Board of Directors Oversight: Do’s & Don’ts Part 3

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How did you prepare for each board meeting?

The agendas were set by me in discussion with the Chairman and Vice Chair, when we had one in later years. I think some of this was answered above. In general, I tried to give everyone an overview of the state of the institution at that point in time.

Prime interest was on the financial situation, which was driven by the revenue stream generated from enrollment so that would attract most attention and discussion. Then there was discussion of issues of importance on campus, usually personnel matters since they were key to the operation, and finally, any considerations of potential threats on the horizon.

In all of this we took time in at least one meeting a year to look at our progress toward longer-term goals and our success relevant to our mission.

I usually spent considerable time preparing for each meeting. I tend to be data-driven and I like to illustrate visually and to corroborate my thinking with supportive data. I also like to establish benchmarks and mark progress by fixed points of reference.

Hence I would use Power Point presentations with charts (some would say too many). I found it useful and it also kept me honest since everyone could see the data from which my observations were drawn.

Given that the board met so infrequently and the members were at such a distance from one another, it was important to put the time to greatest use. It was important for me to spend the time to prepare carefully so that meetings were effective and everyone came away feeling the time was well spent and the sacrifice of a weekend in their busy calendar was worthwhile. Remember this was a volunteer board of a non-profit.

 

How did you frame the way the board would define and measure success?

I did not set our criteria for success in isolation. It was generally understood and agreed upon by all trustees that several factors were benchmarks by which we could view progress and determine whether a year was successful.

Also, in my weekly conversations with the Chair, it was clear which issues he hoped to see progress forward. We did not have a formal set of goals laid out at the beginning of each AY and by which we evaluated performance and success.

As a relatively young institution, our goals were pretty straightforward and immutable.

As a not-for-profit and an institution without endowments, we were tuition driven. Hence, success took several forms, some of which were quantifiable while were others more subjective.

 

  1. How were we doing financially? Were we in the black or red? Were we trending up or down?
  2. How were we doing with respect to our Mission Statement? Were we meeting our educational objectives as well as our social ones?
  3. How were we doing with respect to treatment of our employees (morale)? Was the workplace environment healthy?
  4. How were we doing with our relationships within the community? As a foreign institution in Switzerland, were we becoming accepted as a resource for the city and point of pride? Were we gaining their support?
  5. Were we making progress toward recognition by the Swiss as a Swiss institution on a national level?

 

Many CEOs grapple with imbalances between board members’ power relative to their experience with the day-to-day reality of the organization or industry. Would you offer some advice to a CEO hoping to maximize success?

It is an issue every CEO faces. There are trustees who, not through malevolence but often through a genuine desire to help and be useful, get involved in the daily operational issues of the institution.

That is problematic, as it sends out wrong signals to employees and it gives more power to individuals who are usually not in full knowledge of the nuances of the situation. It can result in decision making and action taking based on inadequate information and through incorrect lines of administration.

Trustees must know their role; they are responsible for general oversight of the institution and the management of the CEO, who in turn handles the operational issues. If the trustees are not happy with the CEO’s results, they should deal with him/her through the board as a collective or through the appropriate committee of the board responsible for CEO evaluation.

When those situations arise, it is usually a strong Chair who can step in and keep the lines of authority straight. When the CEO tries to take that on, it can appear defensive and self-serving.

The Chair needs to exert a leadership role. If the Chair is unhappy with the CEO, then you have a communication issue to be resolved, quickly. It is sometimes useful for a CEO, especially if there are some new trustees, to hold a workshop, facilitated by an outside individual in order to instruct new members on best practices and the specific role of trustees in governance.

This is also useful when there are issues that have developed on the Board regarding CEO and trustees management perceptions.

Give us your best advice on using data effectively in a board meeting.

Data can be overwhelming and too much can numb trustees’ minds or put them to sleep. It is a talent to be able to use data judiciously and effectively to make your point.

You want to ensure that everyone understands the nature of the issues and has enough data to offer meaningful suggestions. I may have erred on the side of providing too much data.

