An effective CEO, one who understands how to work with the board, can achieve a great deal at board meetings. An effective board of directors looks internally, for accountability, and externally, for strategy – the effective board looks to the past within the organisation, and to its future on the market. Relations between management and effective boards today don’t start and stop at board meetings. Working through the company secretary, management should be in regular communication with the board members and the chair to discuss how planned strategy is being implemented, and what decisions will need to be made at the next meeting.
UK CEOs Try to “Manage the Board”
Here’s what one CEO at a UK company had to say about board meetings: ‘My board frustrate the hell out of me, they are second-guessing me and my executive team on a continuous basis, they haven’t a strategic bone in their bodies and to be quite honest, other than their watchdog oversight role, I seriously question if they add any value to me, my team and this company,’” writes Kieran Moynihan, managing partner at the London-based consultancy Board Excellence.
What’s more, Moynihan adds that he hears comments like this routinely from UK CEOs at both FTSE 100 companies and small private firms. The problem is that many CEOs simply don’t respect their boards, and they think that they have to “manage the board” in order to get useful work out of them, Moynihan explains.
Conflict of this kind inhibits effective board meeting, with the CEO trying to dominate and control the discussion.
But, then, according to a Harvard Business Review survey, 65 per cent of leadership meetings at major firms are not called for the purpose of making a decision, but rather as “group discussions.” The survey finds that only 12 per cent of executives felt that their top management meetings consistently produced decisions on important strategic or organisational issues — and when they do make a decision, it often never gets implemented properly.
The Chair Must Get CEO on Track and Take Control of Effective Board Meetings
Overcoming these obstacles is the role of the chair, who must make the CEO work with the board as a team, and then run board meetings so that they lead to effective decision-making.
The chair must work with the CEO to create a team strategy, with board and management working together. It’s also up to the CEO to bring a management perspective to the longer-term discussions of strategy. If the CEO, in fact, thinks the board is weak on strategy, it is up to him/her to bring this out in board evaluations, so that the board can improve its performance.
Relations between management and effective boards today don’t start and stop at board meetings. Working through the company secretary, management should be in regular communication with the board members and the chair to discuss how planned strategy is being implemented, and what decisions will need to be made at the next meeting.
CEO Can Focus Decision-making
Ahead of the meeting, the CEO, the chair and the company secretary can discuss what decisions must be prioritised. There may be compliance issues that need attention, and the company secretary will see that they are addressed. There may be prospective investments that the chair wishes to propose for approval. The CEO, knowing what the immediate needs of the company are, can make certain that any operational decisions and risk management can be prioritised as well.
On a well-composed board of directors, there should be a broad distribution of skill sets that the CEO can draw on. It’s important that the CEO see this as an opportunity to share expertise, and not as a bunch of “second-guessing” busybodies wasting time. The chair should work to integrate the CEO into the group, so that the board and the CEO form a team.
Bridging the Gap Between Management and the Board of Directors
An effective CEO, one who understands how to work with the board, can achieve a great deal at board meetings. An effective board of directors looks internally, for accountability, and externally, for strategy – the effective board looks to the past within the organisation, and to its future on the market.
No one knows the challenges that the company faces better than the CEO. The board may not grasp the gravity of an issue, or they may want to conserve resources on which the CEO knows management needs to draw.
The dividing line between big, board-level decisions and day-to-day, CEO-level decisions — and between drawing up plans and carrying them out — is not always clear. The meeting gives the CEO a chance to take part in both types of decision-making.
The board meeting gives the CEO a chance to provide depth of understanding for the board, and, in the process, get the board to allocate funds for a project, or to hire more staff in a given area.
More importantly, the CEO can get the board thinking about what lies ahead and propose eventual responses. Risk management that looks ahead six months could prove very valuable to the company.
Learn about Diligent’s Board Succession Planning tool
Diligent Governance Cloud Enables CEO With Modern Governance Tools
To participate in the board’s strategic planning and decision-making, a CEO has to be able to rely on board software and secure board communications. The CEO should also be able to access board papers and documents needed for decision-making, and to perform board evaluations based on participation at meetings.
Then, Diligent Governance Cloud provides a secure storage space for all board papers, documents and materials to which the board makes reference. This storage is encrypted for security and is protected by Diligent’s expert security team. The most sensitive matters can be safely documented and stored, while access is carefully controlled.
And Diligent’s board evaluation tool enables the CEO to share what he finds the board does well, and where they need improvement. And this can be done in complete confidence that the discussion will remain confidential.
With Diligent, boards can gain a competitive edge to improve governance by having the right information, analytics and insights to spot risks, act on opportunities and turn insights into action
Good governance isn’t just one thing — so why buy only buy board software that only manages your board documents? At Diligent, our board management software empowers leading organisations around the world to turn good governance into a competitive advantage for their business. In the ever-changing landscape of the world, governance hasn’t kept up with the fast pace of business. Quarterly board meetings, paper board books and not using secure communication tools for sensitive data have opened up numerous companies to risk.
Today, threats come fast and furious, from a hacker attack in Belarus to breaking news about boardroom malfeasance. Issues, events and calls for regulation arise in the blink of an eye. In this environment, opportunities won’t wait. Modern governance tools are built to support leaders in making smarter decisions, making them faster to function in this new landscape.