CEOs are most likely to flourish and succeed when they have a strong board behind them.
But it’s entirely possible for a board of directors to adhere to all requirements that should lead to vigilance and compliance, and yet fail to be truly engaged in formulating and supporting the organisation’s strategic direction.
So, what can CEOs or business owners do to ensure that the board members are cohesive, valuable and strategic?
1. Take advantage of individual board member skills
Having a board that is diverse in age, professional background and gender will usually mean that its members will bring a wider range of skills and interests to the table, proficiencies that can be exploited to the strategic advantage of the business. Diversified expertise will encourage divergent thinking rather than uniform opinions.
CEOs may not have the sole authority to recruit board members, a prerogative that may rest with a board sub-committee, but they are the person best fitted to identify and advise on the specific skill sets required for a strategic board composition. An ideal board may have a mix of financial, legal, strategic, marketing and IT expertise, as well as some broad knowledge of the sector in which the organisation operates.
2. Recognise the CEO’s role in offering guidance and leadership to the board
The board of directors is technically the CEO’s ‘boss’. However, this does not mean that a CEO needs to feel insecure or threatened by the board. On the contrary, the CEO is the senior executive with the greatest authority to exert influence over the board’s focus, methodology, relationships and communication with management, and even its composition and education.
3. Use regular contact to promote engagement
While a board of directors may only meet officially four or five times a year – or even less – it’s important to set up more regular communication channels. Board members may become disengaged if the only contact they have with the company is via infrequent board meetings, bound by protocol and the need to make decisions and pass resolutions within a short time frame.
Instead, CEOs can aim to interact with board members between meetings, using weekly or monthly board update emails, or one-on-one casual conversations. The content does not need to be formal, and might include events of social as well as business interest, or developments within the industry. This will help to cultivate personal bonds, make individual board members feel engaged, and remove any element of shock or surprise contained in the information presented to them at board meetings.
4. Build trust and respect
CEOs and business owners can further foster mutual trust and respect in their relationship with their board by being transparent at all times. This will involve the fearless sharing of both good and bad news, encouraging questions, and listening as well as advising, so that all parties feel able to express their views freely.
Promoting social interaction may also help to build rapport. You could get the board together for social occasions, such as a restaurant meal, preferably after the board meeting to avoid it becoming merely a pre-meeting discussion.
5. Don’t shy away from dissension
The separate members of a diverse board will not always, and possibly rarely, see eye-to-eye, and this is not a bad thing. Don’t pursue conformity, which is an enemy of strategic thinking. You should be able to harness the dissension and turn it into a constructive force to encourage considered debate, leading to better outcomes.
6. Provide all the facts needed for informed decisions
The CEO and other executives are on the front line every day of the year, while the board is only present for a few days at most. If they are to help shape strategy, board members must be provided with adequate information on which to base enlightened decisions. This is particularly important in the case of financial data. The board needs access to the same management reports that senior executives have, in addition to any formal financial reports they are required to approve.
This does not mean expecting board members to digest an unreasonable amount of material only hours before the start of a meeting, so give plenty of thought to the preparation, curation, delivery and presentation of board information. Quality, breadth and relevance should prevail over volume. Executive summaries a few pages long, setting out a problem or question, options for solutions and the decisions that need to be made, will be more practical than an abundance of complex text, tables and slides.
You may need to have a three-way conversation
Talking to your board about the way in which it functions, in the light of these considerations, may be a good starting point in creating a more effective and productive governance team, but you may need an external perspective as well. The team at Bentleys has board practice and education specialists who stand ready to engage in a three-way discussion with CEOs and their boards to further their strategic goals.
Disclaimer: This information is general in nature and should not be relied on as advice. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs and seek professional advice before making any decisions based on this information.