Someone on LinkedIn said, “Good governance is like keeping the train on track.” I like that analogy as it runs parallel to the description of the CEO who ‘keeps the trains running on time.’
You need both good direction and good execution.
You also need the third phase of the board’s work – monitoring progress.
It may have been John and Miriam Carver who described the work of the board as:
In over twenty years working with boards and serving on boards, I find it’s the third step that gets dropped most often. This Winston Churchill quote says it well:
“However beautiful the strategy, you should occasionally look at the results.”
Why is looking at the results such a challenge?
Maybe it’s because evaluating the progress of not-for-profits (NFPs) lacks the clarity of stock price, shareholder value, and return on capital metrics monitored by many in the...
This edition of The Savvy Director is inspired by feedback from one of our readers about the maturity lifecycle of boards. As this reader pointed out, “It’s important that directors understand the maturity of their organization, where they fit on the maturity scale, and where the board aspires to be.”
These comments got me thinking about governance models. We all need to appreciate the range of governance models from the hands-on working board to the hands-off policy governance model, and a variety of permutations in between.
The good news is the models can all work well. The key to success is knowing which type of governance your board has adopted and the expectations for your role that arise from that model.
An organization with few staff, or no staff at all, may start off with an operational working board, and then evolve its model to more of a strategic board complete with board committees and support staff as funding permits.
During this evolution process,...
Ensuring that the annual operating budget is aligned with the strategic plan was one of my greatest takeaways when I was enduring ‘audit committee weekend’ as part of the corporate director certification program. LoL!
I learned that many of the best questions for management come from non-financial people like me around the board table. Why would that be?
While I believe the audit partners teaching that program module wanted to get the non-financial people excited about being on finance and audit committees, they were also making the key point that today’s era of compliance and regulation causes professional accountants and financial experts on the board to focus on those priorities first.
The question of whether or not sufficient funds had been allocated to strategic priorities was considered to be the kind of intuitive question that a non-financial director might ask. And that lit me up. I had a role and a reason to make an effective contribution.
What are the...
I’m happy to welcome back Alice Sayant as today’s guest blogger. Alice is a certified corporate director (ICD.D) and co-founder of DirectorPrep.com.
The boards that I serve on conduct regular board self evaluations. They often use confidential online surveys for this purpose, since they are a convenient tool for obtaining input from each director on the board. Analyzing the data obtained from this kind of survey can serve as a foundation for continuous improvement at the board table.
Without exception, every board – no matter how effective in other ways - has scored poorly on the following survey question: “I receive adequate feedback about my contribution to the board.” For whatever reason, it seems that boards are just not very good at giving feedback to individual directors. Maybe it’s because no one has been tasked with that function. Or maybe it’s just a reflection of the natural...
“How is it you would rather find the time to rewrite an ‘F’ grade paper for a better mark than to invest the right amount of time in the first place?” This comment was made by one of my university profs. A truer observation would be hard to find.
There is real power in preparing. Preparation is like prevention -- it reduces the potential for failure and the costs that go with it.
Where am I going with this? I’m glad you asked.
Preparation is the savvy director’s key to success in the boardroom.
I’m going to bounce lateral on you for a minute. Let me tell you about my recollection of Dr. Howard Bentall and his son Barney.
When I was growing up in Calgary, Alberta in the 1970s, my parents would take me and my siblings to church most Sundays. Dr. Bentall was our minister. As a young boy, I remember him visiting us at our house. He would often bring his young son Barney with him. Barney was about my...
Following last week’s blog post about conflict of interest, we received some excellent feedback from insightful readers who provided additional points for consideration. In response, we’ve decided to defer the post we had planned and instead produce a follow up.
Last week’s post was written for the director who wants to self-declare a potential conflict of interest. Today’s post will discuss undeclared conflicts of interest and the problems created between board members by a lack of transparency.
Based on the responses we received, this is clearly a hot topic. So, let’s follow the money.
When I served as chair of the local chapter of the Institute of Corporate Directors (ICD), there were times I needed to counsel volunteers to step off the program committee because their primary reason for being there was to generate business or find board appointments for themselves.
From experience, I know...
Relax! Having a conflict of interest with respect to something on the board’s agenda need not interfere with your ability to function as a high quality board director. It’s okay to have them. It doesn’t make you a bad person or ineffective board member. The real issue is whether your board has a good process/policy/practice to manage and mitigate any actual or potential conflicts.
Let’s get the definition out of the way.
A conflict of interest is a situation in which a director’s duty to the organization conflicts with their own interest or duties to others. A conflict of interest can come about either as a result of a personal conflict between the director’s own self interest and their duty to act in the best interest of the organization, or as a result of a conflict of duties that the director owes to the organization and to another organization. Such conflicts of...
Today’s edition of >> The Savvy Director™ << is focused on the challenges faced by a successful business person who is asked to serve on a government-sponsored agency, board or commission.
You might assume that the shift from a single bottom line (private for-profit) to a double bottom line (government revenue + social benefit) would be the most significant adjustment for the new director. You’re right. That’s part of it. The director’s role is essentially the same regardless of ownership scenario. I would suggest the main difference is how the income is put to use at the end of the year. Government entities may receive revenue targets for funds to be transferred to government coffers, while for-profit companies have targets for their owners or shareholders.
You would expect both types of organization to have a customer focus, wouldn’t you? But what if one entity has a monopoly in its market?
Bob has been a successful...
Being on a governance board is like running a restaurant. Let’s say you are the original owner but now you have other investors. You’ve hired a renowned chef to run the kitchen. If you keep going back there and adding salt to the soup, you will be looking for a new chef before you know it. You know what I mean? On the board, you represent the owners' interests. It’s time to get out of the kitchen and leave the cooking to the pros.
You may have started the business as a successful food truck operator doing everything but now you have investors and a board of directors who want you to be the best restauranteur in town. The investors want more locations, maybe even to franchise. Succession planning for the chef will become your core business if you’re not careful.
Your role on the board
So what is your job on the board then? I’d suggest it’s to act and govern like the owner/director that you are. Sure, there may be times when you need to...
Have you ever returned home or back to the office from a board meeting and asked yourself, “Why did I say that?”
Me too. In fact, it happened a couple of weeks ago and it wasn’t the first time. But the frequency has gone down considerably since I’ve discovered and put to good use the acronym W.A.I.T. (Why Am I Talking?).
As we’ve noted in earlier blog posts, the art of asking questions includes waiting for the right time to contribute. And contribute you will with a timely, relevant question that has the potential to influence the discussion toward a successful outcome.
Those who are known to their peers as savvy directors seem to have their listening skills on high alert and their mouths figuratively fastened with Velcro. They break down barriers and encourage dialogue with good follow-up questions. I’ve seen this time and time again and admired how the technique works to influence the discussion.
The savvy director doesn’t feel the need...