Every board of directors is unique and so are their results. Some boards are supportive and empowering; others use the H.M.S. Bounty as their template. Some board positions are paid, but many are a volunteer army. Similar techniques shape board performance either way.
Whether paid or not, the composition of the board changes over time potentially disrupting the snuggly embrace of status quo. Board members can be visionary, detail oriented and strategic or as engaged as a rubber stamp. They can be energetic or seemingly narcoleptic or a hodgepodge of all. Therefore a CEO fares best when actively working with their board to find board members that best fit the company.
The CEO is often responsible for developing and certainly for implementing the vision of an organization. It is the board’s responsibility if not to develop the vision, to sanction it, shoot it down in flames, or reshape it. Board chairs can be instrumental in steering their fellow board members to support the CEO’s agenda or they can be fodder for the CEO’s ulcer. Confrontational boards tend to drive their CEO away and their vision and operational skills with them. The company, suddenly rudderless, drifts aimlessly along until the next CEO comes aboard and the cycle begins again. It is important to keep good CEOs around awhile because implementing a compelling vision can take years to achieve. Board members impact the tenure of a CEO.
Keeping the company hierarchy intact can be difficult. Some of the disruptions are scheduled. Board term limits can be amorphous or written in stone. The danger with no limits is that a board can become stagnant, bereft of new ideas or energy, dumping all that back in the lap of the hapless CEO. Too-short term limits can pull the rug out from vision implantation. CEOs and their boards have to work together long enough to get things done.
So now that we’ve determined that board composition is critical, how big should the board be? If a board is larger than 12 members, it can become unwieldy, making it more difficult to get work done and align the members. Some organizations have the philosophy of filling the board with all the key leaders in the community, region, nation or world. When boards become this large, a sub-group of the board, the executive committee, typically functions as the board of directors. No matter the size, aligning the board members is the responsibility of the Board President or Chair and hopefully is in partnership with the company’s CEO.
Most boards have by-laws and the organization has articles of incorporation. The by-laws are easier to change and, as with anything documented, by-laws need to reflect current practice or be updated. By-laws typically include language about the board of directors, how many members are on the board, the officer composition, committee structure and the duties of the board, board leadership and committees. It is wise to review the by-laws annually and revise them as needed over time. The board chair or president should read the by-laws regularly to ensure compliance.
Succession planning for a board is as important as succession planning for an executive. Often, there is little effort put into recruitment and retention. As a result, board strength waxes and wanes. Therefore, membership criterion needs to be developed. The criterion can include a specific type of experience, such as in marketing, legal, financial, executive leadership, healthcare, etc. as well as value based and behavioral criterion. If the organization has developed values, such as transparency, respect, integrity, etc., the board should adopt the same values and have board candidates demonstrate or prove they are capable of adhering to these values.
Common pitfalls with boards:
- A political board or political board members where there are innumerous hidden agendas
- A board that is missing true leaders
- A board comprised of operational members who are more concerned with the internal workings of the organization than what the board is to achieve – operations needs to be the CEO’s job, not the board’s
- No defined criteria for recruitment or plan for retention
- Lack of succession planning for the board and organizational executives
- Nominating committee functioning separately and apart from the board
- Lack of diversity be it age, gender, race, etc. or too many of one type
- Too many board members to be able to function effectively
- Lack of planning to stagger board terms (resulting in many members going off at once and many coming on brand new)
- No clear vision or mission
- No strategic plan or planning process
- No clear process to oversee the CEO
- Poorly organized or led meetings
- Limited or lack of metrics to measure outcomes and success
Highly functioning boards concentrate on the future and know how to work well with the organization’s executives. Together they can accomplish incredible outcomes for the community, customers and stakeholders they serve. Build an infrastructure for board recruitment and retention and watch your board performance soar!