28 Oct What are board meetings for?
We see a lot of boards in action. Sometimes it’s an enjoyable and stimulating experience. At other times we find ourselves asking “what was that meeting supposed to have achieved?”. And if we’re thinking that, it may be that other people are wondering the same thing.
There’s a simple question that isn’t asked as often as it should be. “What is this meeting for? What is the purpose of all these experienced – not to say expensive – people sitting around the same table for several hours?”
Are they there primarily for executives to share information with the non-executives? Or for the board to approve executive proposals? Or perhaps to keep the regulator happy? Maybe they are there simply to draw on the experience around the table in order to improve the quality of decision-making.
All have their place, so a balance needs to be struck. But in practice, the last of these is the one that gives the most added value – but that is also the least common. This doesn’t really stack up.
It’s difficult to get the mix right if you don’t have a clear idea of what you’re aiming for. And if you don’t get the mix right then you won’t get the most value from your board. This Bulletin gives you some things to think about.
Good practices to consider…
Ask the board what it thinks. Are our meetings primarily for discussion and debate? Or for the executive to share information? Or to understand and approve the executive plans? Perhaps our meetings take place simply to show our regulator that we have a board? Obviously, any answer will be a balance of all these issues, in addition to other goals as well. But discussion around the sort of balance we want to aim for will open up any differences of opinion about the role of the board.
Things to avoid…
Don’t assume that everyone has the same understanding of what the board is there for. They won’t. (A misaligned expectation of the differing roles of the board and director is one of the most common root causes of problems in boards.) So you need to get this sorted, or at the very least into the open, before you can have a meaningful discussion about what the board meetings are for, let alone how they should be organised.
Good practices to consider…
If you’re the Chair or the Company Secretary, have a plan for each meeting. What are the objectives? What needs to be achieved for everyone to say “that was a good meeting”? And then, at the start of the meeting, make sure everyone knows what those objectives are.
Things to avoid…
Avoid dusting off the template agenda yet again. (“It’s served us well for twenty years, why change it?”) If you have clear objectives for the meeting, plan the meeting to achieve them. If you don’t have clear objectives, a template agenda won’t make up for that.
Good practices to consider…
After each meeting, reflect on how much time was spent in discussion and hearing the opinions from the NEDs. (If you remembered to set out the meeting objectives at the start, you could even ask the board if they were achieved.) At least for a few meetings, ask the Company Secretary to make a note of how time was used. And always, as Chair, ask the Company Secretary how they felt the discussion had gone.
Things to avoid…
Never roll from one meeting to the next without rigorously asking how the discussion flowed in the meeting just gone. In our board reviews, it’s not uncommon to observe 80% or more of the time being taken up by management speaking, although many are surprised when we point this out. If that is genuinely what you need, then so be it. But most of the time this seems to be out of line with the aim of better decision-making through good questioning and debate.
Good practices to consider…
Work with the executive managers to reduce the amount of time they take up in “presentation”. Assuming that the pre-read papers have been read, a 3-minute headline introduction (maximum) should be enough. Of course, this assumes that the pre-read papers are short enough for NEDs to read in the time available, and have been written in such a way that they do actually prepare them for the meeting. (This assumption needs to be validated.)
Things to avoid…
Managers should not kick off with “I’ll take the papers as read” but then merrily carry on by walking through the pages. The Chair needs to stop this, even at the risk of appearing abrupt. The risk of embarrassment will be reduced if the CEO has given firm guidance to his colleagues before the board meeting.
Good practices to consider…
Get to know and form an opinion of the senior management team through allowing enough time for questioning and discussion.
Things to avoid…
Avoid using “we like to hear from the managers” as a reason for allowing a lot of time to be taken up in management presentation. A performance that’s been prepared and rehearsed in advance is likely to provide less insight than one which encourages managers to think on their feet and respond to questions. And in a more freeform discussion, you might get a sense of their real hopes and concerns.
Good practices to consider…
Help management understand the purpose of the meeting. If the aim is to have a good discussion that stimulates the board’s collective wisdom, managers need to know this so they can judge the level of their own involvement, and when and for how long they should be talking. It isn’t just about their moment in the sun, but that’s not always clear to them.
Things to avoid…
Managers should not automatically assume that they occupy the stage and that the board is the audience. Sometimes that’s how it should be; but at other times, the presenter’s role is to facilitate a good discussion that extracts value from the board. If this isn’t made clear, then what can result is that NED questions are answered in a way that closes down – rather than stimulates – discussion.
Good practices to consider…
Avoid slide presentations. A few slides to give structure to the discussion and to help participants understand the flow might be useful, but they must be used with care and discretion.
Things to avoid…
A slide-based presentation must never dominate the case which a manager is making, although the odd two or three slides may be helpful. This is partly because such a “slide-heavy show” just saps up time: we all know that a five-minute slide presentation easily becomes 15 minutes, with severe underestimation of the time required being pretty normal. Furthermore, the audience too easily slips into “receive” mode, rather than remaining alert and engaged… or even switches off altogether. After all, they’ve already read it.
Good practices to consider…
Position the papers to promote discussion. That means using an “overview” or “summary” to highlight the main issues on the paper owner’s mind, alongside the questions that the board might wish to consider. And throughout the paper, shift the emphasis from “this is what the board needs to know” to “these are the issues the board needs to discuss”, supported by the information needed to enable a good discussion.
Things to avoid…
Don’t allow the pre-read papers to dictate the nature of the discussion. Too often we see the nature of the paper (ie information provision) mirrored in management’s approach to the board discussion. Try to break that habit by changing the balance of the paper.
For ideas on papers: click here
Good practices to consider…
As Chair, encourage discussion, drawing in the NEDs and correcting imbalances as the meeting proceeds. And if that sounds as if we’re simply repeating a basic rule of good chairing… that’s because this is exactly what we are doing.
Things to avoid…
Don’t become so focussed on getting through the agenda that it’s the time of the Board’s discussion that gets cut, rather than that of the management.
Good practices to consider…
Work out an agenda structure that encourages discussion. That might mean getting the procedural formalities quickly out of the way up front or, alternatively, keeping them out of the way until the end. Either way, what’s needed is for the more strategic, more interesting and more demanding issues to be up front and centre. That way, the items meriting discussion, and benefiting from NED input, come when everybody is still relatively fresh and engaged. If it works well, that also gives good momentum for the rest of the agenda.
Things to avoid…
NED involvement should not commence 45 minutes or more into the meeting. We often see meetings where there is no need for the NEDs to participate until well into the agenda. By that time, a tone will have been set which will require extra effort to rebalance. Of course, one possibility would be to take an idea from long-distance flights and give NEDs the option of wearing stickers that say “Please wake me for meals – and interesting agenda items”. But restructuring the agenda to keep them engaged from the beginning is probably a better option.
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