How should boards respond?
By holding more and longer meetings, perhaps? Whether a well-paid corporate director or a volunteer board member, expanding the amount of time applied to the role seems neither attractive nor likely. Many people are already on too many boards—or at least fully committed with other demands—so this is not a realistic option, beyond a little more stretch at the margin.
Nor is it desirable. Holding longer meetings, or more of them, creates other kinds of problem. Without an uncommon level of discipline, many boards unconsciously use the extra time to expand into the management domain. It is too easy for a board to forget that its role is to ensure the organisation is well managed, without doing the managing itself.
Another concern about longer meetings is concentration span. It is debatable that any group—not least a board of directors, each anxious to attend to other matters competing for their attention—can concentrate on a cognitively demanding agenda beyond 3 or 4 hours.
Another option is to try and push more agenda items into a ‘normal’ length meeting. This is hardly a solution either. By cramming the board agenda, most boards set themselves up to fail. When board meetings become a race against time, even the most important items on the agenda are unlikely to get the attention they need. This deficiency increases as the meeting closure time looms.
When meetings do little more than tick off items on a long agenda, board members leave with a sense of frustration rather than accomplishment. They know that, once again, important conversations about matters central to the board’s responsibilities and the organisation’s success have been cut short or not even begun. Important questions were not only unanswered but unasked. Much of their valuable board ‘face time’ was simply frittered away.
Given new demands, a board really has only one option to make the necessary impact on its organisation. Board members must become more discriminating about what they give their time and, more particularly, their attention to. Robert Greenleaf was onto this challenge more than 40 years ago when he wrote about boards needing to go beyond governance that was nominal at best. He said that for boards to be effective they must learn to practice ‘the art of systematic neglect’.1 For him this was essentially a matter of separating more important matters from those of lesser importance. In modern vernacular this might be expressed as boards needing to avoid ‘sweating the small stuff'.
How might a board do this successfully? Here are five steps we have found to be significant in developing board effectiveness.
1. More focus on what only the board can do
As Peter Drucker reputedly stated: if you want to do something new you have to stop doing something old. When your board’s time and that of management to support the board are fully committed, it will need to stop doing something to find the resources to apply to new obligations or opportunities. Improving efficiency (doing better the things it already does) will go part of the way but attention must be directed to board effectiveness (doing the right things). Most boards will find that that a significant proportion of their time is consumed by matters they need not attend to. These can get the 3-D treatment (ditched, deferred or delegated) or can be dealt with in passing but not substantively.2
In his book Necessary Endings, Henry Cloud focuses on how to end things whose time has passed or which we need to give up to move forward. In addressing this challenge, he uses the metaphor of rose pruning.3 This can be a useful and powerful concept to apply to board work. As any gardener knows, it is not just about removing dead wood. Even strong, healthy branches must be eliminated if they are growing in the wrong place or in the wrong direction. Removing them enables a rose bush to become healthier, better looking and more productive. There will always be agenda content that members consider useful or even desirable but which, if pruned out, will improve board effectiveness.
Gardening manuals can guide even novices to make good cuts because the objectives of the pruning process are well understood and the end-result reasonably easy to describe. Time management manuals have a tougher challenge and tend to focus more on process than the result. Many suggest preparing a ‘to do’ list. For a board, however, it may be easier and more stimulating to produce a ‘stop doing list’. What topics and activities consume the greater part of the board’s valuable meeting time? Which routine things does the board attend to mainly because it always has? What is the board emotionally (or habitually) attached to, that it is time to move off the agenda to make room for something more compelling and valuable?
Warren Buffet, in modern times arguably the world’s most successful investor, is reputed to have said that the difference between successful people and very successful people is that very successful people say ‘no’ to almost everything. Which agenda topics and board activities should your board be saying no to? Do not underestimate how difficult this might be. You must assume that ‘status quo’ bias4 is in play and some board members will resist. However, you will likely be surprised, for example, at how many routine decisions and reports serve little useful purpose when escalated to the board level.
2. By improved policy direction.
Even though a board’s legal responsibility for an organisation’s wellbeing is near total and without pause, most governing boards convene only occasionally. A board, therefore, has no choice but to delegate at least the day-to-day decision making and implementation to others. So, are there are matters the board is attending to directly that could just as easily or better be conducted by delegation?
