The Savvy Director Blog

Many boards have been functioning well these past weeks, but others have become divided over the important issues that are now confronting them.

More than a few Savvy Director readers have described situations where sharp divisions have developed around the board table while dealing with significant decisions arising from the pandemic. These are not just cases where one or two directors disagree with the majority. They are situations where the board is split 60/40 or 50/50 on sensitive, significant and urgent issues.

There are so many issues and questions that have arisen. Some examples are:

• Staff layoffs.
• Executing funding cuts – should cuts be targeted or across the board?
• Whether to proceed with previously approved capital projects - could the money be better spent?
• Charitable donations and community support – yes or no? Doesn’t charity begin at home? And which organizations should be supported?
• Is our company a fundamentally sound business that simply does...

A recent email from one of our Savvy Director™ readers got me thinking about how diversity of experience actually influences the opinions and viewpoints that we bring to board discussions, as well as the decisions that we end up making.

It’s taken for granted these days that diversity at the board table is a good thing and that it contributes to more robust discussions and better decisions. But how does this actually occur? Especially in the light of board discussions with management about the COVID-19 pandemic and its impact on business.

I’ve paraphrased our reader’s comments below:

I’m curious about the experience of boards in the current environment where directors coming at the impacts of COVID-19 on the organization vary greatly based on the industry or sector they come from.

For example, there are those who may be from a sector that is experiencing significant layoffs and is not considered to be an essential service. And others who are focused on...

For many years on boards, my use of the admonition to never let a good crisis go to waste was often met with understanding, acknowledgement, enthusiasm … and then reluctance.

Change is hard. People are slow to change if they don’t see a burning platform. Boards did not really understand why we did things a certain way because we had always done them that way.

Besides, it worked … until it didn’t.

Reimagining the Future

I only recently discovered that the phrase Never let a good crisis go to waste originated with Winston Churchill. He was a great wartime leader, but his track record in peacetime was less successful.

The same thing could apply to some of today’s boards and CEOs – those without the agility, responsiveness, and vision to re-imagine the future as we plan to emerge, at some point, from these uncertain times.

The other day, New York Governor Andrew Cuomo posed an interesting question during his daily briefing. He asked,

...

As I attend more and more virtual board meetings, I can’t help wondering about the effect on board dynamics.

In brief, board dynamics refers to the way that individual board directors interact with each other. You can see a board’s dynamics through the language that directors use, how they constructively challenge and debate each other, and the way they make decisions.

When I think about board dynamics, it reminds me that a board of directors is a group of human beings, not just a collection of rules and processes. To quote a recent article by Meena Thuraisingham in the Australian Institute of Company Directors magazine,

“The process of governing does not occur in a social vacuum.”

Every board takes on the collective personality of its members. This plays out in the behaviors, routines and social norms that the board develops. It contributes to the expectations – whether stated or unstated – that every board member tries to understand and live...

Have you attended your first virtual board meeting yet? If not, I’m sure there’s one just around the corner.

Organizations big and small have been adopting virtual meetings to enable seamless board governance in the face of the COVID-19 pandemic and the consequent social distancing and isolation requirements. Large, geographically dispersed companies may have been using video conferencing for their board meetings for some time already. At the other end of the spectrum are boards of small, local organizations that may not have yet ventured into the online world for their governance needs.

I spoke to a few of my colleagues who have recently chaired or attended their first virtual board meeting. And I canvassed my LinkedIn network for observations about what makes for a successful virtual board meeting. In this blog, I’ll share with you what I learned.

But first, what’s a virtual board meeting? I like BoardSource’s definition: “Virtual meetings are...

“A crystal ball?”

That was the first reaction from the CEO of a multi million-dollar tourism not-for-profit when I asked her what she needs from her board, right now. Laughter aside, the crystal ball comment was followed by some great insights from inside the storm we know as COVID-19.

I then emailed the same question to a dozen other CEOs, male and female, across regions, from organizations large and small, for profit and not-for-profit, private companies and government departments, from pro sports entertainment to healthcare, from financial services to the arts and culture sector all of these CEOs report to boards.

They all responded to me in a matter of minutes. (By the way, if you are one of those individuals reading this blog right now, thank you for taking the time to respond!)

Clearly, this has been an intense week. From their responses, these CEOs seemed stressed yet definitely in control. If they are working from home, it means they have both business and...

If you’re like me, your email inbox has been filling up with information from various businesses about how they are responding to the challenges presented by COVID-19. And if you sit on a board of directors, you have likely been hearing from your management team as they implement their business continuity plan (assuming they have one!) in the face of this health crisis.

The business risk resulting from a pandemic was incorporated into some plans as a response to the outbreaks of SARS and H1N1. Fortunately, much has evolved on the technology front since then to help mitigate the risk to business continuity. Not only are employees able to remotely login to company servers and intranets, software is available to facilitate online collaboration, use stable video conferencing, enable chat, collaborate on shared files and communicate with colleagues across all devices.

These arrangements help support the “social distancing” recommended by public health experts by...

“It’s really hard to publicly support the board’s decision when I personally disagree with it.”

Yes, that’s a tough one for a well-intentioned board director who cannot support the will of the majority of board members. But is it necessarily a bad thing to vote against a motion?

I’d suggest it’s not. What’s important to the board is reaching consensus. When I refer to consensus, I’m thinking of a description from McKinsey that I read a few years ago. It went something like this:

Consensus does not necessarily mean a unanimous decision. It does mean that everyone feels they were heard and can live with the decision outside the boardroom.

On the positive side, a dissenting vote or two may reflect a robust discussion and an appropriate level of due diligence and independent thinking. In my view, those are good things.

Less positive would be the situation where the Chair is called upon to cast a deciding vote to break a tie. That...

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.

Alice’s thoughts on balancing independent thinking and collaboration

We are fortunate at DirectorPrep to have a group of engaged fellow board directors who seem to be quite willing to act as guinea pigs and to provide feedback on our ideas.

The inspiration for today’s blog arose from just that kind of feedback. As we tested out a framework for the essential behaviors of a savvy director, one director wrote “I am curious about Collaborate with Others and Think Independently. … Could someone get a mixed message right off the hop with the use of these words: be collaborative with your fellow directors (don’t be too independent around the table) but remain independent with your thinking (don’t collaborate too much)?”

Exactly!

The board director is called upon to balance the need to...

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:

1. Setting direction,
2. Delegating authority, and
3. Monitoring progress.

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...