helping boards deliver greater value…

A New Approach to Helping Boards Improve Business Effectiveness and Executive Accountability

“In life and business, there are two cardinal sins. The first is to act precipitously without thought, and the second is to not act at all”. - Carl Ichan

Perhaps the most difficult job in business today is that of non-executive director and member of the Board of Directors of a publicly traded company. In this time of great economic uncertainty and business confusion it is easy for a member of the Board to feel like “neither fish nor fowl”. That is to say, while most come from backgrounds of business leadership positions with much experience in making difficult decisions, as members of a board they must act as advisors and coaches, not allowed on the playing field but still held accountable for the score, as well as being responsible for potential illegal acts that they don’t commit. Add to that the public outcry over executive compensation during times of business failure and bailout and it’s the wise individual who will think hard before accepting a Board position. And the current global financial crisis has added a significant challenge to the Board, one in which the solutions are anything but clear and obvious.

And the uncertainty and confusion at board level is beginning to show. According to a recent McKinsey & Co report, less than half of the 186 board members surveyed say their boards have reacted effectively to the global economic turmoil. Not knowing what to do, or how to do it, has kept many boards from being proactive in helping their companies deal with the current mega-crisis.

There are no cut and dried formulas and few black or white choices for boards to follow. There never were, but today’s pace of global business means boards have to respond quicker. The luxury of time to mull it over or decide next quarter is no longer available. So how can the CEO and Chairman guarantee that the board is fully functioning and effective?

Selection has been one of the key routes to building effective boards and will always remain important. But selecting the most experienced players doesn’t mean the team will be effective. Look at the poor record of national sports teams, English football is just one example – the best players from individual teams come together to play for their nation. More often than not the fans are disappointed because their superstars can’t seem to play as a team, and when they get soundly defeated by a third rate country, the poor teamwork is clearly evident. We believe some of the same characteristics happen on the most “stellar” boards – great experience but poor teamwork.

Why should teamwork among the board be important? We are not referring to the elements of teamwork that most people understand – collegial warmth, high spirits and group hugs! The real elements of teamwork that turn a collection of individuals into an effective team are much more hard edged – open and honest dialogue, continuously challenging ideas to arrive at the best solution, pressing each other to deliver their best, not yielding to the easy approach, breaking through deadlock to achieve alignment, understanding each other’s strengths and weaknesses so they can work together effectively. These are the “hard” skills of effective teams and we believe there is work to be done to help boards be even more effective.

When was the last time your board had a teambuilding retreat? If you can’t get them to take the time out for a 2-day board teambuilding event, then you may have some additional problems to think about. But we are convinced one of the reasons most board members would balk at a teambuilding retreat is that most teambuilding tends to follow the HR-based approach, with games, motivational speeches, outdoor challenges and other activities more appropriate for supervisors or middle managers than experienced senior managers. A board-level team alignment retreat is an important commitment and should be handled by those with the skills and the experience of working with senior executives.

If you would like to discuss an approach to helping your board be even more effective and that will pay positive dividends for the company, shareholders, and the board members themselves, talk to a partner at the principia project. We’ve been there.