Benefiting from a board member’s expertise and contacts means asking the right questions.
Most independent private company board members bring more than just proven business acumen. They also have their reputations, their contacts, and a history of being in the trenches to improve companies. What are the best ways for private companies to leverage all that their board members bring to the table? In preparation for a feature on this topic in the upcoming edition of Private Company Director, we talked with W. Steve Albrecht, who serves on the board of the privately held Larry H. Miller Group of Companies as well as SkyWest Airlines (NASDAQ). We discussed how his boards leverage his contacts, what matters he wishes he were asked to weigh in on, and the frequent questions he’s asked that might not be the best use of his expertise.
As a board member, you have a wealth of contacts that can be beneficial to the companies you serve. In general, how well do these companies do at leveraging those contacts or your expertise in general? How do you believe they could do a better job? Are there ways that you feel you could do a better job of communicating your expertise?
The companies I serve do a great job of leveraging the contacts I have. We have used investment bankers I’ve recommended, outside legal counsel, CPA firms, search firms and friends in other similar businesses (for best-practice management) — and we’ve made acquisitions of companies I was familiar with. The companies have hired CEOs that I’ve recommended, many of whom I met because of my work on other boards.
As an example, I serve on an airline board. Many years ago, we met with a major airline partner annually for a joint meeting. In that setting, I met the COO of the partner airline who, after that airline merged with another airline and he was the odd man out, became CEO of a software firm where I served as a board member. Because of his computer science background and his ability as a leader, he led the company extremely successfully until we sold it for $35 billion.
Having served on 12 boards, I’ve also seen situations where CEOs didn’t leverage their boards for the resources they could have. Therefore, they missed out on opportunities to benefit from the board’s knowledge. The major responsibilities of board members are to provide oversight for the owners, to deliver advisory services to management and to help make the CEO and management team as successful as possible. To that end, one of the best things a management team can do is ask each board member to provide a list of contacts and resources that they would recommend for different scenarios. They can then compile that into a list with which all members of the board and management are familiar. Then, when help is needed, the list can be discussed and the appropriate resource tapped.
What types of questions do you wish you were asked by the companies you serve that you are not often asked to address?
Too often, board meetings have long presentations and not enough time for discussion. A firm’s board is a resource, and it should be assumed that all board members have read and studied the materials prior to board meetings. One of my boards provides a list of questions at the end of every deck that they would like the board members to think about before the meeting. Then, in the meeting, after a short presentation, we focus on those questions. It makes for a great discussion and a productive meeting.
I also think that CEOs should call every board member between meetings and discuss what’s on each of their minds concerning the company, including what the board member believes are the biggest issues and risks facing the company and what issues should be covered in the next board meeting. A good board has frequent dialogue with management outside of board meetings. Another thing that has been extremely helpful to me as a board member has been to go to each board meeting a day early and interview people two to three levels down in the organization. Since I am an audit committee chair and financial expert, I have found it extremely helpful to interview controllers, internal audit staff, accountants and finance people, IT staff and more. Not only do they appreciate me spending time with them and gaining their perspective, but I learn what their concerns are and what questions I should be asking in board meetings.
What types of questions are you asked, and what matters are you asked to weigh in on, that you feel are not the best use of your expertise?
Board members should be assertive enough to be able to say to a CEO or a CFO, “That is not my expertise, so I’m not sure I’m the right person to ask. I suggest you talk to ‘so-and-so’ about that.” Having said that, it is every board member’s responsibility to become familiar with as many aspects of the company as possible. For example, while I am the designated financial expert on all my boards, I have tried very hard to understand the intricacies of the software and technology companies whose boards I’ve served on. There is no excuse for a board member to not try to be the best-read and best-prepared member on the board. While we all have different areas of expertise, we should do everything possible to elevate the discussion in the room, no matter the topic being considered. A board member shouldn’t be overzealous or obnoxious, but he or she should always be contributing.
Make sure to check out the upcoming edition of Private Company Director to learn more on this topic. Also, be on the lookout for details about the 2022 Private Company Governance Summit, June 15-17 in Washington, D.C., where we will focus not only on the topic of effectively leveraging your board’s contacts and experience, but also on how to remain an effective board member, onboarding new directors, and more.