Better Board meeting for a NED

Better Board meeting for a NED

I sit on a board as a nonexecutive director and often feel uncomfortable about the amount of time available to raise questions and debate issues. In addition, I recently worked with a different board on how to add more value to the business. In this role I found myself counseling one of the directors to ask fewer questions and make fewer comments.

How many comments or questions should a board member raise in a board meeting? Before I became a director, I asked board chairs what qualities they most appreciate in a nonexecutive director. One said, “Someone who only makes one comment at each meeting. But it is a really important contribution.” Is this right? Should a nonexecutive expect to make one contribution per meeting, or one contribution per agenda item, or what?

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The advice from the governance gurus is that board members should challenge executives whenever they are concerned, and should continue to challenge until they are satisfied. For example, the Guidance on Board Effectiveness issued by the UK’s Financial Reporting Council states, “An effective board should not necessarily be a comfortable place. Challenge, as well as teamwork, is an essential feature.”

But you can have too much of a good thing. Let’s look at how a typical meeting plays out.

A board meeting usually lasts about four hours, with 10 or so directors attending. Let’s assume that 30 of the 240 minutes are lost to warm-up discussions, breaks, and wrap-up. Let’s further suppose that presentations take up half of the remaining time. That leaves 105 minutes for discussion, challenges, and significant questions.

If each significant question or comment takes an average of five minutes of discussion (some may take 15 minutes, others only two), there is time to discuss 20 issues. This may seem to be quite a lot, but it is only two questions or comments per director. So the chair who advised me to go for one good comment at each meeting was not far from the mark.

Of course, if the meeting lasts the whole day or if the board has only six directors, then three or four comments per person are possible. If presentations take up three-quarters of the time or if comments result in 10-minute discussions, then there is time for each director to initiate only one discussion.

A board meeting usually lasts about four hours, with 10 or so directors attending. Let’s assume that 30 of the 240 minutes are lost to warm-up discussions, breaks, and wrap-up. Let’s further suppose that presentations take up half of the remaining time. That leaves 105 minutes for discussion, challenges, and significant questions.

If each significant question or comment takes an average of five minutes of discussion (some may take 15 minutes, others only two), there is time to discuss 20 issues. This may seem to be quite a lot, but it is only two questions or comments per director. So the chair who advised me to go for one good comment at each meeting was not far from the mark.

Of course, if the meeting lasts the whole day or if the board has only six directors, then three or four comments per person are possible. If presentations take up three-quarters of the time or if comments result in 10-minute discussions, then there is time for each director to initiate only one discussion.

What does this imply for board discussions? Three thoughts:

  • Directors need to be much more disciplined in identifying the one or two challenges or comments that they want to make at each board meeting, and more thoughtful about prolonging discussions initiated by other directors
  • Board papers should be sent out at least four working days in advance to give directors time to read, digest, and prioritize
  • If a director has more than two discussions in mind, the complete list should be submitted to the chair in advance so that they can decide which to address at the meeting and which to address in other ways

Board discussion time is one of the scarcest commodities a company has — often less than 10 hours per year. While making sure the time is used wisely is ultimately the chair’s responsibility, every director should maximize the value that is created from this resource.

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