Is your board a strategic asset or a liability?
Any CEO would like the former to be the case, but unfortunately, for most CEOs, the board you serve is not your dream team. Existing company boards are usually inherited, not handpicked. And yet, even though they may not be discretionary, it falls on the CEO’s shoulder to transform that board for effective governance. Managing that transformation is in the best interest of the firm you lead as well as your own shelf life as its leader.
Attention to three factors will move the needle toward “asset,” versus a “liability.”
1. Coach your board to function as a team vs. a committee. Individual board members have their own agendas. Hopefully these align with the strategic goal of the board as a whole. However, some members of the board may represent the interests of their firms, or their personal relationships, overtly or covertly. If you inherited your board, find out what drives each individual.
A team wins or loses based on collective effort. If you gain observable behavior without a clear link between action and the organization’s strategic goals, you will need to take proactive action. That action must be subtle, because power relationships with the board you inherited are bidirectional. You cannot manage them as you would employees. What you can do is encourage a culture of accountability for group goals and process. Reward behavior that serves the organization’s best interests, by calling attention to individuals and groups that exemplify good performance. Make that attention highly visible. Meanwhile, privately coach the individuals whose behavior does not match that of your stars. Over time, with this kind of “relational peer level guidance,” you can achieve alignment on overall goals and processes that serve the organization’s best interests.
Work closely with your nominating committee as you achieve this transformation from self-interested committee behavior to effective teamwork. Make sure they observe which types of talent function best in the team environment. Make it clear what skill sets and relationships the organization needs the most, not just in its current state but also in its desired future state.
If your board does not already function with term limits that allow it to adapt to changing market conditions, work to get term limits in place. Some of the more seasoned individuals on the board will eventually need to leave, to make room for the skill sets you need as the company evolves. Just as companies need different attributes in its CEO at different stages of its growth, organizations also need a board that evolves over time.
2. Build relationships aligned with strategic desired outcomes. I often council CEOs, “The organization cannot follow you if they are not crystal clear on where you are headed and how you plan to get there.” Since a corporate board’s primary fiduciary responsibility is governance, the board members have to understand and support an agreed-upon strategic direction. That outcome is the “what”—what’s the end result, the destination? Once you have alignment on that, it’s time to address the input—the “how”—the tactical action that will carry you forward toward the desired outcome.
Getting aligned action on that “how” will come from appealing to your board members’ logical self-interest. This is best done one-on-one. By phone or in person, seek the input and advice of your board members. Use these encounters to build alignment on key issues. Show them that you have their backs and ask for their support on key initiatives, early and often.
When individuals on the board have confidence that you understand the requirements and challenges of their roles, they feel their contributions are valued. Your return on investment in building those relationships will be alignment and accountability. That, in turn, creates market gravity for the organization. Qualified candidates—people who add to the prestige of the organization and the board—will recognize this is a board they want to serve on. Over time, your board makeup will achieve “dream team” composition. But even then, remember—from a relationship standpoint, it’s a board you serve, not a board you own. Managing a board calls for servant leadership.
3. Establish your credibility through the questions you ask. As a leader, you deliver your value through the questions you ask, through the conversations you’re able to facilitate, through the subjects you get people thinking about. We all come to the board meeting with very different lenses, very different set of experiences, and very different competencies. To align that breadth on a desired direction and destination demands leadership. While you are a servant leader, you are not without a backbone. If you allow the board to set the agenda, or to get too involved in the management of the organization at the expense of their true role—governance—you will fail to be perceived as a credible leader.
Best-of-breed leaders are intentional about the way they identify, prioritize and nurture their strategic relationships, using each opportunity to deepen alignment of key players with desired outcomes. If you devote sustained attention to invest time in building relationships that are aligned on a shared understanding of strategic outcomes, and take care to establish and maintain your credibility and authority as the board’s leader, you will find you can manage your board effectively—even the members you didn’t pick.
- Recognize that individual board members may represent the interests of whoever picked them. Learn what drives them.
- Invest in building relationships with individuals, in order to develop their commitment and accountability to the organization’s desired outcomes.
- Establish your credibility as a leader through the questions you ask and the positions you take.