Boards involve an extraordinary set of complex business, management and human capital issues, particularly for public companies. If you have a seat at the board table, now is a perfect time to take steps towards positively impacting the effectiveness of your board, beyond regulation and compliance.
Following are seven questions I ask the boards I work with, and I invite you to take these questions to your board and to have the discussion that goes with answering them thoughtfully, regardless of how difficult it might be. This conversation is the perfect first step towards having a great board.
1. Is there anything your board does that you can label as self-imposed limitation(s) as result of having procrastinated on a key decision or simply not having known how to define a process that works?
Might you have accepted the sales forecast as presented to you, assured that there were no concerns while there have been indications that growth is stagnant?
Might you have been too complacent about a management change or not been transparent with the CEO about concerns that you have? Do you have the right management in place to execute on the current strategy at this stage of the organization? Are you assuming that every one at the board table and on the management team are skilled to tackle this execution phase?
Executive compensation diligence review and CEO succession planning are too often procrastinated. What gets in the way of getting it done?
2. Are you able to call on each other decisions that are truly not in the best interest of the organization and its management?
More than ever, boards are invited to engage in strategy. Is your board align on strategy and capable to make the right decisions? If you are not clear on the strategy, do you understand your shortcomings and how it affects yours and the management team effectiveness?
Is one of the board member or most of the board pressuring management to go forward with a product launch or an announcement to accelerate momentum while cognizant that customer satisfaction is at risk?
While calling each other on how to best address “the street,” the analysts, is your approach offering solutions to empower management, as opposed to unduly stretching their potential?
3. Do you paralyze when confronted with liability issues?
I don’t know one board, one CEO, one management team with its CFO and legal counsel that has enjoyed dealing with liability issues. Most are humbled by the incredible challenges they create– the torments and the frustrations. While confronted with these issues, do you have a process for external and internal communication to pro-actively address the issues? Do you react to the events and their twists? How do you contain with integrity? Is there confusion within the board? If not, are the board and management in alignment on what must be?
Often, boards are learning as they go. Do you have the right team of advisors who are augmenting your bandwidth under the circumstances?
4. Are you sustaining a culture of integrity? Are you ignoring some compliance, afraid of the daunting task of pro-actively dealing with the issue?
Are you aware of improper behavior or breach of ethics and in denial in about addressing the matter? Why? What and who is in the way? Who on your board is the gate keeper for ethics and behavior– the soul of your board?
5. Are you breaching your trust with the CEO by going directly to management? Is your approach thought out? If you are disappointed in the CEO, how do you thoughtfully and conscientiously determine how to optimally deal with the issue?
Is the board fully aware of the communication and action boundaries with management? Is management fully aware of the communication and action boundaries with the board? Is the board cognizant of the actions that can tarnish the trust in the CEO by developing an inappropriate direct relationship with his and her direct reports? Are you clear, and is management clear, about the level of interaction and communication that is appropriate between the board and management? Do the independent directors and the CEO have the maturity to be transparent on respective leadership effectiveness?
6. Do you have a clear process to deal with crisis, or does your lack thereof create additional organizational and board challenges?
While there is a lot of talent at the board table, there are many egos, many different views. What you see is not necessarily how another views things. To which level are you all diligent and agreeing to be vigilent?
7. Are you fully engaged in your role to empower or to disrupt and possibly manipulate?
As a director, you might no longer be active in an operating role. It is not easy for high achievers to be retired or to no longer be in charge of an organization. It is not uncommon for directors to use their board role as an opportunity to define themselves. In doing so, it is not atypical for a board member to micro-manage a CEO or bring the worst of the leadership of a CEO and/or of the management team as a result of needing power.
Boards don’t need corporate governance and compliance policies to address some important fundamentals of doing the right thing in the board room. Boards need strong leadership, transparent communication and the courage to objectively examine behavior and dynamics that optimize their ability to be well governed.