MasterClass recap: Author, board consultant, and ValueAlpha CEO Seamus Gillen shares practical steps boards can take to positively transform the way they make decisions.
The decisions made by a board of directors have the power to move the organisation forward – or backward. As such, making sound decisions is business-critical.
Good decisions don’t happen by chance. According to Seamus Gillen, author, board consultant, and CEO at ValueAlpha, there are four key conditions that must be in place for there to be high quality decision-making in the boardroom:
- The board is addressing the critical issues
- The right people are sitting around the table to discuss these issues
- Board members are displaying the appropriate behaviours
- There’s a sound board process in place
Recently, Gillen joined Anderson Dy, Head of EMEA Sales at OnBoard, to lead a MasterClass focused on the last factor: transforming the board process to improve decision-making performance. Here, we’ll explore the key takeaways from the session.
The Board Process Can Be Broken Down Into Four Key Time Periods
Transforming the board process can seem like an overwhelming endeavour. However, Gillen believes that making simple changes to the way board meetings are planned for and executed can have a significant impact on the way decisions are made.
“Some of the most important aspects of good decision-making boil down to straightforward issues of organisation and planning around the meeting process,” he said. “Making improvements in the process can deliver disproportionately high value in terms of improving the quality of decision-making.”
He advises boards to examine their processes from a timing perspective:
- One week prior to the board meeting
- One hour prior to the board meeting
- During the board meeting
- In and around the board meeting (AKA all the time)
Throughout the MasterClass, Gillen discussed the key challenges boards face during each time period – and practical ways boards can improve each phase to fuel better decision-making.
One Week Prior to the Board Meeting: Developing a High Quality Board Pack
Great board meetings require plenty of advanced planning. A key part of this planning is the development of the board packet.
But oftentimes, these packets fall short. A poll found that four-fifths of MasterClass attendees are dissatisfied with the board pack one week prior to the board meeting. “This is the beginning of dysfunction in the boardroom,” said Gillen. “If the board pack is not up to standard, we can’t expect the directors to do their jobs.”
In an ideal world, board packets are succinct and distributed early to allow board members to read them. But oftentimes, the packets are unnecessarily long and are distributed at the last minute. “Good practice is to circulate the board pack a week before the meeting takes place,” said Gillen. “It is a consistent feature of organisational life that this doesn’t happen.”
There are a number of reasons why board packets fall short, including (but not limited to):
- Last minute additions and requests
- Lack of clarity on the information needs of directors
- Assumption that directors can read voluminous amounts of paper and make sense of it all to contribute to discussions
“Taken as a whole, these factors set up a board to fail,” said Gillen.
However, there are simple, concrete ways to improve the quality of board packs.
Develop an Annual Strategic Agenda
This “divides the board business in the course of the year into what you have to do and what you should spend your time doing in terms of value creation.” McKinsey & Company – as well as other organisations – offer strategic board templates to be used as a starting point.
Keep Meeting Agendas Focused
Board meeting agendas should be as short as possible, with priority on the high value issues. “Ensure each agenda item can be identified in terms of the strategic objective it’s delivering,” said Gillen.
In addition, consider a timed agenda that provides sufficient time for agenda, especially for items of a strategic nature.
Rethink the Structure of Board Papers
The executive summary should be two pages max – with four to five pages of the main paper. Any additional information or appendices can be housed in the reading room of the board portal.
One Hour Prior to the Board Meeting: Ensuring Board Members Arrive Informed and Prepared for Full Participation
The best discussions happen when board members show up to board meetings prepared. But that doesn’t always happen.
“All directors should be able to attend a board meeting in a position of greater knowledge of the organisation’s operations, compared to when they attended the previous board meeting,” said Gillen. “But the reality is, this doesn’t happen often enough.” In fact, 57% of MasterClass attendees said they feel their board members show up to board meetings unprepared.
In some cases, board directors have too many other obligations. For whatever reason, some board members are simply unresponsive. “This is a problem that gets in the way of quality decision-making,” said Gillen.
Gillen offered several solutions to help ensure board members are prepared to deliver value.
