Whether you lead a global conglomerate or a mid-sized privately-held firm, the effectiveness of your board, and your relationship with the board can have a profound impact on your role and success in achieving company objectives.
The extreme nature of changes impacting businesses today demands board members who are savvy and attuned to what’s required to steer the company they serve in today’s global and volatile market. Increased expectations and accountability of board members are based on the pace of change and the size and scope of key board responsibilities such as:
- Is company strategy on target?
- Is today’s business model appropriate and flexible enough to meet business goals given constantly shifting market and customer needs?
- Does the company have the talent and resources it needs to succeed?
- Does the company have the agility and resilience needed to address a wide array of potential risks?
- Have the right technology investment priorities been set?
Traditionally, boards have been made up of experts from traditional business areas such as finance, operations, HR, marketing, sales and legal. A full board will then include member expertise across key functional areas.
Given new business situations, boards are compelled to have both a broader and deeper understanding across an array of topics to make key decisions. To achieve this some boards are adding members in specialty areas such as technology and risk management. Others retain experts in these areas they call on as needed.
Traditional Board Responsibilities
Typically boards are accountable for:
- Governance, protection of stakeholder interests, compliance
- Providing direction for strategy and growth
- Developing top-line financial objectives and metrics
- CEO selection, evaluation and compensation
- Succession planning
- Addressing substantive business issues as they arise
Board and CEO Relationships
Although it’s critical for boards and CEOs to work cohesively to achieve company goals, that’s not always the case in practice. Boards and CEOs at odds decrease both board and CEO effectiveness – to the company’s detriment.
Chief Executive* polled more than 120 mid-sized company board members across industries to learn “what makes CEO-board relationships tick.” Nearly 90% believe effective partnerships are based on high levels of trust. Agreement on CEO and board priorities is also critical.
Achieving and maintaining healthy CEO-board relationships requires effort from both. Each win when company success is prioritized over stringent roles.
Board Meeting Priorities
Boards typically schedule regular meetings well in advance, along with committee meetings led by members with functional area expertise. Certain topics are covered at every board meeting.
Given the considerable changes businesses are facing, are boards still focusing their attention on the topics of greatest importance? Or, is it time to re-assess priorities?
Per Inside Council**, directors nearly always rate strategy sessions at – or near 10 – on a 1 – 10 scale, but often board agendas are too packed. Even when plans include adequate time for strategy sessions, in practice other topics squeeze strategy time to the extent it isn’t feasible to fully address company strategy.
Getting the Balance Right
Given the importance of company strategy within the board’s role, dedicated attention is crucial. One option is moving “unplanned topics” or new issues to a board subset for resolution and/or recommendations. Another possibility is spreading board strategy topics across several board meetings. Also, including specific strategy topics within committee meetings can help. Strategic company direction, including board and CEO agreement, is too important to be shortchanged.
- Track the actual amount of time spent on each topic relative to the agenda and priorities. Where time spent doesn’t represent focused attention to the most critical priorities find ways to reduce or otherwise handle topics that take more board time than they deserve.
- Evaluate the backgrounds, expertise and skill sets of your board members. Together are topics and issues with the greatest impact on future company success well covered? If not, consider adding one or more board members who can ensure board guidance includes the level of expertise required in all areas. If needed, in the interim bring in subject matter experts to provide input and recommendations.
- If your CEO-board relationship isn’t as strong as desired, invest in an objective third-party to help identify primary issues from both sides and work to find common goals, dispel misperceptions, and set mutually-agreed upon working parameters. Reassess the relationship status quarterly.
- Assess the effectiveness of the Board meetings. An outside facilitator is an option for critical strategy sessions and for dedicated focus on new issues.
* Saporito, Dr. Thomas J., “Effective CEO-Board Partnerships: Successful CEO-board relationships demand trust, communication and alignment”, Chief Executive, January 5, 2016
** Edwards, Christine A., “No time for board strategy discussions – Has governance gone awry?” Inside Counsel, November 1, 2015
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