Human Resources Committee. Respondents are asked what’s most impressed them about the new director to date –feedback that means the world to a new board member, even if they’ve previously served on other boards. They also provide any suggestions for improvement– which can nip potential problems in the bud. Finally, they provide advice for the new director to continue their professional development beyond orientation – and the innovative ideas that emerge from this component are terrific, because they’re practical and targeted.
A commitment to continuous improvement is what makes good boards great and keeps great boards vibrant. Every year, most boards undertake a board evaluation, but this is typically a squandered opportunity, that often that involves a perfunctory survey. Surveys are a decent compliant tool; but if your goal is continuous improvement and you want to use the board evaluation to keep it at the top of its game, you need an entirely different approach. Switching to an interview process on Zoom and incorporating feedback from senior management who regularly work with the board can be a game-changer. It enables you to explore questions such as:
- How does the board add value for you, as a senior executive?
- What do you see as our board’s unique strengths compared to others?
- If you could change just one thing that you believe would make our board more effective, what would you change and why?
Last year, I wrote an entire book on upgrading board evaluations: Board and Director Evaluations: Innovations for 21st Century Governance Committees. It offers plenty of ideas to turn this annual process into something genuinely worthwhile. Another continuous improvement tool that works particularly well in new CEO scenarios is an exercise called Optimizing the Board/ Management Relationship – which you can download more information on at www.boardadvisor.net. This process not only gets any new CEO off to a great start in working with their board, it surfaces opportunities to better utilize both the talent in the boardroom and within the executive team, creating a highly constructive board/management relationship.
About five years ago, I began to notice a shift that directors wanted to make in their working relationship with management – not only at the boards of US public companies but at boards around the world. It involved a transition from the timeworn pattern of management “Reporting Out” to the board followed by “Okay, any questions?” to a more collaborative approach focused around robust two-way discussions of critical issues. After all, what’s the point of recruiting directors who are successful corporate leaders, financial wizards or technology innovators – and then treating them largely as an audience for management presentations, with only the ability to ask a few questions at the end? That doesn’t exactly harness the talent you’ve assembled in your boardroom.
In Collaborative/Oversight mode, board members fulfill all of their fiduciary duties and oversight functions, but the board/management relationship is markedly different: Efforts are made to actively engage the board around pivotal issues where directors’ expertise can add real value. It’s characterized by robust two-way discussions between the board and management, eliciting views from both sides on critical issues. Management comes into the meeting with a well-considered point of view – and uses the board to test their assumptions, advance or confirm their thinking. Boards operating in Collaborative/Oversight mode play the dual role of both (i) a thought partner, sounding board and collaborator, drawing on their wealth of experience to offer insights to management; and (ii) an effective overseer and watchdog, challenging management where appropriate and holding them accountable for achieving corporate objectives.
But this shift to Collaborative/Oversight mode will never “just happen”; it requires changes to board materials, the approach management takes in board presentations and the ability of the Board Chair to facilitate more complex discussions. When it does, however, the “music” of the board, the value it contributes, and the satisfaction directors get from being on a board like this is almost breathtaking.