Unlocking the hidden talent on your Board

At some stage in your career, you will run companies, and inevitably these companies come with Boards of Directors.

In moving to run a company or to becoming a lead director in a subsidiary company, you would have made an impact in how you have managed the people who work for you and controlled the business well. But when you reach the dizzy heights of running a company, you have an added responsibility, that of managing the people for whom you work. This is the first of five posts about Boards of directors, looking at unlocking talent, what Boards should do, selecting your next Board member,  how Boards become dysfunctional and how to create a Board at peak performance.

Make no mistake, if you do not actively manage your Board, your life will become impossible (unless you have a superb Chairman of the Board). On boards I have served I have found that there are four styles of Board members.

1. The friend of the Chairman. You do need Board members and typically nominations come through the Chairman or through him to the nominating committee. Typically the Chairman will find room for a couple of mates (as they have found room on their Boards for him) and typically they will be quite content to attend, listen and vote with management. They often add little value unless their skills are unlocked, but don’t involve much work. Ensure these people have some outside influence to assist the company. Maybe they know Government officials or politicians to enable you to meet with them. Or are great hosts or golfers again to facilitate meetings.

2. The Company representative. They represent shareholders and fully support the views of these bosses. As they are corporate types you can effectively manage them by understanding the aims of their shareholder and if these are in congruence with your plans then there should be few problems. If the views of a shareholder differ from your own, you may need to engage with them outside of Board meetings to align them with your thoughts or be ready to have a range of meetings gaining aligment with your plans.

3. The High Maintenance Board member. They could be a company representative, a friend of the Chairman or an independent member of the Board- and their fault is they want to get involved in every aspect of your day-to-day business. They secretly desire operational control and typically spend time second guessing your moves. These people have often been very successful entrepreneurs or businessmen and haven’t been able to transition their thinking from being the person who does things to becoming a Board member. Avoid these people, because they will waste your time and will distract management from executing on important goals. You don’t need the organizational confusion of board members who want to act like part of the everyday executive team.

4. Finally there is the Value Adding Board Member – and these are the people you want- again they could be friends of the Chairman, representative of a shareholder or an independent appointment. These people bring focused expertise to the Board, jump in when asked for advice or when they believe they can add real value, but leave the day-to-day operations to the you or your CEO and their management team. These board members help you tackle the larger business issues, but don’t meddle in your operations on a daily basis.

So how are you able to unlock the hidden talents on your Board. Here are five strategies I’ve used with companies I have been responsible for to help them build great Boards of Directors.

Define the Rules of Engagement.

Before asking anyone to join the board, make sure to clearly define what their participation will entail. Draw up rules for agreed behaviour to achieve productive dialogue, such as guaranteeing that every member has a chance to speak at each meeting, how decision-making will work, and how discussions will be recorded. Craft a board plan that enables everyone to contribute their unique expertise and viewpoint, but also maps out how you’ll come to a consensus. Constructive debates should be encouraged, but it’s important to stick to key issues to lead to consensus and closure and avoid petty meddling on day to day operational issues (unless there is a real problem in the business).

Conduct an Annual Board Evaluation.

Boards should have a plan in place for an annual self-evaluation. How is the team working together? What problems have arisen? What’s working and what’s not? Has feedback been collected an acted upon? Ask the views of your management team on their experience at the Board. Make sure to regularly measure how the board’s implemented recommendations have impacted your business, both positively and negatively. Ask yourselves the hard questions, because a board’s self evaluation should uncover the real issues that inhibit effectiveness.  If there is a gap between how effective the Board sees itself and your views, then you will need to take this up with the Chairman and find an objective means of discussing the difference in views.

Proactively Manage your Board.

Neither the over-zealous board member who wants to direct every decision, nor the slacking board member who doesn’t participate, are assets to your board. Don’t be afraid to approach members who aren’t contributing in a beneficial way to discuss ways you can work more effectively together. One way to approach sensitive conversations like is to host social events, such as a board dinner, before or after a meeting to talk through issues that impact working relationships. If things still aren’t working out with a board member, think about asking that person to leave, if possible.

Clearly Communicate.

Clear, open, and regular communications are vital to the health and functioning of your board. Information should be focused, timely, and digestible. Don’t send out an 80-page deck with financials the night before the meeting. You can’t expect directors to stay up to speed on your business the way the management team does, so present them with the main facts and updates in a short document. Agree a range of simple Key Performance Indicators for assessing the day to day management- if these are in line then less need to review these numbers. The most important rule of board management is to not surprise them – make sure they know everything important that’s going on, good or bad. And, lastly, don’t try to pull the wool over the eyes of your board. If you are stumped on a next business move, admit it. Tell them you’re searching for an answer and ask for their guidance and advice.

Focus on the BIG Issues.

A CEO’s  job at board meetings is to keep the discussion focused. Busy directors will appreciate you keeping things on topic and on time. One way to keep the focus on important issues is to present potential solutions – not open-ended questions. This way, you get their immediate input on your concrete business ideas. Don’t let your board spend too much time talking about minor issues or get bogged down in compliance – and then become rushed when it comes to the real opportunities to add value. Always present a simple agenda with only substantive topics, and get agreement on next steps on each topic before moving on. Keep all administrative matters for the end.

In the end, creating an effective Board of Directors is part science, part art. I know from experience (both negative and positive) that the right Board makes all the difference in growth, market reach, and business success.

Have you any Board of Director stories, why not share these with me?