Last month, I was delighted to participate in the Yale Governance Forum, an annual event that is organized by The Millstein Center for Corporate Governance and Performance at their Yale School of Management and attended by more than 300 global directors and academics.
The focus of this year’s meeting was to examine changes and uncertainty in the global capital markets as these issues are at the top of policy agendas worldwide. Our session topics on how capital markets and policies can come together to provide needed energy in the economy provided a lively framework for discussion. What struck me about being a participant in this group was how all of us were taking the initiative to attend a learning forum outside of our own industries. To me, this is a vital part of being a board member or even a senior executive looking to continue to provide value to the organizations we serve.
Every board member should participate in such a learning exercise annually, in order to continue to fulfill their mission of enhancing shareholder value, but also to stay current with changing regulations. If you serve on a public board, you have made a commitment to do just this. Your job should include asserting your leadership to stimulate investments. Another obligation is to make sure the board has strong governance and help prevent board members from becoming focused on the wrong issues.
Here are some things leaders need to keep in mind to build and maintain a focused board:
Be clear on what information board members need to make better decisions. Sending board members links to interesting articles is not enough. What they will find helpful is if you pull out the high points that you want board members to pay specific attention to. Whatever is on the board’s dashboard is what the data should include; don’t give them a complete data dump unless all of the material is relevant. I’m personally interested in seeing employee-turnover numbers because they show retention rates and red flags. Low turnover numbers can be a measure of success. An HR executive can give me 20 articles to read, but I won’t see the cold, hard data in a snapshot.
Create a dashboard to measure performance. One way to measure the board’s performance is to create a “dashboard” that sets measurable goals within a given time period. This is something all members can do together. Remember, a CEO or board member can’t make good decisions about an organization’s present or future without good information about what’s happening now.
Maintain high performance with high integrity. What may appear obvious to you as a director or a CEO somehow gets lost in the middle of an organization. You have to understand the values of the company and make sure you live them every day. Actions, not just words, tell a team what is acceptable. One striking image that illustrates this is a piano teacher demonstrating good technique to a student. The teacher’s technique is fantastic in this instance. Show by example. Your behaviors provide a constant opportunity to ensure high performance and penetrate the right values through the organization.
Have a strategy and a plan. A director knows that an important part of his or her role is to add value to the board. One way he or she can achieve that is by understanding the needs of the company. The board needs to know what the company strategy is and what the plan is to fulfill that strategy. Just as the board needs a dashboard, members also need a plan that lines up with dashboard goals. Members may want to create a mini-operating plan that shows them what they need to do to meet monthly milestones. Maybe the board just needs a to-do list. In any case, they should set priorities.
Another important goal that many boards shunt aside or just don’t put on their agendas is formulating a succession plan. The board needs to have a candidate who is being groomed for the leadership role.
Building and maintaining a focused board takes work. It is everyone’s responsibility on that board to externally continue to obtain the necessary learning to be an active and valuable participant on that board as well as to internally understand that board’s goals and objectives. Combining both external and internal focus is a powerful tool and skill set to continue to add value to the company and shareholders you serve.
©2008, All rights reserved. Stuart R. Levine is Chairman and chief executive of Stuart Levine & Associates LLC, an international consulting and leadership development company. He is author of Cut to the Chase and The Six Fundamentals of Success.