Over the years, I have personally witnessed some very unproductive board meetings that waste director’s time, management’s time and shareholders’ money. Company director productivity will continue to be a relevant topic with increased workloads, compliance issues becoming more complex and a greater focus on risk management.
Boards should regularly question the cost of a board meeting and what is the return on this investment for shareholders. This is a particularly critical questions for boards caught up in compliance and routine.
Here are a few of my top tips from several sources.
1. A productive board and a strong chair who can organise matters before, during and after a board meeting go hand in hand. When choosing a new chair, ask if he or she can improve the board’s current governance structure or re-engineer it to become more productive.
2. There is no hard-and-fast rule on the optimum board size. Different organisations have different governance needs. If your board has more than seven or eight members, ask why. There may be a good reason, but too many directors can impede board productivity if conversations fracture and factions emerge.
3. High board productivity starts with having the right mix of people around the table with directors who understand their roles and are sufficiently skilled to fulfil them. Poor board productivity is often linked to director diversity being a poor match for where the organisation is heading.
4. An often understated factor in board productivity is a good culture of focus on contribution and outcome. It facilitates open, robust discussion and debate and helps find a consensus view. Such a culture promotes active, dynamic board meetings.
5. Find a balance between the familiar and the unexpected. Plan meetings well in advance so directors know what to expect. But don’t hold every meeting in the same format for long periods. Over time, it can exacerbate group-think and create a sense of complacency or tenure. Find ways to freshen up meetings, within reason.
6. The board should be clear on the depth and format of information it prefers to receive from management. The chair should spend time reviewing the board pack with the company secretary before its dissemination. The pack should be easy to navigate, succinct and have a strong focus on analysis that aids decision-making. Having a cover sheet for key issues is a good idea.
7. Ideally, this should be done a week before the board meeting. Do not fall into the trap of sending board papers on Friday afternoon for a Monday or Tuesday meeting and assuming directors are happy if they have the weekend to review the information. Give directors enough time to resolve smaller questions with the chair, management or the company secretary before the meeting.
8. There is no simple rule on the time required to prepare for a board meeting. An inexperienced director or someone new to a board might allocate three hours of preparation for each hour of meeting time. An established director might allocate one to one and a half hours of preparation for each hour of the meeting. More time could be needed if a critical strategic issue is up for discussion.
9. Encourage director input on the agenda. The chair should ask directors if they are happy the right issues are on the meeting agenda and in the correct order.
10. Finally, Boards can easily fall into the trap of reviewing everything to death. However, it makes sense to have a short review of each meeting as a standing item on the agenda. The governance committee should review the board pack annually and board evaluations can also improve productivity.
Henri Eliot is CEO of Board Dynamics.