By Les Wallace
While the Vistage community offers support and insight into business and personal growth, your own personal board of directors — advisory or investors — can add a different value to your success.
Boards become highly intimate with your business and its environment and as such become a focused sounding board for strategic decisions. Boards of directors also typically include business people outside your realm of endeavor who bring expertise in strategy, finance, technology or some other dimension that can expand perspective on your specific marketplace.
Finally, boards also become a monthly or quarterly set of business eyes to help you stay focused on the most critical performance, growth, and success factors for your enterprise. As you convene and utilize boards, consider the following governance strategies to maximize value.
- Measure organizational performance with “balanced measures.” Progressive organizations measure customer/client value and employee engagement equally with bottom-line financial results. Tracking customer value allows you to see trends developing early. We know an engaged workforce delivers higher quality and service. Boards that keep a close eye on each of the three categories have a full spectrum view of enterprise performance.
- Create a simple set of dashboard indicators to review at each meeting. Employing balanced measures requires an easy-to-grasp reporting system. Information should be presented as a simple set of indicators on a monthly basis. This report allows board members or advisor groups to quickly scan overall company performance and determine which area they want to help you select for focused effort. The report should contain five to seven indicators for each balanced measure.
- Tie at least seventy-five percent of each agenda to strategic plan objectives. If boards use a “consent agenda” they can accept numerous self-evident updates without wasting valuable time. A consent agenda is a single agenda item that includes standard actions (e.g. bank signature changes), informative correspondence, and general reports to the board that shouldn’t require dialogue (e.g. renovations update, quarterly marketing/advertising plan, updates on corporate investments performance). By accepting the consent agenda the board completes many minor transactions at once, thereby leaving more time for one of the most important functions of governance: strategic thinking and planning. In today’s fast-changing business environment, boards struggle to assure enough strategic change to remain relevant and successful. Investing more of each meeting in strategy discussion enhances a board’s focus, performance and responsiveness in regards to strategic issues.
- Conduct board member development at each meeting. Ongoing growth of board member capabilities is a constant challenge. Limited free time and budgets make travel and professional conference participation for continuing education a rare opportunity. One solution is to conduct a small amount of development at each meeting. For example, boards can read and discuss an article on governance to learn how to be a better board, listen to a presentation by an accountant to improve financial oversight, or invite a customer/client to provide their explanation of your product/service value to promote greater board understanding of your value proposition. These brief investments will contribute to the ongoing growth of governance capabilities.
- Hold a brief “product” or “service” tutorial at each meeting. A ten-minute update on one of your organization’s products or services enables board members to stay current and maintain a “feel” for the texture of the enterprise. This enhanced knowledge also offers the board a chance to interact briefly with managers and program leaders as a means of evaluating the CEO’s management and leadership influence.
- Create rules for board interaction. Seasoned board members are adept at decision-making, interpersonal relationships, and handling differences of opinion and conflict. Boards that define commitment expectations and develop rules for interacting at board meetings and with company officers often function more effectively than before creating these guidelines.
- Job descriptions and commitment to serve signed by each member. Joining a board is frequently fraught with uncertainty about the required time commitment, conflict of interest guidelines, board development commitments, representation and other duties. Just as a job description helps focus an employee’s work, a board member job description helps focus the potential member’s commitment and also discourages those who might consider joining for the wrong reasons. Board members should sign their job description and conflict of interest statement as an additional step to raise awareness of the governance commitments expected.
- Conduct a board self-assessment at least once a year. Progressive boards engage in regular self-assessment. These can be limited or extensive. A limited evaluation might look at the quality of meetings, agenda management or perceptions of individual participation. A comprehensive assessment would cover additional aspects of governance, such as strategy, board makeup, committee structure, and CEO feedback.
- Provide formal CEO feedback twice a year. Many boards fail to evaluate their CEO on a timely basis. Boards should provide direct, formal feedback on their CEO’s performance, twice a year. This discussion keeps expectations and performance calibrated and results in better organizational and board performance. Even advisory boards should pause once a year to give the CEO / owner feedback.
- Plan an annual retreat to revisit organizational values and strategic plans. Progressive boards find time to “retreat” at least once a year, if only for a day, away from the pressures of a typical agenda. Discussion at these retreats allows relaxed exploration of changing business conditions, shifting customer expectations, chronic challenges, expansion and a renewal of focus on strategy for the governance body. Retreats range from one to three days.
Vistage speaker Les Wallace, Ph.D., is president of Signature Resources, an international leadership development and strategy firm. He is co-author of ” “A Legacy of 21st Century Leadership” (2007) and author the Principles of 21st Century Governance (2013). His governance video series, 9MinuteMentor is used by larger organizations for board development. He can be reached at firstname.lastname@example.org.
Originally published: Sep 7, 2011