Optimize performance of both directors and the board as a whole.
The recipe for an effective board has 10 key ingredients. Five of these ingredients are for individual directors and five are for the board as a whole.
As businesses and their boards strive to get better, many insights have been shared among the board director community, including in the pages of Private Company Director. There has been much written about board best practices across a wide range of topics, such as how to deal with ESG, techniques for conflict resolution and director performance evaluations. A well-run board needs individual, self-motivated board members contributing at their highest level. Those board members also need a superior structure in which to integrate their work for the good of the whole. One cannot succeed without the other, so if you consider these 10 factors you will have a peak-performing, thriving board of directors.
Ingredients for director effectiveness
Engaged directors. Peak-performing boards need directors with relevant experience and targeted expertise to contribute to a company at a specific time leading forward into the future. The board team requires a specific, intentional assembly of complementary individual board members who hold each other to high standards and who are deeply engaged in their governance role.
Preparation. Directors must prepare diligently for their committee work, board meetings and any special assignments. There is nothing worse than a director who does not carry their weight because they have not put in the work to understand the background of a key topic or the options for a major decision. This preparation includes doing extra research, not just reading the materials provided.
Listening skills. Fully understand the situation and all points of view during board discussions. It doesn’t matter if the person speaking is a fellow director or a member of management.
Curiosity and critical thinking. Open-minded, solutions-based thinking will help you find answers and alternatives on any topic. Use “Why” and “What” questions to stimulate the thinking of both yourself and the board: “Why would we do that?” “What alternatives have we considered?”
A positive mindset. Deliver questions, comments and points of view with positivity and a focus on solutions. This allows others to listen and consider your insights more fully, since they know you care for the business and all its stakeholders.
Ingredients for board effectiveness
Leadership. Board chairs must be on top of their game. The chair must lead by example, be effective in assembling the right directors and guide discussions to consider all points of view for the best results.
Knowledge of purpose. Leaders must create a clear, unifying board ethos. This ethos must incorporate an expectation of high performance as well as a board team effort characterized by constructive debate and collaboration. Unfortunately, many boards have plenty of operating documentation with no real ethos.
Preparation. Establish information symmetry on critical matters. While there is no way directors can know everything, board members must be up to speed on all relevant information related to the most critical topics under consideration. This is vital, since the best boards have a keen emphasis on preparation, curiosity and critical thinking. Board discussions should focus on the right information, analyses, questions and facts on the ground related to key issues.
Trust and transparency. A productive and transparent board/CEO relationship is a must. The best dynamic is characterized by a confident CEO who sees the board as a strategic asset, not a requisite oversight group. In this environment, the board can engage with directness, clarity and idea-sharing without overstepping real or perceived bounds.
Talent management. Optimal boards are composed of a team of complementary, well-selected board members who fully embrace your board ethos and commit to working each day on behalf of the business as evidenced by mindshare, heartshare and timeshare. Make sure they feel valued and heard.