Board meetings. Love them or hate them, they are a part of every company, non-profit and investor’s life. With one exception (we’ll get to that later), I have loved every board of directors I have been part of whether as CEO or a board member or Chair in good times and bad.
More importantly, I believe there is a strong correlation between the company’s success and how well it integrates the Board and Directors into its functioning. I base this on over 20 boards on which I have been a member over a 20 year period. With only one exception (see the end) the companies (and nonprofits), where there has been the most frequent board member interaction have been the most successful. The entities where interaction has been quarterly and formal only have the highest rates of failure including bankruptcy.download full movie Hacksaw Ridge
So what characterizes a high-functioning board and how does it help make a company successful? Primarily it’s members who:
1.) Know they are all on the same team and do everything they can to ensure the success of the entity. This is all about attitude and knowing it’s not about control, it’s about success. The CEO can set this tone by holding a board dinner at the inception of a new board (or board member) where everyone can get to know each other while breaking a little bread.
2.) Respect and leverage each other’s strengths. For a CEO, a good board is like having 60-80 years of experience sitting around the table with you. WOW right? CEO’s that leverage that, have an unfair advantage because, chances are, board member(s) have seen his exact kind of pain several times before and can offer advice on what works and doesn’t. But there must be frequent communication for board members to be able to offer appropriate advice in a timely fashion. For board members, having informal access to the CEO allows them to float ideas, findings, articles, as soft input knowing that it will be taken on board, but is not a “federal case.”
3.) Communicate frequently formally and informally. This is the most important part. The best CEOs send an informal email board update weekly summarizing successes and where they are lagging and need help. Discussion often ensures by email often with Board members offering specific help. e.g. “Sorry about the sales team bust. I have a great sales VP candidate I can introduce you to. Anyone else got leads?” This turns the board into the company’s uber-team of super problem solvers.
Frequent interaction also means that Board meetings are real working sessions instead of “let me (the CEO) take two hours to catch you up on all the stuff we have been doing because it is a mountain and there are a bunch of issues you need to know about, some of which I am kind of embarrassed about so they might be minimized or at the back of the materials.” You can see this has the potential for trouble with different members of the board reacting differently and the potential for dissent and trouble.
For example, one of my company’s went through an extended period where we could not make a key Ph. D. level technical hire. The board knew the blow-by-blow weekly, and chipped in on advice and helped evaluate candidates and working with consultants to get us as far as we could get. After a year (it just felt like 10), we agreed that if we could not make the hire, we had to lay off staff and move the development to a lab that already had these highly specialized capabilities. Without the board being intimately involved this could have been company ending event, but instead, everyone was engaged in finding a solution together and the company is now ahead of its milestones.
In an opposite example, this CEO refused to hold board meetings more than quarterly and sometimes punted on those. (I came late to this board – its habits were already defined.) Financials were always late and it seemed like the company was doing something different every board meeting. With the previous meeting so long ago (and probably 15 other board meetings in between) you were never sure whether it was your fuzzy memory or the company flailing. You probably guessed it was the latter and when the board finally got to the breaking point and the Spanish Inquisition ensued you can probably guess at the mess that was found. It resulted in bankruptcy and damage to the CEO’s reputation. But while the CEO failed the “Duty of Loyalty”, the Board was also partly to blame (the “Duty of Care”) for not insisting on disciplined monthly board meetings.
(The one exception is a company where I was CEO, and the Chairman / lead investor was bordering on psychotic to the point where I had to threaten a restraining order. Ultimately we recapitalized the company which went on to great success with a high-functioning board. Lesson: if you think an investor or CEO might be nuts, run, don’t walk, the other way.)