How To Transform A Board
Generally, it’s not that hard to identify an ineffective board of management. The real challenge is how to transform the board to one that fulfils its duties and responsibilities as governors of the organisation and provides leadership, direction and support to management and staff.
The first requirement is to determine effectiveness and listed below are a few early warning signals that generally point to an ineffective board:
- A poor culture
- No clearly articulated strategic plan
- Inadequate reporting and monitoring systems
- Lack of diversity on the board – age, gender, cultures and capabilities
- Lack of training – no real understanding of what the position of a board member entails
- A short term bias - focusing on the here and now, rather than the future and where the organisation is going
- Factions within the board that have loyalty to the faction over loyalty to the organisation
- Lack of time management – board meetings that ‘waffle on’ for hours and do not make any real decisions
- Being reactive rather than proactive – it’s always easier to react to situation, rather than try to create a preferred state for the future
- Reviewing/rehashing/re doing … speaks for itself
- Unclear accountability between the board and the CEO and management
- A confusion between ends and means – the board should focus the ends, management on the means to get there
- Poor structure – insufficient or inadequate resources to achieve the organisation’s business goals
- Inadequate succession planning and board renewal
- A poor decision-making process, inadequate discussion and analysis
- Reliance on a few, rather than contribution by all
- Low standards of performance – of board members themselves and the CEO and management
- Board – CEO strength imbalance.
The consequences of an ineffective board can range from very poor performance to self-destruction on the organisation, all of which are not the goal of good governance.
So, what can be done to transform an ineffective board?
While it may be relatively easy to recognise an underperforming or ineffective board, it is another matter altogether to resolve these issues. Here are some suggestions that will assist in this process:
- Acknowledge there is a problem in the first place
- Engage an external facilitator to assist the process - this can range from a specific report on the governance of the organisation to a simple facilitation of a strategy workshop that includes a review of the business and the board
- A good Chairman is a good place to start – without a capable leader, the challenges are exacerbated, and without someone to initiate and lead a transformation program, it’s highly unlikely to succeed or even start!
- An induction program for all new board members – agree on mutual expectations at the beginning of the relationship;
- Develop a strategic plan and annual business plan – this will provide a framework for managing the business and a focus for the board
- A performance management system for the organisation, the CEO and management and the board itself
- An annual agenda that plans out the priority areas to be addressed by the board during the year - including the strategic plan, annual budget, risk management plan, CEO review, business review
- Board papers – appropriate information provided on all agenda items that require board input and decisions delivered to board members at least five working days prior to each board meeting;
- A detailed monthly meeting agenda and, unless there are extreme circumstances, only agenda items are discussed at each meeting, no discussion without notice
- Manage the meeting – all members given a chance to contribute but not dominate, then make decisions
- If possible, conduct the meeting at the start of the day rather than after the end of a normal working day – energy levels and brain power are greater at this time of the day
- At the end of each meeting, briefly discuss the effectiveness of the meeting and identify ways to improve the process if necessary
- On an annual basis, undertake a formal board evaluation process that includes a section on board effectiveness. Discuss the outcomes form the review and then develop and adequately resource a plan for improvement.
In summary, like any sickness, you first have to recognise there is a problem before you can start working on the solution. However, given that there is a genuine aspiration by board members to be part of an effective board, there are many ways to enhance performance and improve the contribution the governors can make to the success of the organisation – it just takes application and commitment to achieve good governance.
For further information, go to www.governancetoday.com