Making board meetings productive is a challenge at or near the top of every CEO’s priority list. This holds for all senior executives, whether they lead non-profits, small, privately held companies, or large, public companies. (Wouldn’t you love to be a fly on the wall at GM board meetings these days?) An interesting discussion thread on ExpertCEO addresses these topics. The original thread is excerpted below:
Lyle Lovett has a line in a song: “She wasn’t good, but she had good intentions.” With two funding rounds, my board consists of VCs and an outside director. Most have a tendency to get micro-focused (for example, it’s not uncommon for them to focus on a sub-topic like lead generation.).
I attribute this behavior partially to natural early-stage investor focus … but it is also due to the junior nature of some of the directors. Plus, all too often their focus on managing their investment overshadows their broader responsibility as a director.
As we are beginning to scale our business, I want the board dialogue to elevate as well. I’m looking for ideas on how to invoke and/or manage this desired change.
I have an opportunity to add a second outside director, and I want to select someone who can help elevate the discussion.
There are a number of topics covered in this post, several of which are blog-worthy in and of themselves. For now, I want to focus on one issue that seems to be of concern of many, if not most, CEOs: finding the proper balance in board meetings between operational issues and strategic issues.
I’ve experienced this challenge as a CEO, as an investor, and as an independent director. Note that I carefully used the word balance. It’s not realistic to think that board meetings won’t get into any operational details, especially if the results for the month or quarter aren’t meeting expectations. By the same token, it’s important to expect that the board should be able to step back and focus primarily on big issues and not try to micromanage the CEO or run the company.
One concrete suggestion was made by a CEO who has established written ground rules for his board that address a) their preparation for meetings; b) the quality and relevance of contributions during the meeting; and c) their ability to remain concise, objective, and constructive when commenting on the CEO’s efforts to date. And he has created a feedback mechanism – a 1-page evaluation that is completed at the end of each board meeting by all of the directors for each director.
Another comment, posted by a successful former CEO and current VC identifies the best board meetings, meaning value to the CEO and the company, as those that focus on strategic issues first, governance second, and operational details third. He goes on to state that several of the boards he’s on set aside a strategic topic or two as the main agenda item. Operational metrics are provided for review, but are not formally presented. Instead, there is a short session allotted for directors to ask any questions they may have related to the operational metrics. This method matches the oversight process with the philosophy that boards are supposed to govern and guide the long-term direction of the company, not run the business.
Almost all the participants in this discussion agree that having one or two well-qualified current or former CEOs on your board is critical to balance the financial focus that VCs and other investors offer. These individuals provide operational and company-scaling wisdom that can also help you predict what’s around the next corner.
My own observations, having attended, led or participated in hundreds of board meetings:
a. If performance is bad, it will not be a positive board meeting – no matter what else is on the agenda. Directors will want to drill down into the minutia of operations, compensation, individual customers, lead generation statistics, etc.
b. Conversely, if performance is great, the board meeting can be conducted on a higher plane dealing with strategic issues. Bring the issues to them for input, and be clear about how they can best assist as plans are formulated.
c. The role of the independent director in smaller, venture-backed companies is important, whether counseling the CEO or bridging communication between the investors and the operating executive. Key decisions on fund-raising and acquisitions, however, tend to be governed by shareholder agreements, not director votes.
Finally, IMHO, the number one thing a CEO can do to improve board meetings happens BETWEEN meetings. CEOs must have frequent and open communication with the board–brief weekly emails detailing the status of important items at the company; immediate communication with the board about important issues and problems that arise in the company; periodic updates when good things happen; and minimal censorship of management team presentations (except for length). If the board feels well-informed–that the CEO is timely, open and honest with company status–they are likely more willing to feel comfortable thinking about the big picture.