Create Competitive Advantage By Giving Your Board Members Clear Responsibilities

Today’s companies operate in complex and risky environments. To help navigate this increasingly challenging and dynamic climate, many boards are rethinking who should be around the boardroom table and what should be on the agenda. But while the who and the what are good places to start, they are bad places to stop. The real challenges—and opportunities—lie in how the board works together.

In corporate governance, there is a failure to clarify roles and responsibilities. A lack of clarity drives many directors to two very expensive extremes. Some directors over-play their roles, stepping on management’s toes, creating confusion and hampering the company’s ability to execute in response to market opportunity. Other directors fail to fully engage, taking up precious seats at the table that could be filled by someone whose ideas and efforts could really help the company move forward. In addition, the under-engaged director can tacitly support the ill-advised efforts of the over-engaged, or of activist investors who may not have the company’s best interests at heart.

Directors who don’t fully understand the ‘how’ of their board work cost precious time and money as they over or under contribute. Boards who figure this out, who are clear on the how of their work together create significant competitive advantage. CEOs must do three things to help them get there.

“Directors who don’t fully understand the ‘how’ of their board work cost precious time and money as they over or under contribute.”

CEOs must work with their boards to draw a line between what they are expected to do versus what management does. In very large companies, CEOs usually subscribe to the NIFO rule for board participation—Nose In, Fingers Out. For instance, CEOs seek active participation in the development of strategy—ideas, market intel and perspective, but not involvement on execution. CEOs must articulate that distinction.

Small- or early-stage-company CEOs often prefer directors be Nose In, Elbows In, and to roll up their sleeves to fill resource gaps. For example, a small company with a growth strategy that depends on increasing capital may look to its board to make key introductions to targeted clients as well as to potential investors.  The best directors are respectful of their CEOs terrain and truly want to help.  Clarifying responsibilities ensures potential board members can do both.

CEOs must also lead the development of clear and aligned relationships between the players. Leadership teams often utilize responsibility-tracking tools, such as a RACI matrix, so executives know when they are to drive an initiative, advise on it or just stay informed. Boards need the same specificity. There are times when they need to lead, perhaps in a strategy discussion, advise, as in areas where they have particular expertise, or just stay informed when management is driving and board members with more relevant experience or expertise are advising. CEOs should give thought to what methods will work for their boards. Implementing an approach such as the RACI matrix will get directors functioning just as efficiently as the management team.

Finally, CEOs must revisit the line between, and the specifics of, leadership and governance roles as often as needed to respond to change. In today’s fast-paced, dynamic environments, what is required of all the players in the leadership and governance game can change quickly. When the requirements change, they must be discussed openly to reframe expectations and reset role specifics as needed. Management teams need boards to make recommendations and decisions efficiently so they can execute with all due speed. Clear and aligned relationships between the players that are tuned to market conditions will help CEOs create effective and competitive board/management partnerships.

Boards that work seamlessly and quickly with their CEOs and management teams enable their companies to find, evaluate and take advantage of market opportunities. They can do this when they know where the line between what they do and what management does is drawn, and understand specifically how they are to contribute, and are given regular guidance on how their roles must flex and contract in response to change.

The rapid evolution of the how of the work in the boardroom has led to misunderstanding and confusion in many companies. These guidelines create an opportunity for true competitive advantage for the CEO leading clarity in governance.


MORE LIKE THIS

  • Get the CEO Briefing

    Sign up today to get weekly access to the latest issues affecting CEOs in every industry
  • upcoming events

    Roundtable

    Strategic Planning Workshop

    1:00 - 5:00 pm

    Over 70% of Executives Surveyed Agree: Many Strategic Planning Efforts Lack Systematic Approach Tips for Enhancing Your Strategic Planning Process

    Executives expressed frustration with their current strategic planning process. Issues include:

    1. Lack of systematic approach (70%)
    2. Laundry lists without prioritization (68%)
    3. Decisions based on personalities rather than facts and information (65%)

     

    Steve Rutan and Denise Harrison have put together an afternoon workshop that will provide the tools you need to address these concerns.  They have worked with hundreds of executives to develop a systematic approach that will enable your team to make better decisions during strategic planning.  Steve and Denise will walk you through exercises for prioritizing your lists and steps that will reset and reinvigorate your process.  This will be a hands-on workshop that will enable you to think about your business as you use the tools that are being presented.  If you are ready for a Strategic Planning tune-up, select this workshop in your registration form.  The additional fee of $695 will be added to your total.

    To sign up, select this option in your registration form. Additional fee of $695 will be added to your total.

    New York, NY: ​​​Chief Executive's Corporate Citizenship Awards 2017

    Women in Leadership Seminar and Peer Discussion

    2:00 - 5:00 pm

    Female leaders face the same issues all leaders do, but they often face additional challenges too. In this peer session, we will facilitate a discussion of best practices and how to overcome common barriers to help women leaders be more effective within and outside their organizations. 

    Limited space available.

    To sign up, select this option in your registration form. Additional fee of $495 will be added to your total.

    Golf Outing

    10:30 - 5:00 pm
    General’s Retreat at Hermitage Golf Course
    Sponsored by UBS

    General’s Retreat, built in 1986 with architect Gary Roger Baird, has been voted the “Best Golf Course in Nashville” and is a “must play” when visiting the Nashville, Tennessee area. With the beautiful setting along the Cumberland River, golfers of all capabilities will thoroughly enjoy the golf, scenery and hospitality.

    The golf outing fee includes transportation to and from the hotel, greens/cart fees, use of practice facilities, and boxed lunch. The bus will leave the hotel at 10:30 am for a noon shotgun start and return to the hotel after the cocktail reception following the completion of the round.

    To sign up, select this option in your registration form. Additional fee of $295 will be added to your total.