In an earlier article, I discussed how important it was to establish an advisory board. Once you have established this board, it is necessary to put steps in place that will maximize the potential of each board member. In a recent article in "Strategy & Business," Paul Kocourek, Christian Burger and Bill Birschard discussed seven steps that you can take to ensure compliance with Sarbanes Oxley. These same steps can be used to energize your board.
The seven steps put forth by the authors are:
- Select the right people.
- Train, train, train.
- Inform and communicate.
- Balance the CEO’s power.
- Establish new behaviors.
- Devote the time.
- Evaluate and improve.
Let’s look at how these steps can be used to energize your board and improve your company’s performance.
Select the Right People
When evaluating candidates for board openings, ask yourself the following questions. Does this person add value? Do they bring the experience and expertise required to be a productive member of the board? A strong board consists of members who have skill sets that complement the CEO and permits him or her to make informed decisions. A board that is experienced provides the CEO with a resource that can be mined on a regular basis. You want a board that brings varying frames of references and experiences to the decision making process.
Train, Train, Train
In order to have an active, energetic board, you need to provide the members with a program of continuous education. They need to be familiar with your products, markets and customers. They need to understand the environment in which your business operates, its laws, your customers and their buying behavior. They should be familiar with the company’s strategic and marketing plans and initiatives. Board members should also be properly oriented so that they can assume their roles in the various board committees.
Inform and Communicate
In their research, the authors found that many board members did not receive the necessary information in sufficient time to properly prepare for the board meeting. Knowing that your board members have other responsibilities, it is imperative that they receive financials and other information in a fashion that permits time for review and analysis. This additional preparation time will provide a higher level of interaction and critical analysis.
Balance the CEO’s Power
When selecting new board members, consider the personalities and how they will play in the board room. The formulation of a multi-year strategic plan lays the groundwork for the critical thinking process that occurs between the board and the CEO. You want challenge that leads to critical thinking, not conflict in the board room. The CEO needs to know that the board will require substantial justification prior to approving major decisions and policy changes.
Establish New Behaviors
When the board is involved in hiring a new CEO, they should look for candidates who value teamwork, desire feedback and who will develop a culture that encourages communication. You want a CEO who will work with your board, seriously consider their counsel and who will process the board’s constructive feedback.
Devote the Time
Be sure the directors have the necessary time to devote to the meetings and to their committee assignments. The various sub-committees of the board, audit, nomination and others support the board with information for the critical decisions they face as they steer the corporation through turbulent waters. Board members need to be available to actively serve on these committees as part of their overall board responsibilities.
Evaluate and Improve
Install an evaluation process that promotes continuous improvement. Both the CEO and the board should be evaluated on a regular basis. In cases where critical expertise is needed but not available, new board members should be identified, recruited and brought onto the board. Members, who no longer make regular contributions should be exited when their tenure is completed. In publicly held corporations, it might be necessary to request a resignation prior to the completion of the board member’s term.
Following these steps should assist in energizing your board and improving the quality and focus of their decisions. A well-trained, informed board will work more effectively with the CEO and provide greater value to the organization.
