Topics:   Corporate Governance,Featured,Leadership,Partners,Strategy

Topics:   Corporate Governance,Featured,Leadership,Partners,Strategy

September 13, 2022

10 Steps to a Better Board Partnership

September 13, 2022

Never has strong board guidance been more important, yet the board-management dynamic remains inefficient in the eyes of directors and executives. Executives believe they spend too much time preparing for board meetings yet fail to receive the strategic guidance they need, and directors often feel both overburdened and underutilized.

Directors rank information flow issues between the board and management and poor communication of the board’s expectations of management as the second- and third-largest barriers to becoming a high-performing board, according to the 2022 NACD Public Company Board Practices and Oversight Survey. Twenty-six percent of respondents cite the unclear delineation of the roles of the board versus management as a barrier to better performance. At the same time, 58.4 percent of directors say that quality input from management is one of the biggest drivers of exceptional board performance.

Only 17 percent of executive managers are satisfied with their board relationships, according to a CEB survey of chief financial officers (CFOs) and general counsel conducted in 2015. Management believes that board members lack sufficient background to contribute effectively and are not aligned with their priorities. This is a recipe for ineffective board relations—indeed, a recipe for any bad relationship.

Poor relationships between the board and management have led to countless strategic missteps, missed opportunities, and failures to adjust to obvious risks in the marketplace. Executives and directors who have had success bridging this gap use a few simple tools and techniques before, during, and after scheduled board meetings.

  1. Develop relationships outside of formal channels. Don’t wait for the board meeting to engage. Create opportunities, as one CFO said, to “get worrisome questions out of the way” over coffee or a drink. Many times, directors are reluctant to ask questions in the boardroom that they would otherwise share in a less formal chat. One CFO confided that a director was worried he would appear uninformed by asking certain questions in the board meeting but was grateful for the opportunity to ask the same questions in private.
  2. Push for upfront agreement on what should be on the board package for the year. One organization holds an offsite meeting to get consensus on key topics for the coming year’s agenda. Executives’ number one complaint is that they spend far too much time presenting on issues that aren’t ever reviewed by the board. Board members complain that they’re not getting an accurate strategic picture.
  3. Executives should check their presentations to make sure they’re aligned and focus on the right issues. Assigning ownership of issues will avoid duplicative efforts, allow for a cohesive day, and keep down the number of questions that could become a distraction. Delineate between issues that need a decision (and address those first), critical advisement issues (risks, opportunities), and informational guidance issues. Start at the top. One team CEB worked with found that their presentations unwittingly contradicted each other, leading to off-point questions, board confusion, and—in the end—more work for the executive team.
  4. Clarify with directors and executives what materials could be taken care of in pre-reading. Your goal should be to get to a one-page presentation where every graphic or number on the page represents a meaningful discussion. If there’s a detail in your presentation that could start you down a rabbit-hole discussion, move it to pre-reading or create a graphic. Don’t let one figure derail your presentation. Even better, lead with the narrative and footnote the number.
  5. Talk in terms of risk to the business when making critical decisions. Risk is the universal language of directors. When executives paint the risk, they obligate boards to spend time on that issue. One chief human resources officer (CHRO) I worked with shared how depicting the impact of human capital risk to strategy compelled the board to act after a year of inaction.
  6. Avoid these four traps: 
    1. “Blind them with data.” The data presented overwhelms directors to the point that nothing makes sense.
    2. “Adhocracy.” As this relates to data dives, these dives seem random and don’t connect to the broader issues.
    3. “Deep dives.” These are deep dives on data that are going to eat up your time and likely lead to irrelevant questions.
    4. “Cover the waterfront.” Presentations that cover everything but haven’t given the board meaningful information to be able to advise management.
  7. Don’t let ambiguity follow presentations. Push for agreement, denial, or abstinence. Too many directors and executives walk out of board meetings thinking exactly the opposite of their peers. One company appointed its CFO to the role of secretary and empowered the CFO to press directors and executives for clarity on what, if anything, needed to happen next. For legal reasons, many companies avoid recording this information in the minutes.
  8. Board members should “get on the truck” and leverage board positions where it’s legal and clear to do so. Often board members have only a superficial view of the business yet could solve major issues with just a phone call (by, for example, offering to connect two parties), which would otherwise take weeks to resolve by the business.
  9. Get off the hamster wheel. Directors should make clear what direction the board will need from management for the next meeting. Executives should immediately take some time with peers for a debrief to make sure they’ve collectively addressed critical corporate issues and have a plan for the next time around. This will dramatically decrease prep time and increase clarity for the next meeting.
  10. Set up a regular board review process to evaluate board members against future strategy and their alignment to strategy. Companies need to cultivate a pipeline of board talent to be prepared for shifts in strategy or unexpected events. All boards should be rebalanced at some point to best support management’s strategic goals; if you don’t put a mechanism in place to do that, then board replacement becomes a political football game with no winner.

For businesses looking to improve efficiency and performance, strengthening the relationship between the board and management is essential. To do this, it’s important to follow these 10 steps to better communication, alignment, and effectiveness between directors and executives.

Scott Engler is a partner at True Search focused on C-suite and board appointments. He’s spent 15 years advising boards, CFOs, and CHROs at Gartner and previously at CEB (now a part of Gartner). He also ran the StrategyFX consulting practice.

Evan Grossman is a partner in True’s San Francisco office and serves as a member of the CEO/BOD practice. As an advisor to boards, he works closely with public, private equity-backed, and pre-IPO venture-backed companies specializing in CEO and non-executive director assignment.

10 Steps to a Better Board Partnership

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