“Boards are not comfortable places and they shouldn’t be. The two key qualities of a Board Director are courage and integrity.” – Ian White
Comply and explain, monitor and improve. Ian White shared his experiences of Board reviews, from FTSE100 to smaller charities in WCoMC ‘s latest My Most Interesting... webinar.
My own two guiding principles for organisational governance have always been ‘challenge and support’ whether as a school governor, charity trustee or in a regulatory role. Providing either challenge or support, to fellow board members or exec/ops, requires robust and evidenced argument and may come with a healthy side helping of discomfort. After all, if everyone thinks the same, perhaps no one is thinking very much.
“The high performance board, like the high performance team, is competent, co-ordinated, collegial, and focused on an unambiguous goal. Such entities do not simply evolve; they must be constructed to an exacting blueprint.”
For some time we’ve known that diversity is important on boards but it’s not just ‘visible characteristics’. Diversity of thinking (cognitive), background and experience are just as critical to avoid missing perspectives.
So what makes up an effective board review?
- A clear mandate and scope - the review must be owned by the Chair
- Questionnaires to gather initial data
- Background research on the directors (beyond their PR profile)
- Interviews (all confidential and unattributed) - with directors, advisers, stakeholders and employees (breadth and detail)
- Reviewing the Board’s papers
- Observe the meeting (are people paying attention or doing their email; what’s the culture)
- Write the report - which must be independent, objective and diplomatic (the art of phrasing matters here)
Expertise in a board role is important but so is an outside view. Dynamics and culture matter as does the boards attitude to risk - important if the organisation is to develop and grow and achieve and not just play safe and stagnate. More diverse boards make more effective decisions.
Ian highlighted common themes and observations from his experience of reviews – lack of challenge by board members, too much data and not enough info, meeting overload, understanding (or lack) of business/sector, exec vs non-exec (them and us), skills, lack of succession, lack of diversity. And time commitment- how much do you really need when it hits the fan?
And a big question - The chair’s role is to construct and manage the board but who holds the chair accountable to that?
And significantly, what are the three elements of an effective board?
1. Set the right tone
2. Ask what if questions
3. Understand the business model, risks and strategy
So to recommendations: Boards need to do more scenario planning and scenario testing, should focus more attention on the key risks (the key things that would shut us down) and balance risk against uncertainty and visibility against strategic distance (don’t get lost in the detail). And they should take heed of reviews.
Is your board in need of a review - the answer is probably yes. Just use the findings wisely.
References:
- Nadler, Building Better Boards - https://hbr.org/2004/05/building-better-boards
- Ian White, Why NEDs Need Courage and Integrity - https://www.ianrobertwhite.co.uk/why-non-executive-directors-need-courage-and-integrity-but-shouldnt-hedge-popularity/