The original title of the session Bob Buddig, Sheila Rege and Joe Wilkins participated in at Private Company Governance Summit was “Unboarding: How to Remove an Underperforming Director.” So probably there were attendees who expected stories of unceremonious dispatches, vehement arguments, maybe directors never showing up for meetings or falling asleep in the chair when they did bless the board with their presence … and there was some of that.
But there was also a helpful reminder that the overwhelming majority of directors are there to help and contribute. And usually even the underperforming directors can serve an important role in the future. Most times, they even remain on the list for holiday cards.
Buddig, who is the CEO of Carl Buddig and Company, indeed has had to remove a director for a major violation of the company’s bylaws. (“That was an easy unboarding process: ‘You’re out of here.’”) But he notes that aside from the loss of the company car, these unboardings not only lacked acrimony but also included a reminder to the departing directors of their value to the organization.
“When you’re part of our board, you’re part of the emotional value. So you’re part of our legacy,” says Buddig. “Most of the people who have been part of our board still get the Christmas gifts. They get the swag. Any time we have a major event, they’re invited. Because they’re part of a growth. They may not be contributing as a board member anymore, but they’re part of our history.”
Helping to make the process easy in Buddig’s eyes is the fact that, in his experience, most individuals who have been removed from the family company’s board know that it is their time to move on.
“They usually know they are not contributing at the same level, and it makes it an easy process. We haven’t had any real challenges.”
Rege, who is chair of American College of Radiation Oncology and a director of Mirion Technologies Inc., received the majority of her experience with unboarding while serving as “a nom/gov chair with a mutual property and casualty insurance company.” As part of her role, she identified an individual for the board whom she describes as “the CEO of one of our owner companies that brought in a significant amount of revenue.” However, while the individual was quite the rainmaker, it also became apparent that he was not cut out for board service.
“He was very talented, but his actions intimidated not just fellow board members, but sometimes also management. After identifying this as a problem, we as a board and nom/gov committee initially tried to work through the issue. We were facing some tough problems at that time and even brought in outside consultants to help. We worked through coaching and trying to develop some self-awareness. And fortunately, in that situation, with a lot of very open-ended questions and communication, we talked to the individual about how maybe this is not the right time for us to engage his talents but there may be an opportunity in the future for contributions. We found that after the parting this individual was more helpful outside the board role.”
Rege says the third-party consultants her organization brought in helped in two major ways in the wake of the unboarding: They helped her organization establish formal board and committee evaluation processes, and they aided in having the necessary conversation in a respectful manner that honored the board member’s prior service.
“On my current boards, we invite anybody who served on our board back for some corporate events and employee functions. We do a lot of recognition. When we unboard for term limits, we encourage the person getting off the board to overlap or mentor the next person. And that’s the fabric of any family company or mutual company.”
Joe Wilkins, director of QuidelOrtho and Providence Health & Services, has spent over 40 years in the health care industry and has had several experiences with firing board members who “aren’t fulfilling their duties.” He sees it simply as a process that allows the board to regulate itself and manage its performance collectively.
“Unboarding requires board leadership and a board process. It’s not something that happens every day. You just have to make sure you are doing it with a uniform, systematic approach. Most of us have a good, formal orientation manual process for onboarding board members. We need the same thing on the back end.”
More is required than just documenting a director’s behavior if a group of directors is going to unboard a fellow director: a great deal of courage. And while you must work to make the decision as smooth as possible, sometimes very difficult decisions must be made.
“We all sit next to board members that aren’t getting it done,” says Wilkins. “We see it from their violating trust. We see it from their sharing confidential information. There are sometimes destructive, disruptive board members. They come in with their own agenda. If you’re not careful, they can hurt and undermine a productive CEO/board relationship that we all cherish and work hard to build. We, as board directors, need to make the decision collectively, following a solid process, to ensure unboarding is done with great care and dignity.”