A strong board of directors is a CEO’s second team and an impactful tool for company success. Weak or ineffective boards, however, can hold you back. How do you ensure your board is strong and well calibrated—and make the most of it?
In a recent webinar, Why the Board Meeting is Broken: Reimaging Your Meeting, our all-star lineup of panelists, including Edward Norton, Brad Feld, Matt Blumberg and Jocelyn Mangan, shared their perspectives about what makes the entire board process so miserable, and more importantly, what can be done to make it all far more engaging and effective. In case you missed it, here's the full recording.
One hour wasn’t enough to cover everything though, and our live attendees submitted dozens of additional questions that we couldn’t get to during the webinar. Our panelists have weighed in on some of the open topics, including questions around:
- Building an effective board and managing it over time
- Best practices for running an effective board meeting
- Realistic expectations for board members
- Leveraging your board effectively during difficult times
Building an effective board and managing it over time
What does it take to source board members who are collaborative and active members, rather than members who operate in isolation or don’t participate?
Don't forget that an important part of having an engaged board is engaging the board! That said, selecting the right board members is important as well.
One thing you can do is interview for engagement the same way you would with a senior executive. Checking references is key, especially if the person has been on a board before. Make sure you’re clear about what you’re looking for during the process.
My biggest piece of unorthodox advice is that I always like to have a future board member, my finalist in the process, attend a board meeting as a bit of an audition before I actually put them on the board. I am clear with them that it's important that they be an engaged part of the conversation, and I spend the time to prepare them properly for the meeting. You'd be amazed, even with that wind up, that a number of them will still show up unengaged.
How important is it to ensure there is a robust board composition and a skilled Chair to facilitate effective board meetings?
It’s critical that a board has a robust composition of independent directors, a founder/CEO, and investor directors. Whether the meeting is chaired by a chairman, or by the CEO (in the event that they are different people), the most important thing the meeting leader can do is be a skilled facilitator. The meeting will almost always be led by the CEO and being a skilled facilitator is an important part of the role, both inside and outside the boardroom.
What strategies work well for evolving the composition of the board as the company grows or pivots into new directions?
The best things you can do here are to always be recruiting new members and keep a proper balance of investors, executives, and independent board members on your board. You should also make sure you give board members short enough terms, especially in the early days of your business, so it's not awkward if you feel like a given board member has run his or her course and it’s time to replace them with a new independent.
It seems like boards could get big fast if you’re adding some combination of executives, investors, and independents as you secure new rounds of funding. How do you manage that growth long-term?
Over time, you will need to roll earlier investors off of the board. That can be challenging, and it may be a conversation you want to have with investors at the time they invest. Ultimately, board size and composition are usually set in a negotiation with new investors at the time you are doing a financing, so you can use that as a forcing function as well.
How does a CEO fire an ineffective board member?
Great question; long answer but you can turn over independent directors a lot easier than VC directors. That said, you can change out VC board members, too. It's just harder, takes data, takes help from other board members and relationships with others at the firms. You can check out Chapter 14 of Startup Boards for an even deeper dive on this topic.
Best practices for running an effective board meeting
If you run a board meeting without using slides, how do you use your allotted time? Are you still working through the previously sent out materials simply without slides, or do you open it up immediately for Q&A?
Typically, I use the first 30 to 45 minutes in a board meeting to point people to one, two, or maybe three specific items in the historical reporting, or retrospective part of the board book. I ask someone on my team to facilitate a conversation about each of those specific points, then I ask if anyone has any questions about anything in the historical reporting part of the board book.
After that, I move on to the discussion topics that are typically set up in shorter memos at the back of the board book. Each discussion topic has an owner who facilitates the conversation with a few key talking points, and we go from there.
Any suggestions for boards with founders on how to manage the collaborative discussion and leverage them as a "team" vs "owners?"
It can be extremely difficult to manage multiple members of a founding team or management team on a board. That's one of the reasons I always recommend having only one member of the founding team as an actual director, and everybody else as a board observer.
It can be difficult to ask founders to step aside from a board to make room for an independent director, but you can assure your co-founders that they will still be participants in the boardroom, and if there are any special rights you want to make sure that they have, those can be written into your corporate documents.
In the event that you don't have a choice, and that you do have multiple founders on a board, you should have a meeting with your co-founders who are also board members before each board meeting, so you can reinforce to them what their role is at the board meeting. Remind them that they are acting as part of the board team at a board meeting, not as employees, founders, or shareholders.
