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For many private company directors, the concept of board effectiveness can feel elusive. Unlike financial performance, which can be tracked on a balance sheet, measuring whether a board is truly effective requires a more nuanced lens. Dave Garrison, chief navigation officer of Garrison Growth, former chair and CEO of NetCom and author of The Buy-In Advantage, shared his perspective on what effectiveness means, how to measure it and how boards can regain it when it slips.
Defining Board Effectiveness
According to Garrison, effectiveness begins with clarity of purpose. “My experience in serving on nonprofit boards, profit boards, start-up boards and public boards is that each board is as unique as a fingerprint,” says Garrison. “Board effectiveness can only be measured when the board has a clear alignment on its purpose. And I’m not talking about hygiene. I’m talking about SOX compliance or fiduciary duties. All of that is taken as a given. The question is: What is the explicit purpose the board has aligned on and how does each member contribute?
Measuring Effectiveness
While there’s no single performance metric to rely on, Garrison notes engagement is key. “I wish there were a P&L that would just say, here’s board effectiveness. But I look at it and say, what is the engagement level of the individual board members? Are they doing the pre-work? Are they actively participating in the conversations? Are they following up? Are they sharing information that they learn in other aspects of their life with the board members and the company that might be relevant?”
According to Garrison, equally important is the quality of the conversation. “When board discussions are about sharing different points of views and not trying to convince one another, it stimulates new points of view. That, to me, is about the quality of focused conversation.”
Monitoring the Board’s Performance
One practical tool Garrison recommends is a simple question posed at the end of every meeting: How do you rate the effectiveness of this board meeting? “If you’re in a high trust environment, you do it out loud. If not, have them write it down on a piece of paper,” says Garrison. Directors should rate the meeting on a scale of one to 10, and if it’s not a 10, explain what would have made it a 10. This feedback helps boards identify whether meetings are truly a good use of directors’ time.
When Effectiveness Wanes
No board remains consistently effective. Membership changes, competitive pressures and shifting external forces can all diminish performance. When that happens, Garrison advises boards to step back and reanchor. “The opportunity is to ask a couple of key questions. What’s the purpose of this board? How are we contributing? What’s working? What’s not?” says Garrison.
The next step is to align on what success looks like over the next 18 to 24 months. “The board shouldn’t be influencing the results next quarter or the quarter after that, but over a 24-month period, by asking the right questions and helping management think through what to focus on, the board can make a big difference.”
Garrison believes meetings should revolve around focused, forward-looking questions. Rather than spending the bulk of time on updates, he suggests ensuring each meeting includes a pre-identified strategic question, supported by background information, that directors can weigh in on. “If it’s a meeting of updates, we’ve lost a huge opportunity to ask you as a board member to share your experience by the questions you ask about an important issue the company faces.” For private company directors, these lessons are especially relevant. With fewer formal regulatory requirements than their public counterparts, private boards have both the freedom and the responsibility to define their own standards of effectiveness. As Garrison reminds us, effectiveness is not about process for its own sake, but whether directors are contributing to the long-term value of the organization they serve.