You have three hours a month, ten months of the year when the Board, who have both operational and legal responsibility for a company on behalf of its shareholders, sit down together. Some directors may not have seen or spoken to each other since last month while others work closely together daily. How do they optimise the benefits of their collective skills and knowledge to further the progress and health of the company?
That is what we are calling ‘Board Effectiveness’ and it is a growing challenge for every board. In uncertain times like these with Brexit, trade wars and disruptive new businesses all approaching with increasing speed it has never been more important for a board to be effective. If we achieve this we have nothing to fear from the future.
The degree to which a board needs to reflect on this will depend in part on how successful they expect to be going forward. Historical performance is no longer a guarantee of future performance and a board needs to be very mindful of what lies ahead.
- Is the strategy evolving with the changes in the market?
- Are the risks being monitored and understood regularly?
- Are you as the chairman creating an environment for healthy debate and idea sharing?
- Have you got the skills and motivation you need amongst your team?
- Is the board provided with the information it needs to make timely and good decisions?
Whilst the company is dealing with the present, day to day aspects of delivering on client/customer needs, the board needs to be looking forward. How far forward will depend upon the sector and the topic, but they need a clear perspective on the road ahead.
To understand whether your board is achieving this objective, you have to be able to identify the areas upon which your business may be falling behind. By engaging all directors in evaluating the improvement opportunities to increase board effectiveness you can ensure your board is ‘achieves its aims.
As a chair of the board you have a unique position in your company. (See our article on ‘Listening for Perspective’ LINK.) You see the overall results in a way that individual members of your team do not and if you’re a non-executive director you have no role as such in its delivery. You are likely to be based at the hub of your organisation, whereas you may have important members of your team who are not there on a regular basis at all. Whilst you have the perspective of shareholders, customers, suppliers and markets accessible to you, your individual directors are unlikely to have access to more than one these interested parties. Their sense of what is going on will be different to yours.
To introduce a phrase that is rarely used in a business context ,‘what is it like for you’ should become the mantra of all board chairs. In order to encourage the most from your team you must understand what it feels like to be in each department of your organisation and thus each individual seat on the board. Your team are playing for you all day, every day, but are you listening closely enough to know if they are getting it right? Without the appropriate level of attention they may form an incorrect view about the importance of their role or the importance of its repeated excellent execution on the company as a whole. Are you demonstrating sufficiently how highly you value their contribution? As the cleaner at NASA was reported to have replied when asked what her role was, she said ‘I am part of a team that puts men on the moon’! Do your team get the big picture?