Changing the nature of board engagement
Five tips for directors and CEOs striving to make the most of their limited time.
“Ask me for anything,” Napoleon Bonaparte once remarked, “but time.” Board members today also don’t have that luxury. Directors remain under pressure from activist investors and other constituents, regulation is becoming more demanding, and businesses are growing more complex.
- Engaging between meetings. Keeping board members informed also minimizes the background time that slows up regular board meetings.
- Engaging with strategy as it’s forming. Strategy is an area where the diverse experiences and pattern-recognition skills of experienced directors enable them to add significant value. But that’s only possible if they’re participating early in the formation of strategy and stress-testing it along the way, as opposed to reviewing a strategy that’s fully baked by executives
- Engaging on talent. Directors have long assumed responsibility for selecting and replacing CEOs, both in the normal course of business and in “hit by a bus” scenarios. Many also find it useful to track succession and promotion—for example, by holding annual reviews of a company’s top 30 to 50 key executives. But to raise the bar, some boards are moving from simply observing talent to actively cultivating it
- Engaging the field. Another way to enhance board engagement is to assign directors specific operational areas to engage on. Board members can assume roles in specific company initiatives
- Engaging on the tough questions. We noted above the value of probing difficult strategic issues, but the importance of asking uncomfortable questions extends beyond strategy sessions, to a wide range of issues. “You should have some directors—perhaps 20 percent of the board—who know the industry and can challenge any operating executive in that company on industry content
As boards raise and grapple with uncomfortable questions, it’s important to connect the dots between issues—perhaps by tasking one director with serving in an “integrator” role. We get into a boardroom and everybody’s a peer. But having a specific capacity to bring disparate points together is critical to keeping a board functional versus having it be dysfunctional.”