Today’s aggressive environments mean boards must consider ways in which they can improve their performance and company outcomes. In doing so, it is important to remember the following:
- Boards can’t run the company (nose in—fingers out)
- Their most important responsibility is to ensure the right CEO is running the company; and
- An effective practice that works for one board might not work for another
All of that said, our experience suggests that the following 5 practices result in better outcomes.
1. Sustain a productive board culture. It’s hard work, but it’s imperative that boards develop and maintain a constructive chemistry—what we refer to as “collegial candor,” to interact in an open, candid and productive way with each other, the CEO and the leadership team.
2. Fostering effective independent-director and CEO interaction. Although not required, the independent directors should meet alone with the CEO, either at breakfast or a dinner, as part of each board meeting to ensure that all issues and concerns are on the table and addressed.
3. Spend time with the management team and get out of the board room. Working with the CEO, ensure there are multiple and ongoing opportunities for directors to interact with members of the management team below the CEO and his or her direct reports. (It’s an opportunity to meet the next generation of leadership and hopefully get a clearer sense of what’s actually taking place within the company).
4. Conduct constructive meetings of the independent directors. Assure there are open, thoughtful and candid meetings among the independent directors as part of every formal board meeting to ensure there aren’t any hidden concerns or unaddressed issues.
5. Maintain a meaningful CEO succession planning process. Since selection of the CEO is the board’s most important responsibility, there must be a robust, well-designed management development and succession planning process in place annually presented to the full board.
There are numerous other factors to consider when improving board engagement and effectiveness. Attention to often-overlooked nuances, such as the quality of communication from the CEO to the board in between formal board meetings, and even the board meeting schedule itself, will help ensure there is adequate and sufficient time to address the company’s strategy and overall implementation. When CEOs and directors take the necessary steps outlined above to ensure a thoughtful approach to working together, higher levels of engagement and performance will result.