In this video, Corporate Governance Expert David Beatty addresses the challenges of getting the right topics on the agenda of a board of directors.
How Do You Get the Right Topics On the Agenda?
Topics on the agenda, well I regard first the time we spend together as an investment decision, not an expense. It’s sort of a different frame of your mind because when you use the word invest, you immediately begin to think about a return on that investment. Whereas you say to yourself, how do we spend our time, it’s gone. I always try to think, and I often fail but I often try to think, how do we invest our time as a board of directors together?
A simple tool that I use a lot is to ask the corporate secretary just to divide the time that we have invested in the past into three categories. What was looking over the rear view mirror? The audit committee, for example. What was oversight? That’s hindsight, what was oversight? What are we doing today? Are we on the right road? Foresight, what are we doing looking forward wondering about what we’re going to be when we grow up and who’s going to get us there?
I try to get the corporate secretary just very roughly, this is not an exact science to say as you come out of the board meeting, “You know, you spent 75% of your time on hindsight and oversight and only 25% on foresight.” When we polled a hundred directors here in Canada on how they should be investing their time, they said they should be investing 60%, over half, in worrying about where the business was going and who was going to get it there. There’s a very simple tool.
Working the agenda is really the job of the chair and the CEO, back and forth and back and forth. In the companies where I’ve been the chair, I’ve been pretty rigorous in asking my directors before the board meeting, “Is this a proper allocation in your view of our investment of our time?” At the end of every board meeting I ask the same question of my directors again, one by one. Not as sort of an ominous email, but one by one. “Henry, was this a good board meeting in terms of a return on our invested time? What could we do differently? What worked? What didn’t work?” I ask the same of the management team as well. I talk to the management team. I talk to my directors and I regard this as like Japanese kaizen, as continuous improvement. If you start from a proposition, then being a value added board, adding value to the enterprise is a really hard job.
It’s going to take more than a one a year upheaval evaluation. That’s why I like to regard every meeting as an independent investment decision, led by the board and the CEO, appraised by the directors, the board, the CEO and the management team in order that their next meeting might be more effective. It’s a continuous improvement kind of cycle.