Encourage Site Visits
It’s a director’s responsibility to get to know the business better. One of the most effective ways to do so is to go on site visits. “That means getting out and about and talking to members of staff of the organisation, going to sites, whether it’s a bank branch, whether that’s a shop on a high street, whether it’s an oil rig…,” said Gillen. “Maybe going to lunch and sitting down beside other members of staff and asking them how things are going. There’s practically no better way of getting to understand the business better.”
Avoid “Empty Chair Syndrome”
Empty chair syndrome occurs when a board member fails to attend board meetings. However, it also happens when a board member does attend – but isn’t properly prepared. “This is probably the single biggest failure of directors,” said Gillen. “The directors who think they can wing it.”
It’s essential to ensure board members attend meetings – and that they read the board packet in advance.
Provide Engagement Opportunities
It’s important to devote time to communications among and between board members and members of the management team. These opportunities should be in addition to the board meeting.
During the Board Meeting: Ensuring the Meeting Runs Smoothly
Board meetings are an important opportunity to engage in productive discussions and make impactful decisions. However, 80% of MasterClass attendees feel their board meetings aren’t as good as they would hope.
There are a number of challenges that can spring up during the board meeting. Perhaps some directors dominate the conversation – while others sit silently. Maybe the board chair opens all discussions with their own opinion – leaving little room for dissent. Or, perhaps meetings go in a different direction than planned, leaving little time to discuss important issues.
Gillen offered practical solutions to help improve the board meeting itself.
Focus on the Important Issues
It’s important to ensure sufficient time is spent on the highest priority issues. Put these items at the top of the agenda. In addition, the board chair must be disciplined and ensure contributions are to the point and on-track.
Avoid Side Conversations
When directors are having side conversations, that means they’re not concentrating on the business of the meeting. These conversations are also a distraction for other directors.
Avoid Electronic Distractions
Board members should put their phones and other devices away during board meetings.
Delegate Appropriately
According to Gillen, “the most important delegation out from the board is to the CEO.” Boards must ensure the effectiveness of reporting back under delegation. A board delegates out its power to the CEO and management team, to committees, and to specific-purpose vehicles including subsidiaries.
Challenge Directors to Consider the Quality of Their Contributions in Board Meetings
This is an area that can be covered during their annual evaluations. In addition, board members should regularly seek out feedback on the quality of their contributions.
In and Around the Board Meeting: Ensuring Directors Stay Current, Relevant, and Skilled
The world is constantly changing. Board directors must make a conscious effort to keep up.
“Many non-executive directors run the risk of passing their ‘sell by’ date, unless they proactively take action to keep up to speed with developments,” explained Gillen.
Yet, many directors remain reluctant to pursue continuing education opportunities.
“If there’s a director on a board who feels they don’t need to develop themselves, my very unsympathetic response to that will be to get them off the board as quickly as possible, because they’re a liability, or they will become a liability,” said Gillen.
Gillen shared some advice for ensuring directors stay relevant.
Deliver a Quality Induction Process
According to Gillen, continuous learning starts at board induction. As such, it’s important to provide a great induction process.
“We need to work really hard on the induction pack,” he explained. And really make that a quality Rolls Royce process, varying the method, the delivery, asking for feedback, and reviewing the process midway to see how the new director is faring.”
Facilitate Ongoing Professional Development
One particularly effective means of delivering professional development to the entire board is to organise periodic, in-board training sessions. For example, the last half hour of the board meeting can be used to receive updates on regulatory developments or sector-related issues. “Bringing in an external speaker can be particularly refreshing for the board,” said Gillen.
Provide Coaching and Mentoring Opportunities
Coaching and mentoring can have a positive impact on the behaviour of board directors. Coaching focuses on in-role performance and the development of a director’s competencies and capabilities. Mentoring, on the other hand, emphasises relationships – and allows a director to develop a better understanding of how to operate more effectively in their work context.
Join us for Part 2 of the webinar series that will be dedicated to exploring the pivotal role of the chair in the boardroom and its profound impact on effective governance. Register Now!
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