Actively Managing a Successful Board of Directors

Whether chairman, inside director or outside director, occupying a seat on  a board  means more than just, well, occupying a seat.

Actively Managing a Successful Board of Directors

As discussed in our previous blog post, Adding Value as a Board Member: 10 Ground Rules, active involvement and commitment are critical. The same is true when it comes to managing a healthy board.

Between our collective firsthand observations and anecdotal eyewitness accounts, the TEN|10 Group has developed a curated list of best practices for running an effective board. For those currently or aspiring to serve in this capacity, we offer the following advice.

Board Composition: Assemble an effective body.

Study personality dynamics and be deliberate about the mix.
In addition to seeking diversity along traditional parameters (age, gender, ethnicity, background, areas of professional expertise), it is important to consider a healthy mix of personality traits. Many psychologists agree there are five major personality characteristics:

  1. conscientiousness (well-organized and self-sufficient)
  2. extroversion (assertive and energetic)
  3. agreeableness (trustworthy and cooperative)
  4. openness (curious and creative)
  5. neuroticism (reactive and excitable)*

A degree in psychology is not needed, but be aware of dominant personality traits and be intentional about the combination.

Ensure a proper fit for the company and connection to the mission and vision.
Smart leaders build teams that are focused on and connected to the mission of the firm. Boards are no different. When members are mission-driven, they organize and focus their thinking around a common purpose. This leads to more efficient decision-making and more personal satisfaction for board members.

Board Efficacy: Develop a productive working environment.

Define expectations and hold members accountable.
Be crystal clear about short- and long-term goals and explicitly outline what is expected of each board member. For every meeting set an agenda, circulate it in advance and delineate the desired outcomes. Hold members accountable for deliverables and make every meeting count.

Consider and manage communication styles.
Managing through challenges often requires uncomfortable discussions, and it is critical for leaders to be able to facilitate productive conversations during times of stress. Breakdowns in communication can have a swift and negative impact on any team. In order to promote a positive working environment, it is sometimes helpful to apply a framework that gives context and structure to a discussion. Utilizing an impartial, third-party model can remove personal attachments (“John hates my idea”) and reframe them in a more constructive light (“John always thinks about the details first”).

sixhats_0.jpgCompanies including Boeing, Statoil, Motorola, 3M and Hewlett-Packard make regular use of the Six Thinking Hats® framework*. It separates thinking into six clear functions and roles. Each one is assigned a color.

  1. The White Hat calls for information known or needed. "The facts, just the facts."
  2. The Yellow Hat symbolizes brightness and optimism. Under this hat, you explore the positives and probe for value and benefit.
  3. The Black Hat is judgment, the devil's advocate or why something may not work. Spot the difficulties and dangers where things might go wrong. This can be the most powerful and useful of the hats, but a problem if overused.
  4. The Red Hat signifies feelings, hunches and intuition. This hat allows you to express emotions and feelings and share fears, likes, dislikes, loves and hates.
  5. The Green Hat focuses on creativity — the possibilities and alternatives. It is an opportunity to flesh out new concepts and ideas.
  6. The Blue Hat is used to manage the thinking process. It's the control mechanism that ensures the Six Thinking Hats® guidelines are observed.*

This simple system gives each board member the opportunity to speak more openly and non-judgmentally. It is easy to say, “I’m putting on my White Hat because I need to understand the details about how we will execute on this idea.”

Be transparent.
While this is a common goal it often gets lost in practice. Be transparent with board members and management. No surprises. Ever.

Board Durability: Manage for the long term.

Understand the life stage of your company. 
Businesses typically cycle through four life stages: startup, growth, maturity and renewal/rebirth or decline. Be aware that the needs of the firm and the mentality of the board must evolve from one life stage to the next. Resist governing a maturing firm with the same expectations as an exuberant startup. Be aware of growing pains in the movement between the stages.

When it comes to a crisis, be prepared to act, not react. 
Anticipate potential crises in the making. Identify and inform all stakeholders. Be clear about roles and responsibilities and train for them in advance (e.g. who manages the talking points for various constituencies). The bottom line: have a plan in place and execute it.

Assess the performance of board members on an annual basis. 
Perform board member “performance reviews” regularly. Keep them simple and meaningful. Make note of valuable contributions and any lapses in deliverables. Review and discuss any gaps in expectations. Ask for and provide feedback on an ongoing basis. 

We would love to hear your observations and war stories. Let us know if you have other best practices for effectively managing a successful board.

Coming March 21: Three Questions Your Organization Should be Asking