The board is only as good as its Chair. An ineffective Chair will result in an ineffective board. If, as a director, you find yourself in a situation where your Chair is not doing a great job then intervene. Have breakfast, lunch or dinner to discuss the challenges. If that still proves ineffective then resign.
Being an Effective Chair
So what does a Chair have to do to be an effective Chair?
There are three major tasks:
- Talent: at the end of the day the Chair will be the determining figure in the selection of new directors, the improvement of the existing directors and the exit of the ineffective directors
- Tone: the balance between trust and tension. There must be trust around the board room table. And there has to be trust between the directors and the top management team. The board has a different job than the top management team so that there is tension in the relationship as well. Balancing that trust against the tension is the job of the Chair.
- Time: the Chair must effectively manage the time investment of the board.
The Process of Time Management
First, the word investment should always be used when considering time allocation. Thinking of time and its allocation as an investment implies that there will be a return on that investment. Thinking of time as an expense carries no such implication.
Second, the challenge of being a “value-added” board versus simply a “compliance and policing” board is huge. There are many celebrated examples of board failure from Wells Fargo and Tesla to the more distant Global Financial Crisis where some 15 global banks collectively wrote off $2 trillion of shareholder value. Many, if not most, boards simply do not add any value to the ongoing enterprise.
The job of a board trying to add value as a board is simply too hard not to be continuously worked. An annual review is fine but is not sufficient to build a board that will add value in the long-term.
Six Step Process For Your Board Meeting
The following six step process should be adhered to for every board meeting.
Step one: the board Chair and the CEO develop a draft agenda. That agenda is then circulated to the directors as a draft. The Chair then phones each director individually and works diligently at discerning insights and changes each director might propose.
The Chair reverts back to the CEO, with director input, and works out a final agenda.
Step two: at the start of every meeting of the board the CEO should be given the floor without any other executives present.The CEO is encouraged to share with the directors the things that are most top of his/her mind.This brings the directors back into the company’s affairs as most will have been absent since the last meeting.
Step three: at the end of every meeting, the senior executives leave the room and the CEO remains. The Chair then encourages comments from the board itself on the effectiveness of the board meeting and possible improvement opportunities.Following the CEO’s departure the Chair canvasses each director individually determine how they felt about the progress of the meeting. Not an omnibus question: “How do you think things went?” but a director by director canvas.
Step four: The CEO convenes the top management team, present during the board meeting, and conducts a postmortem with them: the things that worked well; the things it did not work so well; and the improvement opportunities that might be available for the next board meeting. The Chair then joins the management team and shares with them what he/she wishes to share while the CEO shares in that meeting what the management team wishes to convey to the Chair.
Step five: The Chair and the CEO meet one-on-one for is long as it takes to generate a number of new ideas to improve the likelihood of a significant return on investment at the next meeting.
Step six:Two days following the board meeting the Chair individually canvases each director by telephone to determine what insights they might have and what improvement opportunities exist for the board to further improve its performance.
In this way the probability of the board adding value to the ongoing trajectory of the business is substantially improved. It takes a lot at work from the Chair but that work is necessary if the board aspires to do more than simply perform an oversight compliance and policing role.