Putting Theory into Practice 150 150 MAKE IT BETTER TABLE

Putting Theory into Practice

Over the past two weeks, we’ve looked at ways to make better boards. The donkey wheel teams sees that there is potential in each board to be unlocked to add value to the organisations that they serve on.  We’ve focused on two main concepts:  

1. ‘Minimal viable governance’; this is about boards focusing on what matters. Boards need to step back from the good governance model, and focus on their core mission, and  

2. Does the board agenda and the board papers actually reflect that purpose and core mission, and seek to make it better?  

donkey wheel’s Executive Chair Col Duthie, who currently also chairs the Give Where You Live (GWYL) Foundation Board and is a director of Ethical Property Australia, has introduced changes to the various boards on which he serves.  

One new practice is each board member being asked to rate their meeting preparation on a numerical scale; one is equivalent to ‘unprepared’, two means that the board papers have been read and annotated, and three indicates that the papers have been read and digested. Since this practice has been introduced, Col says it has been helpful in motivating good preparation. The foundation of high trust among directors has facilitated transparency about their preparedness.  

A significant reform also being trialled is the formalising of the three standing resolutions (below), which capture the board’s governance responsibilities:  

  1. People and Culture: That the board is individually and collectively satisfied that management is doing all it can (within reason) to cultivate wellbeing within its staff, optimising energy levels and contribution, and is alert to existing or emerging risks.  
  1. Financial Health and Compliance: That the board is individually and collectively satisfied that management is managing the financial wellbeing of the organisation (balance sheet, P&L & cashflow), is meeting its regulatory and compliance obligations and is alert to existing or emerging risks.  
  1. Strategy and Identity: That the board is individually and collectively satisfied that management is prioritising activity that achieves the organisation’s mission, that the organisation is being true to our values and purpose, and is alert to existing or emerging risks.  

A key question for board members becomes ‘What do I need to know in order to sign off on each of these areas?’ The expectation becomes that the CEO report and board papers will evolve over time to give the board confidence around these three areas.  

Another significant change will be to the way meetings are structured, built on the three pillars of:  

  1. The separation of core governance functions from advice.  
  1. The formalisation of the three resolutions outlined above. The bulk of the meeting’s focus is centred on this pillar.  
  1. The simplification of the agenda. Some papers might be included for noting or background, but no board meeting time needs to be allocated for their consideration. This streamlining of discussion is about eliminating (almost) everything apart from the formalised resolutions and open-ended strategic discussions (which happen after the governance session – see below).  

A template agenda reflecting these reforms could look like the one below. It separates governance (items A-D) from advice (E). It formalises the key governance responsibilities via the resolutions (B) and simplifies the agenda by eliminating other items.   

A. Looking back  

– Minutes of previous meeting  

– Action items  

B. Current Business  

CEO Report  

Senior Manager Report & Engagement (as relevant)  

Standing Resolutions  

– People and Culture  

– Finances and Compliance  

– Strategy and Identity  

C. Other matters that require reporting or resolution  

D. Looking forward  

– Upcoming activities of note  

– Next meeting  

E. Topical strategic discussion over food and drinks (with guests)  

The last aspect of the agenda allows board members and invited guests (or experts) to strategically engage in ‘collective thinking’. This is an important element of making better boards because it achieves two things simultaneously. First, it clarifies the ‘mode’ in which board members contribute. It can be confusing for management when a board member offers advice in a board meeting as operational authority lines can get blurred. In this discussion, board members are clearly offering views that management can accept or reject.  

Second, it overcomes the limitations of board experience and expertise by inviting expert voices into the board conversation. It offers management intelligence and insight to supplement or complement board members’ insights. An important aspect of this is the opportunity to invite other people to participate in key strategy discussions, without requiring the high bar of board membership  

So, what changes are you considering making with your boards?  

We will keep you updated with the changes that we’re making.  

Craig Brown  

donkey wheel storyteller