Every board of directors contains a wide variety of attitudes and personalities, and this can translate into dysfunctional patterns. Board meetings can become exhausting with long presentations that oversimplify challenges and boring discussions that veer off topic. Some members go MIA or are passive at best. These qualities, while they may seem straightforward, are actually evidence of larger problems within the board’s structure.
A company’s board of directors represents the interests of all its stakeholders, including shareholders, creditors, debtors, and the organization’s employees. A good board has a united front when advising a company’s executives. An ineffective board goes in circles, never really identifying the true challenges of the organization and avoiding any information that is not flattering.
There are a few key practices that can help you to avoid stagnation and incompetence within your board of directors.
Most commonly, dysfunctional boards consist of directors, investors, or a CEO that do not have the expertise that the board has been enlisted to provide. Loud, unruly members are ironically often the least knowledgeable, and passive members don’t have the confidence necessary for decisive action.
The formation of the board must begin with a solid screening process, using a set criteria agreed upon by the founding members. Do not enlist anyone who does not have the expertise and business demeanor to advise a CEO, even if they are passionate about the mission of the organization. This includes not allowing an inexperienced CEO to join the board – there is no point in a leader that advises themselves on topics in which they lack expertise.
Make sure that the board sets clear policies, including how to manage meetings, how to approach financial analyses, and how to handle emergencies. Policies can also address things like board accountability, board governance, and expectations for each role. These policies will help keep the board and the organization stable in all situations.
The most successful CEOs communicate with their board of directors on a regular basis, such as weekly, biweekly, or monthly. This gives them the opportunity update the board on key metrics and challenges in the organization and typically helps them to get a consensus from the board at the next official board meeting. Additionally, if board members are up-to-date on issues, they can proactively connect with relevant potential clients, partners, or investors between meetings.
The more that the organization’s investors are kept in the loop—perhaps on a weekly or semi-monthly basis—the more they will be able to understand the rises and falls of the organization. Instead of being surprised when a problem has already gone too far, the investors can step in early and provide their own wisdom. They can also use general information to help advise on how to make the company more profitable.
Discuss Issues Instead of Presentations
It is important to keep the focus of board meetings on discussing issues rather than looking at long and potentially boring presentations. People tend to tune out during the slides and have trouble refocusing afterward. Additionally, when members are burdened with preparing a presentation, they can spend too much time on the anticipation of presenting, rather than being informed about all issues discussed in the meeting.
Instead, distribute the information to the members in advance. Then, in the actual meeting, the board can simply discuss relevant points derived from the longer analyses. This typically encourages members who prepare the information to be more forthcoming about unflattering evaluations, such as fiscal health, and encourages other members to actually read and absorb the information they receive.
For more tips about running efficient meetings see: How To Make Your Board Meetings More Productive [link]
Maintain Good Practices
While some qualities of an ineffective board may seem unchangeable, it is possible to curate your team and practices in a way that will transform efficiency. The best way to support these choices is to invest in a proper board management system. Sign up for a 30-day free trial of Board Management [ADD LINK TO TRIAL], and watch your board’s productivity and efficiency skyrocket.