Friday 22 September, 2000
Read these strategies that CEOs can apply to assist their
boards to provide effective governance, rather than simply being another
tier of management.
Of utmost importance, encourage your board to develop a written
role description that makes clear their governance job. This should
enunciate the difference between their job and yours.
Persuade them that if it is good enough that you should have standard operating procedures in the form of quality manuals etc, then it is good enough for the board to also document their processes and procedures. These should include policies.
Insist that they make clear the results to be achieved by you and your staff. The emphasis here is on results, not good intentions. Many plans we view describe what the organisation/company plans 'to do' rather than what it plans 'to achieve'. There is a profound difference between these.
Ask your board to make clear the boundaries of freedom, that you have as CEO, to design or choose operational methods to achieve the results, without needing to go back to the board for approval. You should aim for the full delegation allowable.
Having agreed what you are to achieve, and with your boundaries of freedom made explicit, ask the board to be equally explicit about what they want you to report to them at, and between board meetings. CE0s often have to guess what their board wants, or needs to know, and don't always hit the mark. CE0s are then blamed for not keeping the board suitably informed. Certainly the board needs financial results. But in what form and with what additional analysis?
You may need to help them to identify what else they need to know and why, e.g. changes in the operational environment, competitor issues, significant operational matters that have the potential to impact on the board's policies or strategic direction.
Your reporting should link them into their governance role, so it should be targeted to governance requirements, rather than merely reflecting management actions. Reporting about management matters will result in a discussion about management matters. On the other hand, by targeting your reporting to governance matters, the discussion will be a governance discussion, as it should be.
Encourage the board to design a full year agenda. On this agenda should be, for example, specific governance events, cyclical reporting requirements and planned time for risk analysis, strategic thinking, board education, board performance review, CEO remuneration and performance review, shareholder's meetings etc. This encourages the board to think about, and plan its annual business rather than dealing with it on an ad hoc, or meeting-by-meeting basis.
Meeting effectiveness is another area where you might assist. Meetings should be creative, challenging forums where ideas are freely shared and where everyone's contribution is valued. A culture of critical, and analytical thinking, incisive questioning, and openness, allows you to share both good news and bad news, and for both to be regarded as essential components in organisational learning. Intellectual honesty is vital, key discussions should take place in the boardroom not in the corridor, in the toilet during a break, or on the phone before, or after the meeting. You can help set the tone for this kind of boardroom culture by modelling ideal behaviours.
As a final suggestion, you might develop a governance library and encourage your board members to read. A good starting place is Ram Charan's 1998 book, Boards at Work published by Jossey-Bass. This book is comprehensive, up to date, and very accessible.
Persuade them that if it is good enough that you should have standard operating procedures in the form of quality manuals etc, then it is good enough for the board to also document their processes and procedures. These should include policies.
Insist that they make clear the results to be achieved by you and your staff. The emphasis here is on results, not good intentions. Many plans we view describe what the organisation/company plans 'to do' rather than what it plans 'to achieve'. There is a profound difference between these.
Ask your board to make clear the boundaries of freedom, that you have as CEO, to design or choose operational methods to achieve the results, without needing to go back to the board for approval. You should aim for the full delegation allowable.
Having agreed what you are to achieve, and with your boundaries of freedom made explicit, ask the board to be equally explicit about what they want you to report to them at, and between board meetings. CE0s often have to guess what their board wants, or needs to know, and don't always hit the mark. CE0s are then blamed for not keeping the board suitably informed. Certainly the board needs financial results. But in what form and with what additional analysis?
You may need to help them to identify what else they need to know and why, e.g. changes in the operational environment, competitor issues, significant operational matters that have the potential to impact on the board's policies or strategic direction.
Your reporting should link them into their governance role, so it should be targeted to governance requirements, rather than merely reflecting management actions. Reporting about management matters will result in a discussion about management matters. On the other hand, by targeting your reporting to governance matters, the discussion will be a governance discussion, as it should be.
Encourage the board to design a full year agenda. On this agenda should be, for example, specific governance events, cyclical reporting requirements and planned time for risk analysis, strategic thinking, board education, board performance review, CEO remuneration and performance review, shareholder's meetings etc. This encourages the board to think about, and plan its annual business rather than dealing with it on an ad hoc, or meeting-by-meeting basis.
Meeting effectiveness is another area where you might assist. Meetings should be creative, challenging forums where ideas are freely shared and where everyone's contribution is valued. A culture of critical, and analytical thinking, incisive questioning, and openness, allows you to share both good news and bad news, and for both to be regarded as essential components in organisational learning. Intellectual honesty is vital, key discussions should take place in the boardroom not in the corridor, in the toilet during a break, or on the phone before, or after the meeting. You can help set the tone for this kind of boardroom culture by modelling ideal behaviours.
As a final suggestion, you might develop a governance library and encourage your board members to read. A good starting place is Ram Charan's 1998 book, Boards at Work published by Jossey-Bass. This book is comprehensive, up to date, and very accessible.
Source:ceoonline.com
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