Making Better Boards – The Best of…
Over the past six weeks, we’ve been blogging on making better boards – here’s a summary of what we’ve been advocating for and experiencing.
One way of board’s adding value, argues Dr. Judith McCormick in the March edition of Company Director, is to ask: ‘What is the organisation’s purpose, why does it exist?’ The strategy behind implementing this purpose ‘should engage the whole board.’
At donkey wheel, this is not a theoretical exercise. Chair Col Duthie and CEO Paul Steele have initiated three focus areas for the donkey wheel board.
1. Is the corporate energy good? Are we taking care of our people? Is the CEO fostering a good culture? Are we working to our strengths? Are you satisfied that this is being looked after?
2. Compliance and finance. This deals with the legalities. Do the financials represent a healthy entity? Are you satisfied that it’s being managed well?
3. Intent and Identity. Are we being true to who we are and what we say we’re going to do? Are you satisfied that this is being attended to?
McCormick’s suggests using the board agenda as a ‘strategic pillar’. We all know boards where regulatory compliance, previous meeting minutes, and the minutes of other sub-committees reporting to the board are ‘ticked off’ at the top of the agenda. What this suggests is that these – necessary – elements are the primary focus of the board. These items can eat into quality time and energy at board meetings.
McCormick doesn’t want your board to ignore these issues, but suggests supplementing them with a ‘single page for the front of every board paper that summarises the vision, purpose, values, strategic pillars and core KPIs’ which is used to ‘calibrate all discussion, decisions and behaviours’. This document becomes a strategic grid used to focus decision making, and then shapes the agenda. It also helps the board determine how much time it focuses on issues critical to the organisation.
The Shape of the Meeting
A significant reform also being trialled is formalising and fleshing out the three standing resolutions articulating the board’s responsibilities:
- Corporate Energy: That the board is individually and collectively satisfied that management is doing all it can (within reason) to cultivate the wellbeing of staff, optimising energy levels and contribution, and is alert to existing or emerging risks.
- Compliance and Finance: 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.
- Intent and Identity: That the board is individually and collectively satisfied that management is prioritising activity that achieves the organisation’s mission (strategy), that the organisation is being true to its 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 to give the board confidence around these three areas.
Another change will be to the way meetings are structured, built on the three pillars of:
- The separation of governance from advice functions, then
- Formalising and simplifying governance – this focuses on the three standing agendas (listed above). The board meeting is divided into two parts, where the first part of the meeting deals with governance issues, and
- Informalising advice. This occurs in second part of the meeting, where board members put on their ‘professional and expertise advice hat’ rather than their ‘governance hat’. This part of the meeting can focus on strategic issues, and invite guests to contribute. It is best done over food and drinks, emphasising the relational aspect of this part of the meeting as against the more transactional nature of the first section.
If you attend board meetings to report to the board – ask yourself: What does the board need to know?
This question isn’t designed to withhold information from the board but, as McCormick suggests, it’s an opportunity to “frame reports around ‘what does the board need to know?’”. This results in board reports that are “succinct, concise and restricted in length.” Reports are tightly focused on what matters to the board during that board meeting.
If you come to these meetings as a board member – consider asking your EO: What keeps you awake at night?
Risk-management systems and templates are now prolific in the boardroom – sometimes to the point of being so comprehensive that they’re impractical to read. This question is an excellent way of cutting down (often well-meaning) length to get to the heart of the risks your organisation is facing. In response, the board can leave meetings with an awareness of how these key risks are being managed. McCormick reminds us that the board’s “good decision-making relies on receiving quality (not quantity) insights and open, honest communication.”
Again, we’re keen to hear your feedback on what’s happening with your board and any changes you’re making.
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