How does a leadership team cope with the inevitable growing pains of transitioning to different methods and practices? Particularly with the older generation of directors who have operated in the same way for decades?
Like any kind of change management, you need to bring everyone along for the ride. Let them know what you’re doing, why you think it's good, ask for their happy participation, and check in with them frequently.
Should founders prioritize “pre-meetings” with board members 1:1 in advance of board meetings, to reinforce topics and gauge feedback beforehand?
I am not a big fan of having a meeting before the meeting, or a meeting after the meeting. The meeting should be the meeting. Meeting with individual directors prior to a meeting can be useful if one of them is not up to speed on a particular issue relative to the others, or if you want to solicit one of their points of view in advance, or, I suppose, lobby one of them in advance. But I don't make that a regular practice in my board management routine.
Part of the value of Zeck is sending out the material as a pre-read with the ability for board members to leave comments and questions. If you send this out 3-5 days in advance, it gives you the opportunity to engage with the board members prior to the meeting and spend more time on strategic discussion.
Should CEOs always know the outcome of a board meeting in advance, in addition to providing negative news to board members individually ahead of time?
I agree 100% that bad news should be shared early, and prior to board meetings. I care less about whether that news is shared on a one-to-one basis, or broadcast to everyone on a board.
I disagree, however, that a CEO should always know the outcome of a board meeting in advance. That sounds to me like a board is nothing more than a rubber stamp. Great CEOs know how to use their board to help the management team make difficult decisions when those decisions are not obvious.
Realistic expectations for board members
What kind of "roll up your sleeves" work can we ask of board members?
The most important thing is to understand that there is a distinction between a board member, who should be giving you advice, counsel, and introductions, and a paid consultant, who is giving you deliverables.
When I think of the construct of asking a board member to “roll up their sleeves,” what I am really asking them to do is be super available to me if I need help with something, available to anyone on my team if they need help with something, and incredibly well-prepared and willing to do anything that is asked during a board meeting. As long as it doesn't cross the line into preparing an actual deliverable that you would normally pay a consultant to do, it’s fair game for a board member.
For our board, most decisions and discussions seem to happen 1:1 outside the meeting, and the meeting is used only to agree while challenging questions are frowned upon. While that makes meetings efficient, I wonder if it removes the benefits of group discussions and suppresses diversity of thought.
It's too bad that that is how your board operates. As the leader of your business, I would work to change that dynamic. The best way to do it is to cultivate an atmosphere of trust and rigorous intellectual discussion among your board members. Force the topics and the hard discussions into the actual board meeting, and you’ll find that you have a much higher impact and more efficient board as a result.
As a CXO, one challenge I often see is that board members only have an ongoing relationship with the CEO, which can limit the board’s ability to get to know the rest of the team, and for the CEO’s performance to be effectively assessed. How are effective boards assessing the CEO in an ongoing manner by gaining other c-suite perspectives?
Personally, I’m a big believer in independent relationships between board members and members of the executive team. That’s the best way for a board to have a true understanding of what's going on inside the company.
If that isn't happening, or worse, if the CEO is intentionally preventing it, then it's really incumbent on board members to insist on that kind of relationship, as it’s awkward for an individual executive to insist on something the CEO doesn’t like.
Leveraging your board effectively during difficult times
I feel like our organization has come off a year of tyranny, with mutiny rather than strategic team planning with our mission at the forefront. How do we ensure we have board members who truly have the best interest of our organization at heart?
Building a good team dynamic of your board is critical, and difficult. When an organization is going through a particularly challenging year or situation, it's even more important to have a very strong team dynamic at the board level. You must be spending time with the whole board and only the board to develop personal relationships, and a high level of trust as you would with an executive team.
If you feel you have a board member who doesn’t truly have the best interests of your organization at heart, you should work on getting to the root of that with the board member directly. If you are correct and there is a lack of alignment, then that board member needs to leave the board. If the board member is an investor who has a contractual guaranteed board seat, that’s a lot trickier, but it is still possible.
How, if at all, do board meetings need to shift when the business is in a distressed state? Do you change how you show up?
If you’re a believer in Ben Horowitz’s construct of “wartime” versus “peacetime” in business, then you have to recognize that when your company is at war, you need to shift your operating rhythms not only inside the company, but also with the board.
Boards need to meet more frequently for less time when the company is in a state of distress, and while you may want to show up as a little bit more authoritative with your team, you have to be very clear with your board when you are confident about things and driving everyone forward versus when you want the board to help you make a critical decision or give you input on items with which you are less comfortable.
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