Many boards are vague on what board meetings discussions should focus on. I recall a family owned manufacturing company, where the directors met to discuss monthly management reports. A senior member of an accounting firm was chairing these meetings. There were reactive arguments throughout one such meeting (I had the opportunity to observe) which lasted an hour and a half. The chair was dominating the meeting and ultimately making decisions without much contribution from the other directors and executives. They considered these to be board meetings as they comprised of directors and the head of finance.
My point is, there are many such companies who have not evolved to the new reality. The global landscape rapidly changes and boards must prepare more than ever before. Board level discussions and management meetings must have clear distinctions. In this article, I reveal 7 signs of an effective board.
1) Focused on Priorities: The biggest resource that boards must use sparingly is time. Ensuring that the key priorities are centred for preparation, discussion and execution is vital for the success of an organisation. We are aware that the life span of business models is becoming shorter especially with new entrants and disruptive competition. Boards must be prepared for the turning points well ahead to stay in the game. Addressing risk, changes in market behaviour , succession planning, linking strategy to goals and objectives as well as identifying key financial signals are some of the priorities which your organisation need to consider.
2) Clear outcomes and expectations : Boards must be clear with their outcomes. Often, I note that some board members do not have clarity in what the owner’s expectations are. It is worth noting that a half a day immersion session on collective intentions leading to a single clear outcome has proven to be a huge investment for organisations. A clear broader picture will enable boards to specify exactly which aspects need further attention.
3) Policies: It is vital for boards to have a system based approach. Having a set of Policies – which don’t have to be pages long, would serve to be an effective navigational tool. These Policies need to be current and must be revisited frequently to ensure that all new developments are taken into consideration. A model worth looking into is the Policy Governance model®. This model focuses on being outcome driven and elevates the altitude of board discussions. It clearly differentiates between board responsibilities and management functions with clear touch-points, ensuring effectiveness and clarity at all levels.
4) Board Composition: A big drawback that I note many boards have is lacking the right talent. In this digital age, boards can hire board advisors, directors, coaches with much ease. This is becoming common practice for many boards, as they manage to recruit talent that suits their need. New members and board level service providers can bring in fresh perspective which can be highly valuable to the company. The most important question owners of private companies must ask is, how can we leverage growth in our organisation.
5) Continuous learning and developing: To keep progressing, boards must be on top of their game. New skills, increasing bandwidth and building mental capacity have become a constant for board members. Keeping up with technology is vital for board members. Instead of being stuck in past successes, focusing on asking incisive questions will open more opportunities and sharpen intelligence.
6) Board Evaluation: A service company which grew exponentially focused on meaningful evaluations. Establishing what is working and what is not, brings out a point of realisation. Boards must ensure that evaluation is not a tick box exercise but forms a bedrock for making effective decisions. Evaluation should have a set of specific questions which aim to increase overall effectiveness.
7) Monitoring: Boards must have sound oversight mechanisms which have clear and meaningful explanations for the actions taken to translate strategy into results. We have witnessed downfall of large organisations due to negligence. In this age of rapid change, boards must be attentive to all components and not single out a few. This may mean increasing overall board time but is essential for the sustainability of an organisation.
These 7 signs are by no means exhaustive as there are many other elements to an effective board. Boards need to keep progressing by having the right mix and resource for their effectiveness. We must also not forget that the tone at the top reflects what happens to the rest of the organisation. Authenticity and transparency must be maintained at all levels to have overall accountability.
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