The ability of to oversee and govern your organisation, define its values, mission, and goals, and also create its culture, comes down to your board’s relative strength. Building a strong board is a difficult task for CEOs, board Chairs, and allied board members, but it is more important than ever.
Over the past several years, news reports from around the world have been filled with stories of various financial scandals, including product liability lawsuits, insider trading, internal theft and business failures. While the names of the institutions involved change, and the specific details differ on a few points, the one constant thread in all of these situations is a failure of leadership, an absence of integrity in the culture, and a failure on the part of the board of directors to actively provide direction.
Challenges to Effective Board Governance
One reason why we are seeing more boards that are weak and lack strength is because the challenges that our top institutions face are rapidly changing. In addition to traditional governance and oversight areas such as strategic planning, recruiting top talent, and weighing in on potential mergers and acquisitions, organisations now contend with a host of other more complex issues.
These issues are wide ranging and include dealing with the effects of technological advances that both improve and disrupt the way that we live and work, seeking options for how to succeed despite increased competition from domestic and international rivals, and even how to survive actual battles for control of the direction of the organisation from activist investors.
To meet all of these competing demands, it’s imperative that boards intentionally move from traditional, passive roles and embrace a more dynamic and active approach. The following are four core areas that your board must focus on improving in order to create a stronger and more effective board.
Lead by Example and Start at the Top – The Case for Ambition
If you want a stronger board that is more engaged and directly involved with providing governance and oversight, you must literally start at the top. Boards must appoint Chairs that will push themselves and their fellow board members to take a more active role in investigating the key challenges facing the institution and developing strategies and solutions to these challenges that remain consistent with the organisation’s core values, mission statement and goals.
The Chair sets the tone and the pace for the rest of the board, so ideally boards need Chairs that are ambitious and that will actively seek out new ideas, diverse opinions, multiple options and even contrarian viewpoints in order to find the best direction in which to guide the organisation.
Cooperation, Partnership and Collaboration
One of the greatest challenges to effective board leadership is a lack of trust and mutual respect among its members or between the board and the CEO and other management. In order to have a strong board, the board Chair and CEO need to be able to work together in partnership and cooperation, rather than in competition with one another.
Board Chairs need to able to work with their fellow board members, and their CEO, and each must facilitate more frequent opportunities for communication and more open communication styles.
Boards must do the hard work of taking an active approach to developing relationships with one another, their Chair, and the CEO, so that they are able to more freely discuss all issues that the institution faces and have frank, direct and sometimes even pointed discussions so that they can make better, more fully informed decisions.
Strong bonds enable boards to be able to get to the heart of the matter without fear of causing offense or otherwise stepping on anyone’s toes. In the end, this more active, direct, and dynamic approach helps boards to develop better strategies for dealing with all of the changes and disruptions that are taking place within their organisation and the marketplace.
Dive Deep and Encourage Diverse Ideas and Perspectives
Building strong bonds between the Board Chair, the CEO, and the board members, and facilitating more open communication is just one part of strengthening the strategic capacity of a board. While the board Chair and CEO must cooperate and work in partnership with one another, boards and their Chairs must still maintain their independence from the CEO and other management.
As part of their oversight and governance duties boards and their Chair must actively seek out alternative viewpoints and ensure that they have a full and unobstructed view of all of the issues and details surrounding a specific challenge. Oftentimes this means that boards will need specific training and development in order to be informed and competent in specific areas.
Rather than serving as a rubber stamp for the CEO and management of an organisation, boards and their Chairs must dive deep into issues and challenges and the organisation’s comprehensive strategies. From IT and risk management to digital trends, media, marketing and branding and even the safeguarding of the organisation’s reputation, nearly every performance area of an organisation should come under the oversight of the board.
Make Meetings and Agenda Items Count
Many boards only meet a few times a year, but strong boards make these meetings count by getting actual work accomplished. Board Chairs can strengthen their board and increase its impact and effectiveness by setting an aggressive and ambitious agenda.
Ideally, board meetings should first begin with a short reception that will allow members to mingle, connect and bond with one another before getting down to business. This sets a collegial tone for the rest of the meeting and helps put everyone in the right frame of mind and be more willing to cooperate and work with one another.
Next, the key challenges facing the organisation should become the focal point for the rest of the meeting agenda and should include potential options for strategy and other action items. To keep the board’s morale and momentum moving forward, Chairs should allow strategic thinking and planning to take up the lion’s share of the agenda, and save old business and follow up reports for the end.
As boards become more actively engaged in the governance and oversight of the organisation, they should periodically review their performance, as well as that of their Chair and their CEO, to see how well they are doing at transforming their board and the organisation as a whole.
Setting ambitious goals for organisational change and comparing the results against industry metrics can help boards to evaluate their performance in a more unbiased manner and help them to be able to identify and focus on new areas for improvement.
How active and strong is your organisation’s board and how effective is your board at managing change? Do you know in what areas your board excels and can you identify what areas your board should focus on to improve its effectiveness?
Sonia McDonald is the Chief Executive Officer of LeadershipHQ, a Brisbane, Austriala-based leadership and strategy consultancy. Prior to LHQ, she was in executive management with AHRI and FutureStep/KornFerry (Asia). Sonia was recently named as one of the Top 250 Influential Women Leaders across the globe for 2015. Her writing is read on Linkedin, Richtopia, Business Insider, Women’s Business Media and The Australian. Follow her on Twitter.