On every CEO and senior leaders’ wish list is to work with a great board. The contrast between working with a great board and one that is ordinary is that the former is a pleasure while the other is more of a chore.
The difference plays out in that a great board will definitively outperform the ordinary board in aspects of leadership, overall effectiveness, and direct contribution to their organisation’s success. In addition, a great board can be an inspiration to the CEO and staff. Whilst the ordinary board will tend to be more passive, consumed with operational issues, and overly focussed on the regulatory requirements than being a creator and real contributor to their organisation’s performance and success.
So, what might some of the differences be?
1. A Focus on Leading rather than being Operational
It is a great board that leads their organisation. The board knows what they need to be involved in and what can be left to the CEO and their staff. In other words, there is clarity around what is delegated and what is not. The directors are open to robust but honest conversations and seek to be inspirational, supporting a culture of creativity and innovation.
2. Understanding the Board’s Role and Responsibilities
Boards operate better when there is a well-defined governance structure and clearly articulated roles, responsibilities, and decision-making processes. It is this clarity that facilitates addressing any conflicts that may arise, as well as, possessing a strong sense of its accountabilities.
Everyone benefits because there is a clear understanding of the board’s authority and what is delegated to the CEO and staff.
3. Offer Strategic, rather than Operational Support
Sometimes the difference between strategy and operations is not so clearcut. The better performing boards however seem to intuitively know the difference and gravitate to being more strategic. There are few, if any, occasions when they stray into an organisation’s operational territory, preferring to stay at the oversight or helicopter perspective.
Such boards have every confidence in the CEO and their staff. In turn, the CEO knows not to involve the board in what are essentially the organisation’s operational issues. It truly is a symbiotic relationship.
4. Diversity & Breadth of Expertise
The better performing boards effectively manage succession planning and composition of their skills, experiences, and backgrounds. The board embraces differences and encourages a wide range of perspectives to be put forward in meetings. The board members are supported by a culture of active listening of one another, knowing that directors are keen to share their knowledge and information in a timely manner.
There is a genuine openness for communicating which includes listening to others when they speak to understand and engage in meaningful discussions. Opinions are sought and valued, including going out of the board’s way to access and gain input from a range of strategic stakeholders.
5. Regular Performance Evaluation
A regular board evaluation can contribute to a culture of continuous improvement, fostering a more effective, accountable, and strategically aligned board within an organisation.
Evaluations can assist in identifying potential strengths and weaknesses of the individual board members and the board as a whole and feed into a learning program. The board’s professional growth is better shaped when objectively based on an independent evaluation that encourages continuous learning and professional development among board members.
A heightened sense of individual accountability is created among board members when evaluations are regularly undertaken. This then may foster a strong culture of responsibility. The process encourages directors to be held more accountable for their commitment and regular contributions.
Board Culture
Many suggest that a board is a team. Given that the word board is simply a way to describe a group of individuals, trying to get it to act as a team is futile. The board’s culture is however a different matter.
Ultimately each individual recognises that they assume both an individual role and responsibilities as well as a collective role and responsibilities. This group need to have a high level of respect for one another, a high level of trust and be prepared to engage in robust discourse with one another and the CEO and staff.
Before any decision is reached it should have had an opportunity of running the gauntlet of challenge, strong debate and a forum supporting any individual’s opinion that may shape and bring about the best possible outcome and decision.
Any board’s culture will be influenced by the chair. In fact, at any board meeting the tone and productivity will be heavily impacted by the chair’s role. The board’s culture is not just the preserve of the chair, other factors do play a role:
- CEO relationship with:
- Board Chair
- Board as a Whole
- Individual Directors
- Nature of Information and Board Papers generally
- Openness of Communications
Summary
Most of the following elements are likely to be found in a great board:
- Appropriate Size of Board
- Composition of Recent and Longer Serving Directors
- Good Chair
- Good Blend of Expertise, Diversity & Experience
- Planned Succession Planning
- High Level of Mutual Respect
- Ethical Leadership
- Climate of Trust and Candour
- Culture of Open Dissent
- Commitment to Learning
- Long-Term Value Creation
- Strategic Vision
- Individual Accountability
- Independent Directors
- Effective Communication
The above collectively contributes to an effective stewardship board that is fit for purpose to guide an organisation seeking to achieve optimum performance and sustainability in a dynamic and ever-changing environment.
At Enterprise care we are passionate about helping boards be the best they can be. We’d love to know your views. Please reach out to discuss how we may help you and your board in 2024.
DISCLAIMER: This article is general only in nature and is not advice.
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