Board Transformation Part I
Over time boards have transitioned from ceremonial and passive to active and free thinking. This has created increased strength and performance in the board room. But one thing is missing; how to become and maintain high levels of strategic thought in the board room even when bogged down by increasing regulatory requirements and fiduciary responsibilities. This progressive board complies meticulously with the letter of the law but also embraces its spirit. They realize compliance is a necessity but not a competitive advantage. High-performing boards keep their eye on compliance while focusing on issues critical to the health and future of the organization. High-performing boards put strategic thought and application above all else.
When the creation, monitoring and the support of a strategic plan becomes second to the monthly grind of meeting logistics you see increased micromanagement and lack of clarity on institutional goals. This can lead to disjointed communication with the management team and leave them confused and unsure on their role in the strategic roadmap of the institution. The building blocks for a progressive board are strong Board Dynamics and committed Strategic Focus.
The atmosphere, productivity and director’s interaction within the walls of your board room are behavioral constructs called Board Dynamics and they have become a leading indicator to the successful governance and performance of an institution. What happens, and the manner in which it happens, has a huge impact on the decisions that get made. Focusing on your self-developed expectations and rules of engagement (that should have a solid platform within your board succession plan) the Board of Directors will become an increasingly powerful and high performing governing body. When expectations and rules of engagement are the foundation, the Board Evaluation process is the intelligence gathered for honing your board for optimum performance and ever increasing enterprise value long into the future.
When I am doing board evaluation and development work with directors one of their biggest complaints is lack of time for strategic discussion in the board room. Most boards use up their meeting time listening to last month’s results, dissected in unnecessarily minute detail with very little focus on the future. They never get to the heart of the matter – where are they at with their strategic goals and thus the desired profitability of the institution. Too often discussions of important matters such as strategy, succession and external trends are squeezed out leaving directors and CEOs dissatisfied and opportunities to contribute unfulfilled. As boards build skills sets on “how” to be – they also need to be working on skill sets on “what” to be applying it to. Focus on the substantial strategic issues. Focus on the drivers of value and performance. Focus on what is needed to get there.
High Performing institutions have high performing boards. It is up to you to initiate and aid that transition from good to great. Board Transformation Part II will examine the connection between strong Board Dynamics and committed Strategic Focus. Further, how to apply that connection to maximize the strength and productivity of your board meetings.