That is a danger for CEOs who live with the problems every day and become too familiar with the details. They can see the picture and weave through the data usually faster than trustees, who may need time to digest everything put before them.

Hence, when you are presenting data of that type, send it well in advance so everyone has time to absorb it. That said, it is a talent to present things succinctly and clearly so everyone understands the issues.

That often means taking sufficient time to prepare a lucid report for the board. It can’t be created the night before the meeting. A well-organized meeting with coherent presentations and time for discussion leaves everyone with a sense of accomplishment and a willingness to continue.

Without planning, there can be a sense of time poorly spent, and trustees will either drop out or their commitment will wane and wither.

 

A CEO manages board members with varying levels of engagement, preparedness, commitment and power. How does a CEO prepare to handle these kinds of board dynamics?

Each board operates a little differently and is the result of the personalities of its various trustees. Managing a board can be difficult and it usually falls to the effective teamwork of the Chairman and the CEO.

In my experience, CEOs also play different roles on different boards. Some have considerable power and equal voting rights and dominate board discussion. On others they play a lesser role. 

Trustees are usually on the Board because they have significant wealth, significant knowledge of the operation or they have influence within the business community within which the institution operates.

In any event, they are significant players and usually have strong personalities. The Chair and the CEO want to strive to keep things mutually respectful, collegial and yet allow for differing opinions to be voiced.

It’s a delicate balance and can be supported by some social events, workshops or retreats to promote bonding and fellowship and understanding of the roles each party plays. Boards work more effectively when there is mutual respect and friendship.

On the other hand, one has to guard against decision-making based on friendship and the desire to be a team player instead of voicing genuine concerns and objections to proposed courses of action.

Boards are composed of members with different strengths and each brings something different to the table. The effective Chair and CEO know how to draw upon each individual’s talents to make the board most effective as a team.

It is essential that every trustee feel she/he is making a meaningful contribution and is being heard. CEOs need to try to personally engage each trustee at some point in the cycle so they feel productive and remain emotionally tied to the institution. If not they will drop out. No one wants to be on a board simply to give their financial support unless they are remarkably passionate about the mission. They can do that without being on the board.

 

How did your board management strategies change over time?

As our finances improved over the years, we were less focused on immediate operational issues and could look down the road to more strategic initiatives and long term planning that addressed the mission.

We were also able to entertain ways to shape the institution to address changing priorities for quality and makeup. The discussions became broader in perspective. Having worked with the trustees for such an extended period (17 years), I came to know the personalities well and could better understand the nature of their individual interests and concerns. Hence it became easier to anticipate their questions and to answer them in a more meaningful and direct way.

 

What was the best advice anyone ever gave you?

“When you step down, get out of town.” It was good advice though given in a very different context—different school, different city. However, Lugano is a small town and my continued presence might have made the transition to new leadership more difficult.

If you stick around, you create several problems. You tend to meddle in the operations though you no longer are in control. It’s hard to step back completely from a situation where you have been in charge for so long and where you have invested so much of your time and energy.

Others will inevitably come to seek your advice on matters outside your authority. In addition your continued presence can split the board’s loyalties between you and the new CEO. 

Needless comparisons will be made. You may make the new CEO nervous and cause him to start looking over his shoulder.  The new CEO needs and probably wants the limelight. He deserves it to get the job done.

Move on. You and the institution will be better served. Given your personal situation, moving out of town may not be possible. In a large city it is easier to become unobtrusive. Try to be so.

 

If you could give a new CEO just three tips on earning his/her board’s confidence and support, what would they be?

Always be honest. If you made a mistake own it and tell them first and provide a correction.

Engage the board as you think through issues. They are part of team and want to be engaged for their wisdom and experience. Use their talents.

Work with the chair to create open, transparent and frequent communication with your board. It will build trust and confidence.

 

Stay tuned for additional posts about board management, including How to Keep Board Minutes and Boards in Transition, plus more about the board management software platform, boardbookit.com. If you are a CEO or founder with insight gleaned from working with a board, we would love to hear from you.

 

 

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