Mechanisms for an Effective Board: Part One
After answering the question posed in my previous article: “what is the purpose of your board” it’s time to translate that vision across four interdependent mechanisms that – when optimised towards your purpose – will lead your board to effectiveness, which is the foundation of high-performance.
This article discusses the first two of four mechanisms of board effectiveness (to borrow from Cossin’s framework of High Performance Boards)1: People (quality, focus, and dedication), and Information Architecture2.
People (quality, focus, and dedication)
Naturally, people quality refers to board members’ expertise and competence. We all show up to the boardroom with our own unique mix of skills and abilities. The kicker is making sure that ours and others’ expertise and competencies are value-adding to the board and organisation.
Achieving this outcome – where the board’s value is greater than the sum of its parts – starts with a simple skills map or skills matrix. But don’t just consider professional experience when mapping your board members’ expertise; expand your skills map to include personal attributes and traits, such as communication style, leadership potential, ethics, and the individual’s network. And, since boardroom diversity – gender, personality, industry, professional background, culture, opinion – can enhance a board’s effectiveness, consider adding diversity attributes to your skills map/audit.
What competencies, expertise, and other attributes do you include on your skills map / matrix? Well, that is a conversation for your board to have (probably starting at your nominations or governance committee before being presented to the board). It relies on the board being clear of its purpose within the organisation, and what the board and organisation will be focusing on and facing over the short-term future (always with a consideration of long-term implications).
Having the ‘right’ people is not enough to guarantee success. The next decision that your board must make is deciding what matters most and making sure the board’s time and energy is concentrated on those issues. The board must define (and redefine) its role to help set their priorities. This picture will help guide the board’s work for the next 1-3 years.
Naturally, a board must always maintain focus on their governance oversight role. In addition to this, a board can vary in its engagement / involvement with management. Nadler3 ranks board involvement across a spectrum from least involved to most involved, detailing five board models based on the required and desired level of involvement: the passive board, the certifying board, the engaged board, the intervening board, and the operating board. Cossin also advises boards to be conscious of the context in which they are operating and understand how that impacts and influences the role the board should perform (i.e., their level of involvement).
Genuine passion, energy, dedication, and motivation (beyond financial or social rewards of board service) are priceless attributes of the best board members and will enable the board to focus on the right things. These board members go the extra mile when preparing for board meetings, often spending up to 17x more time per hour of meeting time in preparation (including, reading the official meeting papers, seeking external information via social media and news outlets, talking with other board members or relevant professionals, and spending time reflecting on the information received)4.
Information Architecture
For the board to produce high-quality decisions that enable the board members to maintain its desired focus, it needs to receive the right information at the right time in the right format. Too little or too much information can both keep the board in the dark (and in trouble).
Having sophisticated information architecture supports the board in effectively and efficiently producing high-quality decisions.
Ideally, the board’s information architecture is designed around the board receiving information from internal and external sources, via formal and informal channels, and containing a blend of lead and lag indicators. Boards are usually well versed in internally produced, formal information; however, self-discovered external information via informal channels largely remains ignored or forgotten about.
External issues to be considered include:
- Reputation analysis
- Competitive landscape trends
- Customer knowledge
- Understanding of shareholders
- Technology evolution
- Legislative / Regulatory changes
Informal information channels include:
- Access to employee and stakeholder networks (appropriately managed)
- Communication between fellow board members (appropriately managed)
- Connections with management via BBQs, coffee meetings, and phone calls
- Independent information sources: Social media channels, market information, news outlets, employee review websites {for example, Seek Company Reviews}, industry newsletters.
Since you have worked hard to populate your board with high quality and dedicated board members, much of the informal and external information sourcing and sharing is self-directed by individual board members and encouraged as part of the board’s culture. The board has taken the time to ask itself “what conversations do we want to have?” and then gets to work to create the information architecture to support the answer to that question. Board packs are crafted with focus, prioritising what matters most for the board. The board takes the lead in the process, with management supporting.
The path to an effective board is simple, but not easy. You’re beginning to see that board effectiveness requires intention and effort. The hard work you do now as a group will place you in a position to capitalise on this effort. As you begin to master these two mechanisms there is more work to do. Next, we will look at Structures and Processes, and Group Dynamics and Board Culture.