A board cannot, however, safely delegate any of its own authority without creating a framework within which the delegation can be exercised. A board does this through its policy making function setting out, in essence, what must be achieved and what must be avoided. Few boards go about this activity systematically and with a deep understanding of the power of the policy tool. Even fewer boards are good at the follow-up. Is our existing policy framework coherent, cohesive, and up to date? Do those who must interpret the policy do so reasonably accurately, ensuring the policy intent is being achieved?
3. Better meeting planning and execution
Few boards pay as much attention as they should to their meeting agendas and to the best use of the board’s time within the meeting. Some boards have a standard agenda with general headings that do not change from one meeting to the next. Other boards leave the primary compilation of their meeting agenda to their management team. Such agendas only coincidentally align with what the board might prefer, given the chance to decide.
Rather than conscious design by the current board’s membership, the shape, content and sequence of a board meeting agenda often reflects past practice and the thinking of those who have long since left. Some agendas are no more than a laundry list of topics compiled without regard for the need to make the best possible use of the board’s face time. It is likely that a typical agenda for most boards contains content that no longer serves a directly useful purpose and crowds out more important discussion.
4. Adopting more deliberate and disciplined processes
This applies particularly to strategic thinking and decision making. Something we often observe is that what passes for, and occupies the time of, a board’s strategic dialogue, is quite mindless and unproductive. Strategy is inherently about making choices (this, not that) but what we see boards dressing up as strategy is really only business as usual.5 For example, a decision to deploy a strategy that is ‘customer-centric’ is really only making a virtue of necessity. Something is not a strategic choice unless its opposite is also conceivable. For example, is it equally plausible, to say, in effect, “we are going to have less regard for the preferences of our customers”? If not, then choosing to be customer-centric is a given that need barely be commented on.
Another problem is that boards, generally, are too quick to jump into solution mode. Many people who come to the board table are, by nature and experience, problem solvers. So it’s not a surprise that boardroom conversations can get bogged down, with directors trying to promote their own preferred solution before the board has even agreed on the problem. Pushing back on the would be problem solvers a good first question is: “What is the problem to which that is a solution?”. The next question should be aimed at determining whether it is a problem for the board to solve or really a management problem being passed up to the board6.
A board’s discipline should extend to having very simple criteria for deciding whether to devote time and attention to something. Many boards have found useful the mantra adopted by Team New Zealand in its first successful campaign for the America’s Cup. Every decision was weighed up against the question: ‘Will it make the boat go faster?’ A recent publication points out that the most successful firms are very strict:
Unless an idea creates value for customers, employees, or suppliers, they do not touch it. It might be fun to do. It might be interesting to explore, but it's not going to create the kind of value that ultimately gets translated into financial success.
5. Building a supportive board culture
Finally, it is worth noting that implementing the previous steps requires good teamwork and the kind of culture that supports courageous conversations about what, for example, will be ‘systematically neglected’. A conscious effort is required to build trust and mutual respect among board members and to balance out otherwise dominant egos. A board is a social organism. If members do not, for example, have the chance to get to know each other, challenging old ways of thinking and acting will seldom become part and parcel of the way the board operates.
Notes
(1) Robert K Greenleaf (1977, 19). Servant Leadership. Mahwah, New Jersey, Paulist Press (©1991 by the Robert K Greenleaf Center).
(2) By the use of a ‘consent agenda’ for example, when boards must make decisions for the sake of form, perhaps because of some legal requirement. In such cases, all the resolutions for the different decisions can be bundled into one all-embracing resolution (‘That the board approve recommendations in items 12-17’).
(3) Henry Cloud (2010). Necessary Endings. HarperCollins eBooks (EPub Edition Jan 2011)
(4) Status quo bias is an emotional bias; a preference for the current situation. The current baseline (or status quo) is taken as a reference point, and any change from that baseline is perceived as a loss. Status quo bias should be distinguished from a rational preference for the status quo ante, as when the current state of affairs is objectively superior to the available alternatives, or when imperfect information is a significant problem. A large body of evidence, however, shows that status quo bias frequently affects human decision-making.
(5) Roger Martin (2020).’Is the Opposite of Your Choice Stupid on its Face?’ See here.
(6) William Oncken and Donald L. Wass ‘Management Time: Who's Got the Monkey?’ HBR, 1999.
